> terrified of falling into the middle-income trap

Not really, there's 2 middle income traps:

1) the ACTUAL trap / thesis - countries fail to educate / upgrade workforce enough to move up supply chains to generate high income employment to bring up income, the TRAP is lack of advancement, to which PRC is basically the LEAST trapped country in the world, pursuing industrial development in all high end sectors. Issues is PRC being highly developed in every sector = still not enough high end jobs for 1.4B people.

2) the economic middle income trap, for last few years, PRC consisitly a foreskin (low single %) below world bank definition/revision of upper income, people need to ask why that is? IMO it's because PRC DOESN'T WANT to be definitionally upper income to play up developing status, and lose related perks. It would be absolutely trivial for PRC to revaluate FX by a few % and cross nominal USD high income and take a huge victory lap, but they don't.

The reality is "hiding strength" is going ot be increasingly hard with time - PRC per capita is being brought down by 600m low income. The TLDR is bottom 4-5 quantiles, i.e. 40% very undereducated population who got left behind during modernization and generates about only ~5% of GDP. They skew old and will eventually phase out of stats (die) in next couple decades, and numerator is going to be increasingly high educated new cohorts working high income. Low/high income divide is largely generational, the future educated populations are going to be in disproportionately high income high skill jobs i.e. PRC is replacing 200m subsistent farmers with 200m tertiary workforce. If most of the 2 bottom quantile dies by 2050, PRC per capita will nearly double to medium high income simply doing nothing, with PPP to rival upper-high income if they hold on to production. Short of unforseen catastrophe, it's statistic inevitability.

That's without mentioning FX, i.e. PRC securing enough economic clout = eventually ability to flex the FX lever to multiply nominal GDP faster than actual growth.

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saturn8601 7 months ago | parent [-]

600m generating 5% of GDP sounds crazy. Any source to back that up? What % of people are doing manufacturing? The American bull case is that China collapses because these 600m people die off and take their lead in manufacturing with them meanwhile the US is already at the top and continues to absorb the best people in the world hopefully sustaining their growth.

	▲	maxglute 7 months ago \| parent [-]
		During covid, premier LKQ revealed ~40% of PRC lives on 1000 rmb per month, 12000 rmb per year / 1600 USD per year. Do the napakin math that means 600m people contribute to about 7 trillion (rmb) of 126 trillion gdp or ~5%. >people die off and take their lead in manufacturing Unlikely, those 600m are subsistent farmers (something like 200m households), informal workers etc... they are not in manufacturing or anything advanced, where advanced is literally ability to do basic arithmatic, aka this cohort was never in a position to be retrained for manufacturing. To put PRC manufacturing in perspective, I think at height, PRC manufacturing employed "only" 300m. Now they're acquiring RoW combined in automation (industrial robots) and uptraining skilled workforce to hold onto manufacturing / dominate in high end, i.e. that lead is likely set to grow. The bodies problem is basically most new gen wants to degrees and air conditioned office jobs instead of blue collar work. There's plenty of bodies to fill factories (see youth unemployment stats) but incentives/culture not aligned for vocational work. Those 600m bluntly are just... excess people who don't meaningfully contribute to modern economy i.e. 200m farming households can be replaced by 20m advanced farmers with automation, but PRC agriculture not broadly automated specifically because farming is massive jobs program. Well except construction, hence PRC building spree now, where labour is plentiful and cheap. IMO this is basically PRC's happy accident - many wanted hukou reforms to increase equality, but really what CCP did was create a massive structural class disparity that enables 1) arbituaging very cheap labour for low end work 2) have that low end workforce be easily supported because it doesn't cost very much to provide for them. Also why PRC focuses on production side (industrial capacity)... need to build so much shit to economies of scale than make goods cheap enough for bottom quantiles. Which also happens to translate into global competitiveness for all markets, including emerging / low income ones like bottom PRC 40%. >US is already at the top and continues to absorb the best people Remains to be seen, huge % of US S&T talent came (past tense) from PRC, and now education exchanges are being cut off. Which is secondary to the fact that @60% and increasing tertiary that bias STEM, with like 200m new borns in the past 25 years in the pipeline, PRC simply has too much talent for US to meaningfully brain drain. US projected to increase population by 40m in next 30 years. US would have to train every new born, and every immigrant to be STEM to match PRC output, that's not counting the other 80m where percentage will go into some other high skilled field, just not explicitly STEM. Hence the talent generation gap is projected to be absurd in PRC's favour. That an PRC academic institutions have caught up and increasingly, PRC's cream of the crop stay in PRC. This isn't the 90s where many PRC diasphora were top of their class from a small academic system that trained only a few, where every brain drained hurt. Increasingly, west is a dumping ground for PRC kids who couldn't hack it in tier1 PRC institutions (didn't score enough on Gaokao) but with parents that have enough resources to send them abroad... meanwhile the Chinese B & C teams are still crowding a lot of western labs to drive US/western innovation. The TLDR is PRC's high skilled demographic divident is projected to be so large that it unlikely to be meaningfully constrained. And for strategic competition, that's the demographic trend that's important to consider especially in next 60-70 year time frame, i.e. almost 2100s, since that's how long those new brains will be in the workforce. The constrain / challenge is on PRCs end to generate enough skilled jobs, which will be difficult. But the side effect of surplus skilled labour is cheap labour, and IMO it's better to have too much talent than not enough for strategic goals, i.e. PRC is only actor projected to not have semi conductor talent shortage in next 10 years.