Analysis On The Influence Of Middle Class Across The Middle-Income Trap

Since China adopted the reform and opening-up to the outside world policy,China has successfully entered the track of modern economic construction,and the economy has achieved rapid growth.In 2010,China officially entered the ranks of upper middle-income countries.With China’s economic development entering a new normal,the decline in economic growth has partly raised concerns about whether China can successfully cross the "middle-income trap."In recent years,the middle class has increasingly become the focus of social attention.So,can the middle class help China cross the “middle-income trap”? This paper aims to study the relationship between the middle class and economic growth in order to explore the role of the middle class in avoiding the “middle-income trap”.This paper uses the micro-income data of the China Health and Nutrition Survey Database(CHNS)to measure the middle class scale of 9 provinces in China from 1997 to 2011 using the definition of median income and feasible generalized least squares estimation(FGLS),an empirical examination of the impact of the middle class on economic growth.The results show that there is a significant positive correlation between the proportion of the middle class and economic growth,that is,the expansion of the middle class is conducive to promoting China’s economic growth and plays a key role in promoting consumption and investment.The growth of the middle class is conducive to alleviating the imbalance of income distribution,and plays an important role in avoiding the “middle-income trap”.In order to nurture and expand the middle class and play its role in promoting economic growth,the government must constantly improve the social security system,enhance the middle class’ s ability to resist risks,promote tax reform,improve the income redistribution policy,and increase the income of the middle class and low-income groups in many ways.At the same time,we need to continue to promote industrial restructuring and urbanization.In addition,we need to vigorously support the development of education,enhance personal human capital and improve social mobility,so that more people can enter the middle class group.