Demistifying the Chinese Economy
Professor Justin Yifu Lin was the host of the « Fondation pour les Etudes et Recherches sur le Développement International » and the « Fondation Prospective et Innovation », in Paris, on September 30, 2013. Professor Lin is the founder of the China Center for Economic Research (CCER) at the University of Beijing and a former Senior Vice President and Chief Economist at the World Bank.
His presentation was an updated overview of the book “Demystifying the Chinese Economy” he published in 2011(Cambridge University Press).
Before the eighteenth century, China was the largest and one the most advanced economy in the world. Yet the scientific and industrial revolution bypassed China, mainly because its cultural backbone, based on a collective experience approach, which was not adapted with the emerging western experiment based approach. As a result China became one of the poorest economy in the nineteenth century. Despite of many efforts China could not reverse its fate and start rejuvenating until it introduced major market-oriented reforms in 1979. China has since become the most dynamic economy in the world with an average growth, in GDP, of 9.8% over the last 30 years. This time China did not miss the technological changes and has massively tapped into all the recent innovations which have considerably supported its impressive growth.
Professor Lin explained why China, both from a historical and economical aspect was a leading country in pre-modern time and how, in the early 90’s, it went through a pragmatic approach based on a transitioning model which allowed the country to gradually catch up with high income countries. He also shared his insights on the future of China, in particular, on the utmost importance of further reforms and the need of progressive removal of current government subsidies to certain parts of the economy. Based on a thorough economic analysis, comparatives studies with Japan, South Korea and Singapore, personal reflection on current policy debates, Professor Lin indicated that, in his view, the Chinese economy has still the ability to continue a dynamic growth of 8% for the next 20 years. But he stated that this potential growth can only be achieved if the new people in power are able: – to conduct the appropriate needed reforms to complete the ongoing transition into a well-functioning, advances market economy, – to reduce the outraging income disparities between Chinese citizens, – to control the corruptive misbehavior of some influential stakeholders. He concluded in saying that he was very confident that China could become the world leading economy in a foreseeable future.
Author : Jean-Claude MULLER, Special Advisor,Innovation & International Relationship (I&IR)
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