The year of 2011 marks the start of the implementation of China's 12th Five Year Plan. The statistics published by the World Bank in the same year showed that the per capita Gross National Income of China reached 4，270 U.S. dollars. According to the 2010 World Bank classification of 215 economies of an over-30 000 population, China has entered into the rank of upper middle- income countries.
This landmark achievement is a doubtlessly of global significance due to China’s status as the second largest economy with a population of over 1.3 billion. It is also noteworthy that such an upgrading coincided with the enduring world economic crises in the recent years that paralyzed most economies and made China once faced with “the most difficult economic situation in the 21st century” in particular. Despite other primary contributors to its success in yielding the soonest recovery, including timely-adjusted macro-policy, the institutional flexibility, resolute decision-making of the government, the huge internal impetus and the general momentum of growth are key conditions for the Chinese policy responses.
As a positive consequence of the recent crises, a record-new tendency, as represented by the proportional contribution to the global growth, is getting clearer that China and the rest emerging economies likewise are becoming the chief stimulating force of the global demand and supply. This acknowledgement is based on peoples’ deepened understanding of the world economic cycle and the fundamental causes of the current crises. Anxieties and frustrations about the uncertain prospects of developed economies intensified concerns of a quick rebalancing of the global economic order. A new round of debate is therefore unfold everywhere in the world, centered on economic reform and development in emerging economies. China, amongst all related discussions, dominates the agendas—from whether its economy is able to navigate to achieve a “soft-landing” to reforming income distribution to promote citizen purchasing power and increase its domestic demand—either as issues or solutions. After all, it is an utmost challenge for the emerging economies that their future development gravity will have to shift from exports to home consumption. How to boost per capita income of their average nationals is no longer a matter of consequence, but a prerequisite of continued growth.
According to theory of development economics, “the increase of domestic demand is related to economic restructuring, to the adjustment of income structure and to the increase of citizen income level”. To resist external impacts from global economic fluctuations and overcome uncertainties in the post-crisis period, emerging economies need to continuously optimize their economic structures, accelerate technical renovations and industrial upgrading, and to highlight per capita production value as well as per capita income. Only by this way could they become new but full-fledged growth poles in the world economy. At the 11th National People's Congress held in March 2012, Chinese Premier Wen Jiabao listed nine major tasks for 2012 in his Work Report, stressing the government’s determination on accelerating the transformation of the nation’s development. To the Chinese leadership, to expand domestic demand is firmly upheld as a key policy parameter to ensure future growth and even as one of the final critera of the nation’s modernity. It is also on such purpose that next China has to advance reforms of its fiscal and taxation system, of the income distribution system, of the system of applied scinces, education and talent promotion, and the reform of the government functions.
Since 2011, the editorial board and the author group of the Annual Report on Latin America and the Caribbean has consecutively undertaken the “middle income trap” phenomena as the book’s cover theme. Following the special analysis of “Chile: To Run Out of Middle Income Trap as the First in South America” in 2011, the 2012 edition presents a further and comprehensive report entitled “Research on ‘Middle Income Trap’ in Latin America and Caribbean: the Analytical Framework of Total Factor Productivity”. By examining the long-term income levels in the target region, the editors and authors assume that behind the failure of majority LAC economies to exceed the middle income phase there must exist complex lessons to that China should be alarmed and pay a timely attention.