The middle-income stage is an objectively existing stage that is necessary for a country’s economic and social development. In 1998, the World Bank’s per capita GDP for lower-middle-income countries was $761-3030 USD while China’s per capita GNI was $800 USD that year. After 12 years of rapid growth since entering the ranks of lower-middle-income countries in 1998, China entered the ranks of upper-middle-income countries in 2010. Since then, after more than 10 years of rapid growth, our current per capita GNI has already exceeded $10,000 USD. According to the World Bank’s standard, China is currently in the middle-income stage and close to the high-income range.
For the present, to cross over the middle-income stage, we need key breakthroughs in the following areas.
First, we must build an international environment conducive to crossing over the middle-income stage. No matter how the global structure changes, we must adhere to reform and opening up. We must vigorously promote the construction of a “community with a shared future,” carefully handle the relationship between international common interests [共存利益] and national self-interests [自存利益], seek the greatest points of cooperation, seek international common interests, create new cooperation platforms, and seek mutually beneficial solutions. At the same time, we must actively promote the globalization process and expand China’s trade circle. Practice has proven that the global free trade environment is beneficial to China. China must expand its trade circle, with free trade as the standard, and accelerate the negotiation of multilateral and bilateral free trade agreements. In addition, we must coordinate the relationships between various values from around the world and China’s core values. The world is diverse, allowing the existence of various values and systems, so we must implement a harmonious diplomatic route.
Second, we must speed up the cultivation and expansion of the middle-income population and create conditions for the formation of a new olive-shaped society dominated by the middle-income population. The middle-income population is the main entity for innovation, the main entity for consumption, the main entity for human capital improvement, and the main entity for social stability. The expansion of this population will help us cross over the middle-income stage. Cultivating and expanding the middle-income population is a systems project. Under the premise of continuously increasing the proportion of labor income in the distribution of national income and with the goal of “raising the lower class, expanding the middle class, and regulating the upper class,” we must accelerate the reform of the fiscal and taxation system, financial system, household registration and social security system, and national income distribution system, remove institutional and policy obstacles, and create a tolerant institutional environment for the growth of the middle-income population. First, we must work to reduce the size of the low-income population, enhance the development skills of low-income people, and generally improve their level of social security. Second, it is necessary to reduce taxes and burdens for the middle-income population, continue to raise the threshold of personal income taxes, lower the personal income tax rate, and reduce the number of tax brackets. At the same time, pre-tax deductions and subsidies for the purchase of energy-saving home appliances should be provided upon the first home purchase by low- and middle-income populations.
Third, we must speed up urbanization and create the conditions for promoting the upgrade of the industrial structure and expanding social consumption. In the future, we must use more public resources for urbanization, promote the transfer of the agricultural population to cities and build an urbanized society (市民化社会). Urbanization provides a golden opportunity (黄金结合点, lit. golden convergence point) to increase the new kinetic energy for both sides of supply and demand. To actively promote new urbanization, we must adjust the urbanization strategy and accelerate related institutional reforms. First, we recommended implementing the strategy of building “clusters” at the upper level and expanding the “base” at the lower level. To build a “cluster” at the upper level means building several large urban agglomerations in the national regional layout in order to enhance and drive urbanization through “clusters.” The expansion of the “base” at the lower level means building administrative villages with populations of more than 2,000 people into small towns according to urban standards while also increasing the population-carrying capacity of existing small towns. Second, with the exception of Beijing, Shanghai, Tianjin, and other megacities, the standards and conditions for farmers to enter and settle in cities should be relaxed within a limited time. In addition, we must establish a public cost-sharing mechanism conducive to promoting the urbanization of the agricultural transfer population and minimizing the settlement costs for this population.
Fourth, we must accelerate the cultivation of new drivers of economic growth and create the conditions for realizing the transition from old to new drivers of economic growth. In the future, the main task will be to promote the transformation of traditional industries and support the development of emerging industries while eliminating outdated production capacity. The main idea of the transformation of traditional industries is to firmly grasp the new opportunities presented by the new global round of industrial technology revolution and make full use of new technologies, new processes, new formats, and new models to transform traditional industries and take the intelligent, green, and high-end road. In supporting the development of emerging industries, we must give priority to supporting the development of a number of new industries, cultivating a number of leading enterprises with international competitiveness, focus on innovation to make breakthroughs in a number of advanced technologies, key core technologies, and common basic technical difficulties that are “chokepoints,” cultivate and introduce a group of leading talents and a group of high-end skilled talents, and introduce a number of major reform-and-opening-up measures, promulgate a series of new policies that can quickly improve the business environment, such as reducing approvals, reducing license issuance, reducing monopolies, and continuing to reduce taxes and fees.
Fifth, we must strengthen science and technology (S&T) innovation and improve China’s independent innovation capabilities. We must further increase the intensity of R&D investment, and especially the investment intensity of enterprises. We must strengthen the research and development of key, core, and basic technologies, focus on industrial transformation and upgrades, urgently form a number of major technical projects, and carry out technological research. We must improve guidance mechanisms, innovation incentive mechanisms, and innovation policies. While strengthening national centralized innovation, we must support private innovation and encourage public scientific research institutions, universities, and enterprises to carry out innovation partnerships. We must improve the S&T innovation service system, support the development of S&T service institutions, such as those for R&D design, intellectual property protection, S&T achievement testing, and intermediary consulting, and create a number of public S&T service platforms in order to serve the innovation of small and medium-sized enterprises.
Sixth, we must accelerate structural reforms and adjust the relationships between the government and the market, society, enterprises, and the public. We must further relax market interventions, let the market play a decisive role in resource allocation, and give enterprises greater autonomy in market operations. We must promote the transition of the function of the government from management to governance and improve social governance.