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Continuing trade disputes, skyrocketing housing prices and low fertility rates seem to have cast a shadow over China’s economic outlook. However, author Liang Jianzhang maintains a “cautiously optimistic” forecast for the Chinese economy. He believes that a country’s wealth is ultimately determined by its level of technology and industrialization. Using per capita income as a measure of wealth, Liang argues that there is still potential for wage growth given China’s level of technological and industrial progress. getAbstract recommends this article to China watchers, economists and anyone interested in the future of China’s economy.

Summary

Given uncertainties in the stock market, trade disputes, home price controls and deleveraging, some people may conclude that China’s economic outlook is gloomy or even that the economy will get stuck in the middle-income trap – that is, that it won’t move past a certain development stage.

But a country’s levels of technology and industrialization are the most important factors in determining its wealth potential. China’s per capita income is far lower than that of developed countries. Yet China’s rapidly growing levels of technology and industrialization are fairly close to those of some developed countries such as Greece and Spain and far ahead of those of other middle-income countries such as Thailand, Brazil and Malaysia. For that reason, China’s income and economic growth still has potential.

China is thus in an advantageous position. If economic policies are necessary to stimulate...

About the Author

Liang Jianzhang (James Liang) founded travel services provider Trip. He is a professor at the Guanghua School of Management at Peking University.


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