Is China Entering The Middle Income Trap?

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Is China entering the middle income trap?
An analysis about China’s current economic situation and the challenges ahead

Vinicius Porto Amorim
Global Leadership Program
Asia B
April 29, 2016
Is China entering a middle income trap? Who knows? But the recent slowdown of the Chinese economy has turned on the warning sign that the country might be falling into one of the greatest challenges of the developing economies: the middle income trap. However, prior to understanding the reasons that the Chinese economy might (or might not) be falling under the trap, it is necessary to do an overview about the drivers that led the incredible growth of the Asian Dragon during the past decades.

The Mao Era: 1949-1976
The history of modern China starts on October 1st of 1949 with the victory by the Chinese Communist Party (CCP) in the Chinese Civil War and the consequently proclamation of the People’s Republic of China (PRC) by Mao Zedong . From 1949 until 1976, Mao started to implement in China his idea of a communist society with a centrally controlled economy based on the Soviet model. In order to achieve the massive changes towards the implementation of communism, he developed several ambitious projects, guided by the Five-Year Plans that included the Great Leap Forward, started in 1958, and the Cultural Revolution (between 1966 and 1976). It’s estimated that the implementation of the Maoist ideals was responsible for more than 65 million deaths in China, mostly by forced
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