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China'S Economy May Face Double Traps

2012/3/20 9:37:00 16

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"If we combine this with the aging of the population, the increase in the number of middle class and pension plans, China will face a double threat - the Middle Income Trap (lag in institutional adjustment) and the high income trap caused by the financial unsustainable welfare program."

At the 2012 China Development Forum held on 18~19 March, the Sri Mulyani Indrawati, deputy director of the world bank, said, "in short, China's economy is facing two traps of middle income and high income."

Indrawati's Chinese name is called

"Ying Zhuo Hua",

This is Liu Shijin, deputy director of the development research center of the State Council, who was sent to China at the 2011 summit of China Development Forum.

Ying Zhuohua's "this" refers to the common problems of many middle-income countries, such as social inequality and the low efficiency of public services in obtaining public services.

To cope with these two pitfalls, the British government believes that on the one hand, it is necessary to increase the financial expenditure on social services, and at the same time enhance the financial services for social services.

Service quality

And enhance pparency, establish accountability mechanisms and competition to improve the quality and efficiency of social services; on the other hand, we should improve and strengthen fiscal decentralization, match the revenues of local governments with their expenditure responsibilities, establish a more equitable fiscal pfer payment system, enhance fiscal pparency and bring public resources into the budget.

In fact, increasing the financial expenditure in the field of social services is the consensus of experts attending the meeting. On the one hand, from the perspective of stimulating domestic demand, only increasing investment in this field, improving the social security network and reducing the worries of ordinary people can increase their consumption level.

Boskin and Austen Gusby, two former chairman of the White House Economic Advisory Committee, said in an interview with the first Financial Daily reporters.

Different from other middle-income countries,

China

Facing the dilemma of "not getting rich before the old age", social security expenditure will inevitably become an important part of China's fiscal expenditure in the future.

Boskin said: "China should be ready to pay for this autumn's account."

Boskin warned: "in a few decades, if the related borrowing or debt does not look so cheap, the situation will be different."

The implication is that we should prepare for a rainy day when China's fiscal revenue is in good condition.