Will China Avoid the Middle-Income Trap?

This paper employs a historical approach to address whether a country can avoid the middle-income trap. The development of the manufacturing sector and technological capacities are important for a country to avoid the middle-income trap. South Korea avoided the middleincome trap through developing the manufacturing sector. Argentina became a middle-income country by exporting agricultural goods and fell victim to the trap. The distribution of political power between state and society affect a country’s capacity to develop technological capabilities. The concentration of power in the government in China is affected by historical factors. With the provision of equal opportunities to all citizens, China will avoid the middle-income trap with her building-up of technological and innovative capacities. The reasoning here can also be used to understand development experiences of other countries.