(East-West Question) Sirius·Hiratsuka: How can China and Brazil share the experience of crossing the "middle-income trap"?

　　China News Agency, Beijing, January 17th: Silior · Hiratsuka: How can China and Brazil share the experience of crossing the "middle-income trap"?

　　China News Agency reporter Zhang Wei and Wang Wanqi

　　China "has reached a historical stage of solidly promoting common prosperity", to achieve a more equitable distribution of wealth, and at the same time to continue to raise the level of national income.

Therefore, how to overcome the "middle-income trap" and become a high-income country has become a topic of concern at home and abroad.

Also as one of the "BRICS" countries, Brazil, which once created an "economic miracle" in the middle and late 20th century, has yet to become a high-income country today.

What lessons does Brazil's experience offer to China in escaping the "middle-income trap"?

Celio Hiratuka, a professor at the Institute of Economics at the State University of Campinas in Brazil and the coordinator of the Brazil China Research Group, recently accepted an exclusive interview with China News Agency "East West Question" to explain this.

China News Service: The World Bank put forward the concept of "middle-income trap" in 2007.

Today, how difficult is it for developing countries to overcome the "middle-income trap"?

Sirius Hiratsuka:

The concept of "middle income trap" expounds an inherent view in economics, that economic development depends mainly on structural changes, and is a process of transition from low productivity to high productivity.

　　In the initial stage, that is, after the transition from the primary industry to the secondary industry by using cheap labor, the next stage is more difficult to develop, which depends on the success of introducing a more technologically superior and competitive industrial system and more A service industry system that meets market demand.

This process is critical to continuing to increase productivity and national income levels.

　　The "middle-income trap" refers to the difficulties faced by countries that have reached a certain level of development and income in the transformation of their economic structure that can continue to increase their national income.

　　The reason why this transformation is difficult is that at all levels of the company and industry, human, technological and organizational links have become more difficult to optimize and break through.

It is precisely this transformation that can propel a country out of the "middle-income trap".

China News Service: Brazil has been a middle-income country since the 1970s, and its economy has developed rapidly in this century, but it has not yet ranked among the high-income countries. What is the underlying reason?

Sirius Hiratsuka:

From the 1930s to the 1980s, Brazil was one of the fastest growing countries in the world. It underwent profound structural changes, ceased to be an agricultural country, and established a diversified industrial system It also integrates important economic forces such as development banks and strategic state-owned enterprises.

Tourists visit the Capitol Building in Brasilia, capital of Brazil, in 2019.

The city of Brasilia was built between 1956 and 1960. It was planned and constructed in a new town and urban planning style. It is famous for its boldly designed buildings and rapidly growing population.

Photo by China News Agency reporter Du Yang

　　In this process, the ability of government organizations to coordinate public and private interests played a decisive role.

　　However, starting in the 1980s, the debt crisis disrupted this development model.

In a global environment that is increasingly promoting neoliberal economic policies, Brazil has also begun to "bet" in the direction of neoliberalism.

　　The problem follows. The market does not have the ability to "self-transform" when it is highly "free", and it is difficult to "automatically" realize the optimal allocation of resources.

　　In fact, it is very important to formulate long-term policies to promote employment and income growth, combined with industrial and technological policies, to overcome the "middle income trap" and achieve sustainable development.

　　To this day, Brazil has not been able to address the above-mentioned problems, while facing old problems of economic and social inequalities and new challenges of environmental sustainability.

China News Service: From Brazil's experience, how do you think China should become a high-income country?

Sirius Hiratsuka:

In general, the problem in Brazil is the stagnation of structural reforms and the failure to ensure that structural transformation benefits all people.

Poverty and inequality in Brazil's economy and society have worsened in recent years, which is an important lesson for Brazil.

Slums and beaches in Rio de Janeiro, Brazil's second largest city.

Photo by China News Agency reporter Tomita

　　Crossing the "middle-income trap" requires mobilizing the broadest range of social forces, while benefiting all people.

　　As far as China is concerned, the term "Chinese characteristics" is an expression of a model that does not simply copy the experience of Western developed countries, but insists on formulating policies that are adapted to its own actual conditions.

　　In the long run, China has always emphasized the role of technology and innovation in its development planning, not only to overcome the "middle-income trap", but also to seek sustainable growth of the entire national economy and achieve "common prosperity".

　　In my opinion, China's long-term development has three important pillars:

　　One is the continuation of structural changes and the promotion of higher productivity, which depends on technological changes and qualitative changes in the innovation structure.

　　The second is environmental sustainability, which is also closely related to technological change, such as new energy development, greener urban construction, and digital infrastructure.

　　The third is common prosperity, which means that the dividends released by the above-mentioned changes will be shared by all, and people's living conditions will be improved to varying degrees.

China News Service: From the perspective of the global situation, what are the favorable and unfavorable international factors for China and Brazil to become high-income countries?

Sirius Hiratsuka:

From a global perspective, the governments and private sectors of some countries are accelerating the control of strategically important technologies such as Industry 4.0 and the digital economy, which also accelerates the return of protectionism.

As a result, asymmetric risks between high-income countries and other countries will increase, especially for those countries that do not have the capacity to formulate long-term development strategies and are not well integrated into the global landscape.

　　As you can see from China's development plan, China clearly knows what challenges exist and, to a large extent, knows how to deal with them.

At present, China has taken a global lead in some technological competitions.

　　Brazil's strategy to meet these challenges is relatively backward.

At the same time, unlike Asian countries, Latin American countries are easily influenced by the existing models of developed countries and some multilateral institutions. These models are simple ways to solve complex problems, but factors such as the specific conditions of specific countries at specific stages of development must be considered.

　　From a favorable point of view, since the COVID-19 pandemic, global recovery needs to be achieved through the cooperation of various countries, whether it is to provide more adequate public medical products and services, or to strengthen infrastructure construction, accelerate green transformation, improve inequality, etc. , all of which are true.

This has the potential to bring about a long-term change.

In December 2021, workers refuel cars at a gas station in Sao Paulo, Brazil.

Photo by China News Agency reporter Mo Chengxiong

China News Service: In the process of becoming a high-income country, can China and Brazil learn from each other's strengths and weaknesses?

Sirius Hiratsuka:

The cooperation between China and Brazil has grown significantly in the past 20 years, with the strengthening of bilateral economic relations including trade, investment and financing, and cooperation in international forums or under the BRICS framework. .

Even so, the potential for the two countries to consolidate the comprehensive strategic partnership and go further is still great.

　　The further development of this partnership is certainly related to the diversification of Brazilian exports, the growth of Chinese productive investment in Brazil, greater production and technology spillovers, and increased investment in infrastructure.

In September 2021, the 2021 BRICS New Industrial Revolution Exhibition was held in Xiamen, Fujian, focusing on the latest achievements in the industrial field of the BRICS countries.

The picture shows the audience visiting the Embraer exhibition stand.

Photo by China News Agency reporter Zhang Bin

　　In addition, the two countries have many common interests in strategic areas such as energy, health, biodiversity, water resources, agriculture, and Industry 4.0, so it is also crucial to carry out scientific and technological cooperation in these areas.

　　It is worth mentioning that both countries have rich cultural resources, which is also an important starting point for closer relations between the two countries.

(Finish)

Interviewee Profile:

　　Celio Hiratuka is a professor at the Institute of Economics at the State University of Campinas, Brazil, and the coordinator of the Brazil China Research Group. His main research areas include relations with China, industrial development and international trade.