THE shift in global economic leadership from developed economies is the root cause of the current global turbulence, and China’s rapid economic growth has been a major driving force behind this structural change, a former Chief Economist and Senior Vice President for Development Economics at the World Bank, Yifu Lin said.
Prof Lin, who is now an Honorary Dean and Professor at the National School of Development at Peking University, was speaking at a press briefing on the topic of “China’s Medium and Long-Term Development, Stability, and the Significance of China’s Stable Growth Amid Global Uncertainties” in Beijing this week.
He provided an analysis on the reasons behind the systematic changes in the international economic landscape, the evolution of China-US competition, and the strengths and prospects of China’s economic development based on the concept of a ‘great change unseen in a century” and China’s future economic outlook.
Prof Lin pointed out that the root cause of this ‘great change unseen in a century” lies in profound changes in the global economic structure.
He compared data from 1900, 2000 and 2018, and pointed out that in the 1900, the combined economic output of the Eight Nation Alliance accounted for 50.4 per-cent of the world total.The Eight Nation Alliance was a multi-national military coalition that invaded North China in 1900 to relief the foreign legations in Beijing besieged by the popular Boxer militia determined to expunge foreign influence and government troops.The alliance consisted of Germany, Japan, Russia, Britian, France, the US, Italy and Austro-Hungary.
Prof Lin said by 2000, the combined economic output figure for the Group of Eight (G8)dropped to 47.7 per-cent, and by 2018, this proportion further declined to 34.7 per-cent.
“The global economic structure was remarkably stable throughout the 20th century. Yet, in just in the first of 18 years of the 21st century, their share declined by 13.1 per-centage points, a drop that had previously taken a full century of 2.7 per-centage points.
“Therefore, I believe the shift in global economic leadership away from developed economies is the root cause of current global turbulence and China’s rapid economic growth has been a major driving force behind this structural shift.
“Since the start of reform and opening up, China’s average annual economic growth has reached 8.9 per-cent, with per capita growth at 8 per-cent.In terms of purchasing power parity, China’s share of the global economy increased from 6.4 per-cent in 2000 to 18.8 per-cent in 2018.
“This has directly weakened the G8’s dominance over global affairs. Particularly since the 2008 financial crisis, the G8 mechanism has proven adequate, and the G20 has taken its place, marking a change in the world’s primary governance mechanism,” he stated.
On the evolving China-US competition, Prof Lin stated that commencing with the Obama administration’s “Pivot to Asia,” through Trump’s technology and trade wars, which continued under the Biden administration, the essence has remained an effort to “leverage advantages in military, technology, and finance to contain China and prevent it from gaining a stronger voice in international affairs.”
He predicted that the China-US economic confrontation will persist in the long-term, adding that whilst “Trade is mutually beneficial, but trading is mutually damaging.”
“While smaller economies tend to benefit more, large economies would bear heavy losses. Clearly if trade stops, the losses for the US would exceed those for China, especially since the US is a high income country, with its advantageous industries all in high-tech sectors. These high-tech enterprises rely on the Chinese market, without which, they cannot maintain profitability to support technological leadership.”
“Therefore economic decoupling would have a greater negative impact on the US,” Prof Lin emphasised.
Speaking of China’s economic future, Prof Lin firmly rejected the so-called “China collapse theory”, pointing out that “in the past 40 years, China has been the only major economy that has not experienced a systematic economic or financial crisis.”
“The fundamental drivers of China’s continued growth lie in technological innovation, industrial upgrading, and the formation of new productive capacity in emerging industries,” he said.
Citing the experiences of East Asian economies, he said Germany, Japan and South Korea achieved average per capita GDP growth rates of over 8 per-cent during their catchup phases – conditions that China fully possesses today.
Prof Lin added that the Fourth Industrial Revolution will present China with a critical opportunity.
“Its characteristics are centered on Artificial Intelligence, big data, and ultra-fast product and technology R&D cycles.”
He identified three major advantages for China and these are “an abundant pool of technological talent, a vast domestic market and the most complete industrial supply chain in the world.”
Prof Lin cited a case in point: “Tesla, after over a decade in the US, only achieved an annual output of around 20,000 units, But within one year of entering China, production jumped to 100,000 vehicles” which he said highlights China’s systematic strengths.”
He predicted that “If China’s per capita GDP reaches half that of the US, a new, more stable world structure may emerge, and that the emergence of a more table global structure, China’s total economic size would be twice that of the US.”
Prof Lin emphasised that Chinese style modernisation holds significance not only for its own development, but also a crucial pillar for global stability.
“At present only 16 per-cent of the global population lives in high-tech income countries. Once China achieves its modernisation goal by 2050, this figure will double, bringing the world into a new stage of equilibrium.
“We believe growth and development are the foundation and key to solving problems for both China and other countries.”
Prof Lin expressed strong confidence in China’s future, saying, “I believe maintaining growth above 5 per-cent is entirely achievable. By 2050, China’s annual contribution to global economic growth will reach 30 per-cent. China’s sustained development is not only vital to the well-being of its 1.4 billion people, but also to global economic stability and the reshaping of international governance systems.”
By DELI-SHARON OSO
In Beijing, China
Caption Prof Yifu Lin (right) speaking at the press briefing in Beijing on Monday 21 April
