Middle-income trap speculation not credible

(Global Times) 09:18, May 04, 2015

(Photo source: xinhua)

US investment magnet Warren Buffett and his partner Charlie Munger praised China's growth at their annual Berkshire Hathaway shareholders' meeting. Buffett described China's accomplishments as "amazing," adding that it has taken China four or five decades to do what took the US 200 years. He remarked that the Chinese have "found a way to unlock their potential."

Buffett and Munger's bullish remarks reflect their long-term confidence about the Chinese economy, without any ulterior motives attached. But despite their compliments, bearish voices are still attention-grabbing. They believe that China may be stranded by the "middle-income trap" in the future.

China's rapid growth in the past decades is unprecedented in human history, and it takes time to have a clear view of why this is so. It is much harder to anticipate the Chinese economy than to summarize it, which can also not be generalized by one simple economic terminology or model.

Buffett's judgment comes from his insights. He knows that a rising superpower cannot do without many specific conditions. But if they can be united in one country, the strength of such unity will be formidable.

As the most successful investor of the 20th century, Buffett looks at the big picture, eying on the trends and overall climate of the Chinese economy. China faces a downward swing, but the fact has not been analyzed thoroughly. Since public opinion in the international community remains skeptical and biased toward the Chinese economy, negative voices in the wake of China's economic downturn have somewhat gained the upper hand.

No matter how we compare its economy - to its past self or to other major economies, China and its economic reform are still vigorous. It will still likely outperform most other economies.

The hope of most Chinese for the improvement of their living standards, such as better housing conditions, medical care and education, remains strong. The upward trajectory of demand is leading the Chinese economy to explore bigger potentials, which will stir China's economic update. This is the aim of China's ongoing reform.

The Chinese government has strong capability to intervene in economic affairs, but it keeps reflecting if it has abused this power. China has never ceased modifying its economic policies and reinforcing market orientation. It has been proven that the way China regulates its economy is an advantage instead of a weakness.

The "middle-income trap" is a lesson drawn from many developing countries. It is necessary to warn that China should avoid following the same road, but any speculation that China will face this destiny lacks credibility.

(For the latest China news, Please follow People's Daily onTwitter andFacebook)(Editor:Kong Defang,Yao Chun)

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