Avoiding the Middle Income Trap in China

Written by Ryan Burkhart, Contributor | 11 June 2013

At the end of May, the Wilson Center hosted a conference on China’s economic and political outlook under its new generation of leadership. J. Stapleton Roy, Director of the Kissinger Institute, moderated the discussion featuring Junhua Wu, Chief Senior Economist at the Japan Research Institute Ltd. and a Wilson Center Senior Scholar, as well as Kiyoyuki Seguchi from the Canon Institute for Global Studies. While each panelist presented their opinions primarily on the economic outlook of China, each highlighted different challenges and opportunities for China’s fifth generation of leaders.

Junhua Wu began her presentation by focusing on the short-term economic projections put forth by the Chinese government. Furthermore, she questioned the legitimacy of these numbers. However, instead of delving into these topics, she reversed course and stated that both topics were irrelevant (unless you are an investment banker, she said) and that long-term projections were of utmost importance. “China’s economy has gone through ‘hot’ and ‘cold’ cycles since 1979,” she stated. She followed this by presenting a graph that showed China’s economy has grown, on average, at a blistering pace of 9.8 percent for the past three decades. She argued that less attention should be focused on whether or not China’s economy has had a “soft landing” and more attention given to potential long-term structural changes contemplated by China’s new leaders.

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