The middle technology trap: China in a comparative perspective

Abstract This article examines the concept of the "middle technology trap" as a critical challenge for China in transitioning from a middle-income to a high-income economy. It argues that overcoming this trap is essential for China to achieve high-quality economic development and sustain its growth momentum. The study compares China's technological landscape with that of both developed economies and those stuck in the middle-income trap, identifying the necessity of transitioning from applied to original technology for economic leapfrogging. Through comprehensive analysis, it is highlighted that China's current technological capabilities, although leading in certain areas, predominantly remain at an intermediate level, characterized by a significant reliance on foreign core technologies and a lack of original technological innovation. The paper further explores historical contexts, policy implications, and strategic reforms required to navigate this trap, emphasizing the importance of an open policy, the cultivation of a robust innovation ecosystem, and the strategic role of government in facilitating technological progress and industrial upgrading. It draws on the experiences of developed economies and successful latecomers, advocating for a "new whole nation system" that embraces openness and global integration, rather than isolation. By analyzing the complex interplay between technology diffusion, talent migration, industrial policies, and the global geopolitical landscape, this study provides insights into the systemic reforms and strategic initiatives China must undertake. It stresses the need for a balanced approach between leveraging external technologies and fostering domestic innovation capabilities to escape the middle technology trap and secure a position as a global technology leader. The findings contribute to the broader discourse on technology-led development strategies and offer policy recommendations for economies facing similar technological and developmental challenges.