Comments by Wen-jen Hsieh, on China's Growth Slowdown and Prospects for Becoming a High-Income Developed Economy

Wen-jen Hsieh: The IMF (2014) forecasted that China would contribute nearly 42 percent of the global economic growth in 2016 (out of 4 percent of the global economic growth, China had contributed 1.66 percent). As China's economic growth is gaining more influence on the world economy, it is important to better comprehend China's prospects for economic development rather than solely focusing on income (GDP per capita) growth or the business cycle. This article extended the concepts of the Kuznets effect, which graphs economic inequality against income per capita over the course of economic development on a hypothetical curve in the dual-sector into a multi-sector analysis, thereby to identify the slowdown of total factor productivity (TFP) growth, and in turn, indicate the possible existence of the “middle-income trap” in China. The author suggests that the development of human capital (e.g., optimizing allocation of educational resources) was critical for reversing the downward...