Chinese Communist Party boss Xi Jinping has a problem, and the answer is — MORE COWBELL! I’m kidding, of course, except for the fundamental truth behind my silly Saturday Night Live gag. Since economic liberalization began under Deng Xiaoping in the 1980s, the answer to China’s economic questions — like Christopher Walken in the famous SNL sketch — has always been the same: MORE EXPORTS.
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But exports are about to hit a wall.
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Without getting too technical, China desperately needs to escape what economists call the Middle Income Trap. That’s when a Third World (or even Second World) economy comes this close to making the move from poverty to enjoying a middle-level income, then to joining the wealthy nations of the world.
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