China to accelerate its modernization for the next 10 years
Updated 21:09, 31-Oct-2022
Djoomart Otorbaev
China to accelerate its modernization for the next 10 years

China to accelerate its modernization for the next 10 years.mp3


Editor's note: Decision Makers is a global platform for decision makers to share their insights on events shaping today's world. Djoomart Otorbaev is the former prime minister of the Kyrgyz Republic, a distinguished professor of the Belt and Road School of Beijing Normal University, and a member of the Nizami Ganjavi International Center. The article reflects the author's views and not necessarily those of CGTN.

The next decade will be challenging, as well as crucial for China's path towards building a prosperous socialist society by the middle of the century. Additionally, China's economic growth in the past 40 years has stood unprecedented.

China's path of per capita GDP growth between $500 and $1,000 transpired from 1994 to 2001. And from 2001 and 2008, the country had raised its GDP per capita to $3,400. And over the following eleven years, namely, in 2019, this figure reached $10,000. Following the World Bank classification, China carries the status of an upper-middle-income economy. There are 54 countries in this category. Potentially, next year China could enter the group of high-income economies, that is, the countries where, according to the World Bank hierarchy, GDP per capita is $13,205 or higher.

If that were to happen, China would have taken about 22 years to step in as high-income economies , with a per capita income increase from $1,000 to $12,535. Before China, such Asian countries and regions as South Korea, China's Taiwan region and Singapore spent 25, 19 and 21 years in this group before moving up to the high income tier. Those "Asian tigers" have changed their growth strategies after reaching the middle-income country level and adopted new strategies to sustain economic growth.

For these countries, passing the gap of GDP per capita between $10,000 and $20,000 was the most difficult but decisive. And this is what China must go through over the next ten years.

There are many examples in the modern world when countries failed to rebuild their economies quickly enough and fell into a so-called middle-income trap. This happened in Latin America, where countries such as Mexico, Brazil, and Argentina have gotten stuck in this trap long ago and remain there.

The "middle-income trap" is an economic theory highlighting how wages in a rapidly developing country rise but that slows down the growth potential of export-oriented low-skilled production ends. To spur economic growth, the rapidly developing country must achieve the modern innovation potential necessary to increase labor productivity in order to become more competitive with advanced countries in the sectors of the economy that have much higher added value.

China began developing national strategies to increase its scientific and innovative potential in the 1980s. In 1986, former Chinese leader, Deng Xiaoping supported the proposal that China should build its advanced technology in line with the world's best practices. The Chinese State Council approved the State Plan for the Development of Science and Technologies affecting socio-economic progress, such as biotechnology and information technology. In October 1988, while inspecting the Beijing Electron-Positron Collider project, Deng Xiaoping said: "It has always been, and will always be, necessary for China to develop its own high technology so that it can take its place in this field."

The 2022 World Digital Economy Conference and 12th Smart City and Intelligent Economy Expo in Zhejiang, China, September 2, 2022. /CFP
The 2022 World Digital Economy Conference and 12th Smart City and Intelligent Economy Expo in Zhejiang, China, September 2, 2022. /CFP

The 2022 World Digital Economy Conference and 12th Smart City and Intelligent Economy Expo in Zhejiang, China, September 2, 2022. /CFP

Accordingly, the Chinese leadership has long recognized the requirement to move beyond the production and export-led growth model, although this model has brought significant achievements and contributed to rapid economic growth over the past four decades. In the early 2000s, innovative development mechanisms became a reality in China. High-tech industries are emerging as the new driving force behind economic development, shifting from "Made in China" to "Created in China." The high-tech sector is getting reshaped from chasing innovation to standing at the forefront of innovation on the global stage. In the 2014 Global Innovation Index published by Cornell University, China already ranked 29th out of 143 countries, earning it the title "Innovative Learner." By the 2020s, the country has confidently taken place among innovation leaders worldwide.

Some Western analysts believe China is also at risk of falling into the middle-income trap, pointing to several important factors. Among them, the population declined due to a drop in birth rates. As a rule, families living in cities and receiving an above-average income prefer self-development to the detriment of a high birth rate. Some of this is already happening in China, and the country's working-age population has declined since 2012. Besides, the economists calculated that around 2013, China entered the "Lewis Turning Point," when workers' wages began to rise faster than inflation as the surplus labor force was exhausted. Even the country's large-scale urbanization, when there was a massive migration of the rural population to large cities, could not stop this process.

The only way to overcome the risks of falling into this trap is through accelerated modernization and high-quality development. Humanity has not yet come up with any other recipe for treating such a disease. And it's precisely such decisions that were enshrined as top national priorities at the recently concluded 20th National Congress of the Communist Party of China (CPC) .

China's overcoming the middle-income trap and becoming the world's largest high-income country will have a significant positive impact on the well-being of 1.4 billion Chinese, as well as having far-reaching implications for global development. Such an achievement would increase the population of high-income countries from the estimated 1.2 billion, or about 15 percent of the world's population, to 2.6 billion by 2030.

China could soon become the world's largest economy in GDP size. But the country remain committed to promoting mutually beneficial and fair cooperation with all partners by expanding its foreign trade, foreign direct investment, development assistance and so on. China's success as the largest developing country to overcome the middle-income trap would set an example for other developing countries to do the same. That is why China's model of modernization and high-quality development could serve as an example for many developing countries moving in the same direction. Active international cooperation in the fields of global modernization and high-quality development will lead the world to accelerated harmonious growth in the interests of all.

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