Rise in per capita GDP creates strong platform for more reform

CHINA'S GROSS DOMESTIC PRODUCT exceeded 90 trillion yuan ($13.26 trillion) last year, according to the National Bureau of Statistics. It means its per capita GDP was about $9,700. If China maintains growth of at least 6 percent this year, which is highly possible given the current momentum, its per capita GDP this year will surpass $10,000. Beijing News comments:

According to the World Bank standard of 2015, countries with a per capita GDP above $12,736 are high-income countries, and between $4,126 and $12,735 are middle-income countries.

So China will take a solid step toward becoming a high-income country this year, which will create more space for it to deepen reform and expand opening-up.

It has been a long-term concern that China will fall into the middle-income trap, but it seems China can avoid it. The growth of those countries that have fallen into the trap stalled because of their failure to transform their government-dominated economies.

In the early stage of a country's economic rise, its government often plays an important role. But as the country develops it needs to adapt its institutions to changing circumstances, or its institutional sluggishness will mean it falls into the middle-income trap.

The vitality of the Chinese economy depends on the responsiveness of its institutions to ensure the economy's sensitivity and adaptability to change. Which means China's transformation toward establishing an open and free economy will be comparatively stable and predictable if it establishes appropriate economic and social institutions for its development stage.

So how to achieve this kind of institutional transformation? In short, it is necessary for the government to build a protective security system and a transparent guarantee system to create a stable economic and social environment instead of intervening in the market.

That China will continue to increase its input into its social safety net of guaranteed basic welfare and public services consolidates the foundation for the economy's resilience. That being so, people will enjoy stronger sense of gain, and the market subjects will have a better business environment and more opportunities in a dynamic economy.