Review of Open Lecture with Justin Yifu Lin
Demystifying the Chinese Economy
Justin Yifu Lin, World Bank Chief Economist and Senior Vice President, Development Economics
On November 11, 2011, Justin Yifu Lin started his lecture by pointing out the rapid growth of the Chinese economy, since the reforms in 1979. For the last 32 years China’s GDP growth rate averaged 9.9%. This incredible development makes the country the largest manufacturer in the world and raises questions for Lin:
- Why was this development possible?
- Why was it impossible before the reforms in 1979?
- Of many ex-socialist countries in transformation why did only China
show such a rapid development?
- What are the costs that China pays for this economic development?
- Is the average growth rate of 9.9% sustainable?
- Will other developing countries have a chance to grow like China?
In his lecture Justin Yifu Lin then explored these questions explaining first that China was able to adopt innovations and mature technologies invented by other countries, therefore accelerating its technological development. Secondly, the Chinese economy before 1979 – similar to other socialist countries – was characterized by capital-intensive industries, which received government subsidies and protection. With the reforms, China started to follow a “dual-track strategy” liberalizing labor-intensive sectors in which the country had a competitive advantage while retaining subsidies for “old,” less viable sectors in order to maintain social stability. Lin also discussed imbalances within the Chinese economy such as income disparities, imbalances between investment and consumption as well as trade imbalances. He was positive about China’s further transition from the “dual-track strategy” towards a single market track while coping with imbalances. Lin concluded in saying that other countries should be able to achieve similar and sustainable growth rates when following a similar strategy like China.
Moderated by Tagesspiegel editor Harald Schumann the ESMT Open Lecture finished with an insightful Q&A session with the audience on topics including the ageing Chinese society, environmental pollution, challenges for urban infrastructures as well as for China’s political system.
About Justin Yifu Lin
Justin Yifu Lin is the Chief Economist and Senior Vice President of the World Bank, a position he has held since June 2008. In his current position, Mr. Lin guides the Bank’s intellectual leadership and plays a key role in shaping the economic research agenda of the institution.
Prior to joining the Bank, Mr. Lin served for 15 years as Founding Director and Professor of the China Centre for Economic Research (CCER) at Peking University.
Mr. Lin received his PhD in economics from the University of Chicago in 1986 and is the author of 18 books, including The China Miracle: Development Strategy and Economic Reform and Economic Development and Transition: Thought, Strategy, and Viability. He has published more than 100 articles in refereed international journals and collected volumes on history, development, and transition. In 2007, he gave the Marshall Lectures at Cambridge; and in 2011, the Simon Kuznets Lecture at Yale and the UNU Wider Annual Lecture in Mozambique, the first ever to be held in a developing country.