Looking forward, it is crucial for China to further open its markets to avoid the middle-income trap and join the ranks of high-income countries in the coming decades. Reforms to state-owned enterprises and financial markets are among the most concerned for private capital and foreign investors. Protections for both the intellectual property rights and domestic private property should be strengthened. Since significant differences in market structure and institutional mechanisms still exist between China and the advanced economies, it is important for China to follow international market rules and practices as it further opens up its domestic market and expands into markets abroad.
Greater urbanization and the accumulation of human capital cannot be accomplished separately. Population quality and population agglomeration are both essential to developing countries in that they contribute to learning by doing and innovation. Urbanization is the migration of rural people to cities and is endogenously determined by economic transition and development. Therefore, although there are barriers to and costs associated with migration, migration boosts human capital accumulation and provides the seedbed for the agglomeration effects of information and knowledge to take shape during the process of urbanization.
In the process of catching up, China should improve internal mobility in order to coordinate the relationship between the process of urbanization and human capital accumulation. In the short run, measures should be taken to improve the system for educating migrant workers' children in the city. In the medium to long term, the government should strive to reduce the income gap between urban and rural areas, which in turn will promote the movement and reallocation of educational resources across provinces and between cities and rural areas.
Source: China Daily
