Faced with the drastic changes in the global economy due to the Sino-US wrestling and the Russian-Ukrainian conflict, Justin Yifu Lin, Dean of the Institute of New Structural Economics at Peking University, believes that China’s best strategy is to maintain a dynamic economic development and an open attitude.
According to internal media reports, Lin Yifu pointed out when attending the 2022 Tsinghua PBC Chief Economist Forum on May 14 that the world is undergoing tremendous changes, and the economic landscape has undergone tremendous changes. On the one hand, the growth rate of major countries has declined, and on the other hand, China The rapid rise of emerging market economies. Due to the changes in the global territory, the biggest loser is the United States. For example, in 2014, China surpassed the United States in terms of purchasing power parity to become the world’s largest economy. Because of these changes, the United States has tried every means to maintain domestic economic output and contain China’s development.
Justin Yifu Lin pointed out that China is currently catching up with great strides and has the advantage of being a latecomer. China’s current technology penetration rate is similar to Germany in the 1940s, Japan in the 1950s, and South Korea in the 1980s. The economic growth rate of this latter model is 8% to 9%. For China, there is an annual economic growth potential of 8%. At the same time, China has a very large domestic market, a high share of the international economy, and a good political environment to ensure stable economic growth. He believes that China should leverage these advantages to maintain dynamic economic growth.
Second, I hope to keep an open attitude and become a promoter of globalization.
Justin Yifu Lin said that China is the largest economy in the world in terms of purchasing power parity, with a potential growth rate of 8%. If China can maintain such a high growth rate, it will continue to contribute to the development of the global economy. China is also the world’s largest trading country, the largest trading partner of more than 120 countries and regions, and the second largest trading partner of more than 70 countries and regions. In the context of a globalized economy, trade is a “win-win situation of 1+1>2”.
Lin Yifu said that if it can “maintain dynamic economic development” and “open reform attitude”, China’s growth will be a development opportunity for other countries, and it can also dismantle the United States’ attempt to decouple from China. He predicts that China’s population is four times that of the United States, and its per capita GDP will account for 50% of that of the United States in the future. Therefore, “one day it will be twice the total economic output of the United States. At that time, the United States will have to make a balance and choice. We must do trade with China, and we must maintain good relations with China. Only by dealing with China can we ensure that it is beneficial to the country and maintain normal economic relations. The new global order established in this way is a new order of stability and peace.”
In addition to Justin Lin, the forum also included Guan Tao, former director of the Balance of Payments Department of the State Administration of Foreign Exchange, and Liu Shijin, deputy director of the Economic Committee of the Chinese National Committee of the Chinese People’s Political Consultative Conference.
Guan Tao said that the mainland economy is currently facing three major challenges: “epidemic prevention and control”, “the interest rate tightening by the US Federal Reserve”, and “the impact of the Russian-Ukrainian conflict”. He emphasized that China’s economy is large, with ample policy space and room for manoeuvre, and it has sufficient confidence, ability and conditions to meet challenges. At present, the main problem is not whether the monetary policy is loose or not, but the impact of the spread of the epidemic and the lack of effective market demand. Therefore, For China, the key is to do its own thing well, stabilize the macro economy, and maintain the global leading position in epidemic prevention and control and economic recovery.
Liu Shijin mentioned that “as long as the country is liberalized and allowed to compete, Chinese companies are not bad at all.” For example, in the auto industry, Tesla has formed an industrial chain after setting up a factory in the mainland, and new energy vehicles in the mainland can coexist. Some are not even worse than Tesla. He emphasized that green new energy technology should be opened up, and international trade, investment and technology transfer will be more active after opening up. At the same time, developed countries have more financial and technological support than developing countries in the field of green innovation, which will also contribute to global development. have a more positive impact.