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Middle Income Trap - Five reasons why China's economy is in trouble

Graham Watson

5th October 2022

The latest Communist Party meeting is prompting a lot of navel gazing by Sinophiles who think that the economy is struggling to break free of the middle income trap.

In this BBC piece, five factors holding the economy back are highlighted: the zero Covid policy, the government's fiscal response to this, an ongoing property crisis, climate change issues and the fact that Chinese tech companies are currently struggling to attract investors and stalling.

As a result, it's not surprise that Chinese growth is lagging behind that of the Asia-Pacific region in general.

We've linked below to an excellent Economist video on slowing growth in China (May 2021) - excellent for deepening awareness and understanding.

More here on the middle income trap

The middle income trap exists for some countries that make significant progress in reducing extreme poverty and experience structural change and growth but then find it difficult to make the climb from being a middle-income country to achieve high-income fully-developed status.

China’s economy: what’s its weak spot?

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to tutor2u, reads voraciously and is interested in all aspects of Teaching and Learning.

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