Chinese Economy off to Fresh Start in 2022
Feb 10-2022
China should still firmly adhere to the principle that development was the basis for and key to solving all sorts of issues, said Prof. Justin Lin Yifu in a recent forum, adding that the country should get efficient market and effective government into concurrent play and rely on its comparative advantages to capture opportunities to ‘switch lanes and overtake’.
Honorary Dean of the NSD and Dean of two other schools at PKU, Prof. Lin has recently published two books on the prospect and development of the Chinese economy. He enjoys high acclaims for pioneering work in new structural economics.
Prof. Lin started his speech by underlining the historic context for discussing the Chinese economy at the moment: 2022 would mark the first year of China’s advancement towards its second centenary goal and the holding of the 20th CCP National Congress. Last year, China had achieved its first centenary goal by completing the building of a moderately prosperous society in all respects.
Prof. Lin believed that the Chinese economy would face an external environment full of challenges in 2022 and a fairly long period into the future. As the pandemic drew to an end, developed countries might resume normal production, which could mean weakening demand for Chinese export. More alarmingly, the US had since 2014 been bent on containing China’s development on scientific, military and ideological fronts. It had gone so far as to build so-called democratic alliances to interfere in trade relationships between China and some countries. China must, said Prof Lin, be mentally ready to ‘fight a long-term war’.
The second viewpoint of Prof. Lin was that maintaining a relatively high economic growth was tantamount to a political need and critical to shaping the overall situations. The new development pattern, featuring dual-circulation, was now being implemented to cope with the once-in-a-century tectonic shifts on the global stage. Prof. Lin argued that the tectonic shifts wouldn’t come to an end until China’s average GDP reached half that of the US; only then would the Chinese economy and market be large enough to convince the US and some other countries to embrace partnerships with China. The goal could be reached in 2049 – the landmark year for the country’s second centenary goal – should the Chinese economy grow at 4.5% annually up to then.
To fully tap its growth potential, Prof. Lin advised China to take advantage of comparative development, particularly for driving innovations. Based on the economic journey that Germany, Japan and South Korea had traversed, Prof. Lin calculated that the Chinese economy could potentially grow by 8% up to 2035 and pull off an actual growth rate of about 6% if it managed to harness the new economy. To unleash its comparative advantages, China must build an efficient market to enable enterprises to make decisions based on price signals; at the same time, it must rely on an effective government to overcome market deficiencies and improve the market through infrastructure construction and institutional arrangements, said Prof. Lin.
