The Challenges of Middle Income Transition in the PRC

Publication | March 2011
  • International experiences suggest that moving up from middle-income to high income status appears to be more complex than moving up from the low-income to middle-income range. Further, growth strategies that proved successful in earlier stages of development are less effective when moving up to higher income levels.
  • Thirty years of successful reform has transformed the People's Republic of China (PRC) into the world's second largest economy. Rapid growth allowed for a swift transition from a low-income to a middle-income country, but today the challenge lies in how to move up to higher-income status.
  • Some of the lessons learnt from international experiences might be useful in designing a strategy in the PRC to sustain growth over the longer term. In this regard, most of the needed reforms are reflected in the 12th Five-Year Plan, and embedded in the context of economic rebalancing. Therefore, the full implementation of the plan will be a key factor in the ascend of the PRC to higher income levels.