Abstract

China has advanced from a lower middle-income country to an upper middle-income country, but is still on the verge of falling into the “middle-income trap”. In 2015, China’s GDP per capita reached USD 8,026,  representing a big gap with the World Bank’s benchmark of USD12,736 for a high-income economy in 2014.  Since 2010, the traditional engine of growth relying on investment, export and labor-intensive industries has been declining, whereas the new engine of growth isn’t evolving as fast as expected. This article tries to shed light on the following questions: What are the new engines of growth for China to avoid the “middle-income trap” and develop into a high-income country? How should China foster new engines of growth and replace the old ones in a smooth and orderly manner?