China's Path to Overcoming the Double Middle†income Traps

Peilin Li

China & World Economy, 2017, vol. 25, issue 6, 28-44

Abstract: China is at a crucial stage of overcoming the middle†income trap, with the factors that drive economic growth having undergone significant changes, and domestic consumption playing a more important role in economic growth. It is necessary, at this point, to promote mass consumption by expanding the middle†income group. The present paper puts forward the concept of the “double middle†income traps.†This refers to the situation in which an economy's per capita output stagnates and the size of the middle†income group is unable to expand for an extended period of time. These two factors are closely related. Based on data from the Chinese Social Survey conducted by the Institute of Sociology at the Chinese Academy of Social Sciences, the present paper analyzes the scale and development of middle†income groups, and the relationship among middle†income groups, the middle†class and middle†class identity. The marginal consumption propensities of middle†income groups are also considered. The findings of the paper indicate that the expansion of the middle†income group plays an important role in promoting mass consumption, maintaining continuous and stable economic growth, and overcoming the double middle†income traps.

Date: 2017
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