be a great literary device, but it makes little sense in a dynamic global economy. Since early research on the middle-income trap was published in 2012, the world economy
has grown by about 25 percent－presumably boosting the moving target of a middle-income threshold by a comparable magnitude over t
hat period. Largely for that reason, recent research has couched the trap not in terms of an absolute threshold, but as relative convergence to high-income cou
ntries. From this perspective, danger looms when developing economies’ per capita income approaches 20-30 percent of the level in high-income economies. Giv
en that China will hit about 30 percent of the United States’ per capita GDP (in PPP terms) in 2019, it must be time to worry!
Slowing growth not as alarming as feared
Third, not all growth slowdowns are alike. A country’s GDP is a broad aggregation of a multiplicity of activities across sectors, busin
esses and products. Structural shifts from one sector to another can give the appearance of a growth discontinuity that may be nothing mo
re than the outcome of a deliberate rebalancing strategy. This is very much the case with China today, given its shift from
higher-growth manufacturing and other “secondary” industries to slower-growing services, or “tertiary” industries. To the extent
that this shift is the intended result of China’s strategic rebalancing, a slowdown in growth is far less alarming.