Will China Be Caught in the Middle-Income Trap? The Economic Path of South Korea and Malaysia May Help Provide the Answer.

摘要

This thesis investigates the feasibility of China s transforming to a consumption-led economy. Specifically, it seeks to determine whether China is destined to be caught in the middle income trap, whereby it fails to graduate to high-income status, and thus is trapped in an economic state of equilibrium that is very difficult to change with short-term forces. To investigate this question, this thesis compares China s economic development with the economic trajectories of South Korea and Malaysia, which have experienced similar economic growth pressures, to assess the likelihood that China s growth will stagnate over the near to middle term. To do so, this thesis will examine the effect of rule of law, education, and demographics on economic growth. Given China s rapid economic ascent based on its export-led and investment-dependent economy, the evidence suggests China s economic growth is decreasing despite popular belief China is on a trajectory to overtake the United States as the world s top economy. Although the Chinese Communist Party has slowly implemented phased economic reform since the Deng Xiaoping era, it still lacks many institutions necessary to transform into a consumption-led economy. This thesis concludes with a scorecard analysis that will provide insight into China s economic future.