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Will Inequality Lead China to the Middle Income Trap?

Author

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  • Nazrul Islam

    (Department of Economic and Social Affairs, United Nations; International Center for the Study of East Asian Development (ICSEAD), Kitakyushu, Japan)

Abstract

China has departed from the East Asian development model by letting inequality rise to a high level, which is now contributing to China¡¯s current problems of macroeconomic imbalance, declining efficiency of capital, and rising social tensions. If inequality persists, China may get caught in the ¡°inequality-trap,¡± which may then lead to the middle income trap (MIT). Fortunately, China still has the levers to pull to reduce inequality and avoid the MIT. Measures along both the ¡°wage route¡± and the ¡°redistributive route¡± can be adopted for this purpose. In addition, China may pursue the ¡°cooperative route¡± to more equitable distribution.

Suggested Citation

  • Nazrul Islam, 2014. "Will Inequality Lead China to the Middle Income Trap?," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 9(3), pages 398-437, September.
    • Handle: RePEc:fec:journl:v:9:y:2014:i:3:p:398-437
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    File URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-003-014-0020-4
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    Citations

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    Cited by:

    1. Zhou, Haiwen, 2017. "Will China Avoid the Middle-Income Trap?," MPRA Paper 82688, University Library of Munich, Germany.
    2. Glawe, Linda & Wagner, Helmut, 2020. "China in the middle-income trap?," China Economic Review, Elsevier, vol. 60(C).
    3. Prajapati, Vishwajeet Singh & Priya, Ashutosh & Pradhan, Vikas, 2023. "The Middle-Income Trap – A Problem Of Definition And Empirical Research," Economic and Regional Studies (Studia Ekonomiczne i Regionalne), John Paul II University of Applied Sciences in Biala Podlaska, vol. 16(3), September.
    4. Gill,Indermit S. & Kharas,Homi, 2015. "The middle-income trap turns ten," Policy Research Working Paper Series 7403, The World Bank.
    5. Tian, Xu & Zhang, Xiaoheng & Zhou, Yingheng & Yu, Xiaohua, 2016. "Regional income inequality in China revisited: A perspective from club convergence," Economic Modelling, Elsevier, vol. 56(C), pages 50-58.
    6. Prajapati Vishwajeet Singh & Priya Ashutosh & Pradhan Vikas, 2023. "The middle-income trap – a problem of definition and empirical research," Economic and Regional Studies / Studia Ekonomiczne i Regionalne, Sciendo, vol. 16(3), pages 459-472, September.

    More about this item

    Keywords

    China; middle income trap; inequality trap; inequality; redistribution; cooperatives;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies

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