BOAO, Hainan, March 27 (Xinhua) -- Despite entering a "new normal" era of growth, Jeffrey Sachs, director of the Earth Institute at Columbia University, is upbeat that China will not get stuck in the middle income trap.
According to calculations based on a purchasing power model in relationship with the U.S. as a reference, the new normal growth rate is 6.5 percent to 7 percent, thus, China's current growth rate of 7 percent is within this range, Sachs said at the Boao Forum for Asia (BFA) Annual Conference 2015 held in Boao in south China's Hainan province, on Friday.
China's per capita income is currently about one quarter of the U.S., when it reaches half this level, its growth rate is likely to drop to a lower new normal, Sachs noted.
"You need to make breakthroughs in innovation-based economy, which is not simply using technology from outside," Sachs said, adding that the transition was as much dependent on structural transition to quality growth.
"Don't expect 7 percent growth to be permanent. This is gradually decreasing," the professor said, adding that other countries that had not been able to maintain such a growth level have been caught in the middle income trap
"It's possible for a country to get stuck, and this is where I am an optimist because China has 2000 years of technological innovation. This is a place that can absolutely lead global science for the coming century. So I don't see any reason to for it get stuck," Sachs said.
China's economic growth has entered a "new normal" of slower growth, with the economy expanding by 7.4 percent last year and the government setting a more modest target of around 7 percent for 2015, resulting in a wave of pessimistic forecasts.