In 2021, China’s per capita GDP will enter high-income countries, which means that China will overcome the middle-income trap
Two days ago, various economic data for 2021 were released. We told you a very exciting news at that time, that is, by the end of 2021, China’s per capita GDP had reached 12,500 US dollars based on the annual average exchange rate of US dollars.As we all know, the RMB exchange rate has been rising throughout 2021, and even in these two days, the RMB exchange rate has reached 6.3 in history. Many people predict that the RMB may even break 6 this year.In such a situation, in fact, China’s per capita GDP may reach $12,800 or even $13,000 in DOLLAR terms. Why are we obsessed with this figure?Because this is a threshold, the threshold line of high-income countries defined by the World Bank, in other words, according to today’s dollar exchange rate, by 2021, China has officially entered the ranks of high-income countries, this is a very important threshold.Because in the past years, all the countries that talked about China would talk about the middle income trap, and it is clear that through 2021, we have proudly told the world that we are beginning to overcome the middle income trap.And even five years from now, we’re completely out of this trap, what is the middle income trap?This is a concept in economics, and one that many developing countries struggle with.As we all know, after the end of the Second World War, anti-colonial movements were launched in the world, and many new countries were born. After these new countries became independent, one of the most important goals was to develop economy.There is nothing more important than lifting people out of poverty, but after decades of development, many developing countries have found themselves reaching a ceiling in their economic development. This ceiling is also known as the middle-income trap.When a country is poor and economically backward, perhaps with only a few hundred DOLLARS per capita, its development speed is very fast. However, when the per capita GDP of a developing country reaches a middle income of 8000 or 10000 DOLLARS, everyone will suddenly find that the economy of the whole country seems to be stagnant.Unlike the past, when GDP grew at an average annual rate of 10% or 20%, or when the income of ordinary people rose rapidly, it stagnated for a long time, sometimes for five years, sometimes for decades, sometimes for decades. In many developing countries, per capita GDP stagnated at $8,000 to $10,000 within a few decades.Mexico, Brazil and Argentina in Latin America and the Philippines in Southeast Asia have fallen into the middle income trap after developing rapidly.No matter how hard, always can’t reach the threshold of the $12000 the high-income countries, just as Chinese companies in the United States have a position in the ceiling, for many developing countries, they have decades could not break the shackles, the whole national economy is only like a backwater, and even the slightest provocation,The economy got worse after the financial crisis.By the end of the year before, the world bank announced that South Korea formally identified as the developed countries, this is the only pile in the post-war decades, developed countries in this world there are a lot of today, the United States, Japan, Britain, France, Germany, Italy, Spain, but these countries without exception is that the powers.When the family is the first world war powers, when somebody else is also powers of world war ii, the world situation is actually manipulated by these powers, Korea is emerging countries after the second world war, however, is particularly bad, just born through the decades of sockets, South Korea finally ushered in the ranks of the developed countries, but made a Korean,But a dozen or dozens of countries are stuck in the middle-income trap today.Therefore, in the past, many economists said that China’s economic development was particularly fast in the past few years, but China will fall into the middle-income trap like Argentina and Mexico sooner or later, and it is difficult to step into the high-income country.Just like a young man in the countryside who has just broken into the big city, he has a lot of strength, regardless of whether it is to do odd jobs or coolies, and it is very easy to earn thousands of dollars a month soon.Even their own efforts to do a little small business, more than a few part-time delivery delivery, delivery, a month to earn 10,000 yuan is also very likely, this income than in the countryside back toward the loess surface that is really much higher.The standard of living will certainly be much better than in the countryside, but when he earns 10,000 yuan a month, he will gradually feel the ceiling.There are many rich people in the city who often earn 30,000, 50,000 or even one million yuan a month. They live in mansions and drive famous cars. Such a life is beyond his reach in his life.But it always had a ceiling, and after making $18,000 a month, he reached that ceiling.No matter how hard he tries, he can’t break through that income ceiling without a breakthrough in intellectual ability, without a coincidence of chance.So for many developing countries, it is true that falling into the middle-income trap is impossible to climb out of, and there is a reason why a low income country has to rely on something in its journey to middle-income status.Or resources of the country has a unique, sell resources can sell for money, or the country’s demographic dividend, there are a lot of young people with education, so it can do the export processing industry, a move for raw materials for processing, then sell go out, do processing industry to earn money, certainly far more than agriculture, so income will increase rapidly.When a low-income country becomes a middle-income country, it will face a dilemma. On the one hand, with economic development and higher per capita income, its people will surely live a much better life than before, which is of course a good thing.On the other hand, the increase in per capita income will naturally mean the increase in labor costs. When people have more money, they can spend more. Then, of course, the housing price of the city or the country will rise, and the price of the whole country will rise sharply.In those days those advantages will gradually become lost, why did the international capital come to you to invest in it, land is cheap enough with free, labor is cheap enough, developed countries can hire 1 person in your country can hire 10 people, so of course the capital is willing to invest in low-cost places to build factories to make money.But as a country moves from low income to middle income, and costs rise, capital will find itself earning less and less.On the other hand, there are 200 countries and regions in the world, and lots and lots of low income countries, and you don’t have an advantage in labor and you don’t have an advantage in land prices.Many middle-income countries will find that they cannot compete with low-income countries have been at low, because the somebody else’s cost is low enough, and high hope they no advanced science and technology without the brand, they will do what is OEM for many years, so they can’t compete with developed countries, they can only be limited to the middle-income trap.It’s very similar to a lot of the middle class in our cities today, and a lot of people say that the middle class is actually the most stressed, because on the one hand you can make some money, you can still make more money than the very poor people at the bottom.But on the other hand, you earn a lot of money, and you have a lot of pressure. People at the bottom may not even own a house, and they have to pay the mortgage. People at the bottom walk on their legs every day, and you have to pay the car loan.On the other hand, it is clear that the majority of the middle class cannot compete with those of the rich. They control the resources, technology and connections. It is also difficult for the middle class to break out and join the upper class.So the past 10 years, there are often many bad-mouthing China’s so-called western economists will say that although China is developing rapidly in economy, that is because it had poor enough, the original China’s per capita GDP is only a few hundred dollars, thirty or forty years ago from a few hundred dollars to thousands of dollars that is soon, but from a few thousand dollars to tens of thousands of dollars I’m afraid that is extremely difficult.In the past few decades, South Korea alone has done it, but in 2021, our good economic data tells them that we will quickly overcome the middle income trap.On the one hand, the epidemic has not completely dissipated, and the world is waiting for Chinese factories to produce at full capacity. Therefore, in the past year, China’s foreign trade has repeatedly set new highs, and we can imagine that it will be the same in the next few years.By the end of 2021, China’s GDP is already 80% of that of the United States. Now almost everyone believes that China’s GDP will surpass that of the United States five years later. What’s more, the RMB has been very strong.Before, many people worried that the appreciation of RMB would affect China’s export, but now it seems obvious that the appreciation is nothing, because most overseas factories have stopped production, it has to be imported from China at a high price, so we will have such a state.On the one hand, the total GDP will continue to increase in the next five years, and on the other hand, the RMB may have a huge increase against the US dollar. Under the combined action of these two factors, China’s per capita GDP in TERMS of US dollar will increase rapidly in the future.Five years from now it’s possible to exceed $15,000, $18,000, $20,000, and at that point we’ve completely crossed the middle-income trap.You know today we have entered a high income country groups, although it is just touch the threshold, but the next few years we will quickly improve the appreciation of the renminbi, in particular, you know, in 2021, the economy of our country’s GDP grew by 8.1%, but we grew by more than 20% in dollar terms, can say without this appreciation,We cannot become a high-income country last year.On the other hand, unlike other countries like Argentina, Mexico, Brazil and Southeast Asia, we have a whole industrial chain. We are not only engaged in export processing, but also have our own independent intellectual property rights.Even in the past few decades, our exports have changed drastically.Twenty years ago we might have been saying that the bulk of our exports were textiles, that we were going to trade 800 million shirts for an Airbus plane, but today our exports have changed.As we said in the last program, in 2021, we will export an unprecedented 2 million cars, which is already a prototype of a world automobile power. In 2021, China will hold more than 50% of the world shipbuilding orders, and the world shipbuilding industry will have no ships without China.Plus we export a lot of home appliances, mobile phones, electronics, we export high speed rail, infrastructure, a lot of things that no other country in the world can produce or build.Unlike those countries that can only rely on the advantage of labor cost to do some simple export processing industry to raise their meager income, we have long been equipped with the ability to overcome the middle-income trap through continuous industrial upgrading.So for those countries, over the course of decades and decades, they have been struggling with how can per capita GDP never exceed $10,000, how can there always be a ceiling for economic development?For China, it will take a few years to easily overcome the middle-income trap, and even reach the ranks of developed countries in per capita GDP in the near future.