China can draw lessons from LatAm in efforts to avoid middle-income trap: experts

China can draw lessons from Latin American countries in its efforts to avoid the middle-income trap, Chinese experts on Latin American affairs said.

The World Bank classifies economies as low, middle or high income. Middle-income nations are those with a per capita gross national income between 1,036 and 12,615 U.S. dollars in 2012. China's per capita gross national income stood at 7476 dollars in 2011, according to China's official statistics.

Latin America and the Caribbean have 28 middle-income countries among a total of 33, four of which belong to the high-income category. Only Haiti is a low-income economy.

Rising labor costs, a lack of technological innovation, social inequality and dependency on foreign demands have all hindered Latin American countries' efforts to rise from middle-income to high-income countries.

The middle-income trap happens when a country's economic growth slowly stabilizes and eventually becomes stagnant. World Bank data shows that only 13 out of 101 countries that became middle-income nations in the 1960s have ever escaped it.

The 2016-2020 period covered by China's 13th five-year plan is considered key to bringing the world's second largest economy into the category of high-income countries.

The Chinese economy and the Latin American economy have many similarities, especially in terms of growth models and vulnerable exports, but the Chinese economy is more diverse, said Wang Ping, director of the Latin American Research Center at Nankai University in north China's Tianjin city.

The transformation of China's economic growth model and the increase of internal demand are two measures that Beijing has taken to avoid falling into the middle-income trap, Wang told Xinhua.

Brazil experienced an average GDP growth of 5 percent between 2003 and 2011, which is a "miracle" brought about by high prices of raw materials in international markets and the rise in internal consumption by the middle class, according to Sun Yanfeng, deputy director of the Institute of Latin American Studies at China's Contemporary International Relations Institute.

However, Sun said Brazil failed to become a developed nation due to "delayed fiscal reforms, cumbersome bureaucracy and a lack of technological innovation." All these factors hampered economic growth.

China's 2015 Central Economic Work Conference, held last December in Beijing, called on the country to improve adaptability and flexibility across all sectors and focus on improving the Total Factor Productivity, a measurement that stresses more on technological progress and innovation.

"Reforms that aim to improve the economy's total growth potential instead of focusing on investments, are precisely what China needs to avoid the middle-income trap," said Qi Chuanjun, a researcher at the Latin American Studies Institute of the Chinese Academy of Social Sciences.

He said that targeted investments can take a low-income country to a middle-income one, but broader reforms are needed to stimulate the innovation and efficiency needed to take the next step.

Qi said China can learn from Chile, the first Latin American country to escape the middle-income trap. Chile has managed to maintain sustainable development by reducing trade protectionism, reforming state-owned enterprises and giving the market a larger role in the allocation of resources, Qi noted. Endi