China, global value chains, and the middle-income trap

Whether China can avoid the middle-income trap has been the subject of extensive research. Currently classified as an upper middle-income country, China increasingly exhibits similar characteristics as countries currently experiencing the middle-income trap. However, using evidence from China’s coas...

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Published inBusiness and politics pp. 1 - 19
Main Authors Murphree, Michael, Breznitz, Dan
Format Journal Article
LanguageEnglish
Published 06.01.2025
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Abstract Whether China can avoid the middle-income trap has been the subject of extensive research. Currently classified as an upper middle-income country, China increasingly exhibits similar characteristics as countries currently experiencing the middle-income trap. However, using evidence from China’s coastal manufacturing city of Dongguan, this article shows how China’s approach to global value chain (GVC) participation created conditions for avoiding the middle-income trap: 1) agglomeration and manufacturing scale at multiple stages of production, 2) a mix of foreign and domestic enterprises, 3) participation in GVCs for multiple industries, 4) development of domestic demand, and 5) continuously reconfiguring government industrial policies. With these characteristics, China’s economy is likely to continue to grow, suggesting that GVC participation can facilitate a path around the middle-income trap.
AbstractList Whether China can avoid the middle-income trap has been the subject of extensive research. Currently classified as an upper middle-income country, China increasingly exhibits similar characteristics as countries currently experiencing the middle-income trap. However, using evidence from China’s coastal manufacturing city of Dongguan, this article shows how China’s approach to global value chain (GVC) participation created conditions for avoiding the middle-income trap: 1) agglomeration and manufacturing scale at multiple stages of production, 2) a mix of foreign and domestic enterprises, 3) participation in GVCs for multiple industries, 4) development of domestic demand, and 5) continuously reconfiguring government industrial policies. With these characteristics, China’s economy is likely to continue to grow, suggesting that GVC participation can facilitate a path around the middle-income trap.
Author Murphree, Michael
Breznitz, Dan
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