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China and the Middle-Income Trap

The odds of escape aren't great...and may be getting worse.

China is far from the first country to endure slowing economic growth following its ascent from agrarian poverty to middle-income status. In fact, middle-income countries are disproportionately likely to experience large slowdowns. As a result, few ultimately ascend to high-income status. Economists coined this phenomenon the middle-income trap. This article continues our series on China’s next 10 years with a look at the country’s odds of escaping the trap.

It’s Getting Easier to Escape the Poverty Trap,
but Harder to Escape the Middle-Income Trap

The climb from middle-income to high-income has never been easy. Among the 96 countries categorized as low- or middle-income in 1960, only 12 non-OPEC countries eventually graduated to high-income status. This is the leap China aims to make, which would involve more than doubling GDP per capita from today’s level.

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