China may break the some of the rules of classical economic development

Comments on Indermit Gill and Homi Kharas "Can Asia keep growing through middle income?" 18/08/2015

While Malaysia and Thailand may have been on the middle income list for some time and might be considered as potential victims of middle income trap, China has not been in the ranks of middle income for that long. I am not sure the case of Indonesia given that it has been a democracy for some times already. It is likely to be premature to say that China is a contender for middle income trap, even though China is still under an authoritarian regime.

There is no doubt that China will continue to reform itself on many fronts, it has not shown serious reforms to be a democracy any time soon. It is likely it will remain authoritarian for any foreseeable future. In such a political context, if it falls into the middle income trap, the main political system may be cited as the main reason. However, if it succeeds in graduating from middle income into the ranks of high income countries, one may have to find an exception to some of the institutional arguments.

China may indeed to be a different model of development. Of course we are now all speculate on the Chinese case, even though it may share some of the most important attributes that other successful East Asian high incomers, such as Japan, Singapore, Taiwan and Korea.

Those attributes include but not limited by high saving rates, strong political regimes, good primary and secondary educations, strong entrepreneurship including innovation, open and externally oriented economy and so on.

As for the argument of institutional factors, I think a stable and predictable political system and a gradually reforming to increase efficiency at the national level may be the key, as opposed to a defined western style institutions.