The transition from middle-income to high-income stage is fraught with risks of growth divergence.Economic transition is clouded by the following possibilities:(1) falling share of industrial sector through industrial depression and weakening growth momentum caused by the large urbanization costs;(2) the subordination of service sector as a result of nearly irreversibly industrial professional,which falters the process of service sector transition and upgrading;(3) inefficient knowledge production allocation and human capital upgrade due to the absence of incentivized compensation of knowledge consumption.We suggest that a country should reshape its efficiency model by upgrading knowledge factor and human capital as the pre-requisite.Given the dilemmas of transition,China should take the factorization trend of service sector and reshape efficiency model through institutional reform,ensuring that service sector will develop in tandem with industrial sector.
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