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China's economic development and its institutions

Comments on Paul Hubbard "If Mao still ran China, China would still be poor", 24/08/2014

While most of Paul Hubbard's arguments in this post may be correct (particularly in regarding the Mao era model) and that includes the title particularly, the point on the middle income trap is a bit confusing, particularly in the context of using the US institutions as a reference point. This is because the high income levels are themselves vastly different from the entry point ($US 12,616 or more on 1/07/2014 by World Bank) to the highest level ($103,050 for Norway), or even the level of the US ($55,200). China's income level was $7,380 then.

Yes, it can be expected China will continue to improve governance and carry out further and possibly continual reforms over the years and decades ahead. But that is very different to catch up with the institutions in the US.

It is possible that China may enter into the ranks of high income countries in a decade. Its institutions, however, can be reasonably expected to be still very different from that of the US's. Further, there is the debate whether China's development and economic growth represents a new and different model, presumably different from that of the US's.

While so far it is difficult to prove the China model, it cannot be completely ruled out at this stage either. It may takes much more time (likely to be several more decades) to prove or disapprove a China model.

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