Abstract: The unique technological progress process of the underdeveloped countries is the starting point of analyzing the middle-income trap. In this paper, the process is divided into three stages: the transfer technology progress stage, the alternative technology progress stage and the innovative technology progress stage. The main reason for the middle-income trap is the change of technological progress mode and demand scale in the process of transition from the first stage to the second stage, and the size of domestic demand limits the difficulty of crossing the middle-income trap. The larger the scale of domestic demand, the lower the difficulty of spanning. At the same time, this paper uses the annual panel data of 28 industries in China from 2011 to 2017 to establish a fixed effect model to test the theoretical analysis results. The results conform to the hypothesis: the larger the demand scale is, the more independent research and development results are.