‘Xinomics’ Leads China Into a Middle-Income Trap: Experts

Shipping containers stack at Zhoushan port in Ningbo, in China's eastern Zhejiang Province, on April 19, 2023. STR/AFP via Getty Images

As China faces economic challenges, it is falling into the “middle-income” trap due to Chinese leader Xi Jinping’s repressive policies, according to Japanese finance experts.

According to the World Bank, China is now an upper-income-middle country. The middle-income trap refers to a situation where a developing country’s economic growth slows down after reaching a certain size at around a per capita GDP of $10,000 to $12,000, which stays at that level. Countries that fall into this trap lose the competitiveness of their exports due to rising wages and cannot create high-value-added markets and developed economies.

Sputtering Economy

China’s GDP in April-June grew by 0.8 percent compared to 2.2 percent in January-March, and it’s not due to a slow post-COVID pandemic recovery, but rather it is an accelerated collapse of a real estate bubble that was formed over the past two decades, wrote Tsuchiya Hideo, a Japanese feature writer and economist at Nikkei, a Japanese financial newspaper, on Aug. 3.