How To Avoid The "Middle-income Trap" In China

In2013, the per capita GDP in China has reached about6700dollars, so our country now still belongs to the ranks of above average income countries. But in order to achieve the standard of high-income countries whose per capita GDP have reached12616dollars, there still are some characteristic roads of sustainable development in line with China’s national conditions to go.As to how to cross "middle-income trap" in China and enter the ranks of the high-income countries successfully, firstly, this paper states the facts, and then analyses the relationship between income distribution and other factors and economic growth. Then, from the point of view of the proportion of the middle-income, this paper forecasts whether our country can smoothly cross the "middle-income trap". This paper uses data provided by the World Bank, according to the purpose of this research, and then sets the index selection standard. At the same time, through forecasting methods in combination with IOWHA operator and VAR model econometric methods to predict whether China will successfully cross the "middle income trap". According to macroeconomic data from the World Bank, empirical results show that there is a negative correlation between urban-rural income ratio and per capita GDP growth rate in China. Namely, there exists an inverse relationship between income distribution and economic growth. However, the impact of lag phase one of gini coefficient to per capita GDP growth is positive, and the influence of lag phase two has a negative impact. While analyzing the influencing factors of "middle-income trap", we find that among various economic indicators, government expenditure has higher impact on the growth rate of GDP per capita, and its lag phase one and lag phase two have positive influence.Through the empirical analysis of how the income gap affects China’s economic growth, our country can learn a lot from the experience and lessons of the world as to income distribution. Finally, this paper analyses the realistic possibility of crossing the "middle income trap" based on the empirical results in China.