Is China A Middle-income Country?

Shanghai, China. (Agnieszka Bojczuk/Wikipedia)
Shanghai, China. (Agnieszka Bojczuk/Wikipedia)

Vice-Premier Li Keqiang of the Chinese Communist Party (CCP) recently met with World Bank President Jim Yong Kim in Beijing. Li said China has become a middle-income country and in the near future will need to avoid the “Middle-income Trap.”

The “Middle-income Trap” occurs when developing countries achieve the level of $US3000 per capita income, then reach a plateau and eventually stagnate at that level.

Jim Yong Kim President World Ban

Jim Yong Kim, President of World Bank. (Wikipedia)

According to data collected by the World Bank, China has a current per capita annual income of $US5400. This suggests China has already achieved the rank of an upper-middle-income country (GNI per person of $US3800 to $US11,900).

China’s entry into the group of middle-income countries was judged on the basis of Gross Domestic Product (GDP) and national income. But some experts question the validity of the data used.

Li Keqiang Vice Premier china ccp communist

Li Keqiang, Vice Premier of The People’s Republic of China. (Friends of Europe/Wikipedia)


Xie Tian is a professor at the University of South Carolina’s Business School. He said China’s Vice-Premier Li Keqiang, while serving as Party chief in Liaoning, China, told an American ambassador that he did not believe China’s “officially reported” GDP.

Mr Li admitted using statistics from electricity production, bank loans and freight transportation volume to estimate local GDP figures, Xie continued:

Homeless man child China

Homeless man with child in China. (Harald Groven/Flickr)

US-based economist Dr Cheng Xiaonong believes China has not fallen into the “Middle-income Trap”, but has instead has fallen into another “trap” known as “Economic Growth Plight” – a result of the unfair distribution of income and wealth, Dr Cheng said:

begging money China begger beg poor

A man begging for money in China. (trey.menefee/Flickr)

In the 1990s, China’s national consumption accounted for 46 per cent of GDP. However, since 2000, the percentage has plunged and in 2010, it was down to 35 per cent.

Wen Jiabao Premier China

Wen Jiabao, Premier of the People’s Republic of China. (World Economic Forum/Wikipedia)

In recent years, Premier Wen Jiabao has repeatedly stated China’s economy cannot realise “sustainable growth”. Dr Cheng therefore believes either Vice-Premier Li Keqiang has not yet fully discerned Premier Wen’s plight or that Vice-Premier Li has not yet found a solution to ameliorate the existing “structure of income distribution”, which is closely linked to the CCP’s “political structure”.

old man poor beg begging begger chalk write story economic growth plight in china

An old man wrote his story in chalk and begs for money. (trey.menefee/Flickr)

Dr Cheng added:

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