Since the end of the World War II, nearly 200 countries have fallen into the "middle-income trap" - that is, an economic situation where developing countries attain a certain measure of wealth but then fail to become truly prosperous nations as rising incomes make their exports uncompetitive in the world market - primarily because of flawed economic growth strategies that do not place enough emphasis on the role of technology.
For China to avoid this trap, it must create conditions which allow its economy to develop its traditional advantages, such as its inexpensive labor force and the low cost of doing business in the country, while also working to create advanced industries and phasing out older technology.
But promoting industrial upgrading and innovation may require more than just the market. The government should offer assistance to specific industries with bright futures but limited resources.
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