As long as we maintain our composure, make good use of our advantages, and insist on reform and opening up, no matter how bad the external conditions are, China's giant ship can still ride the wind and waves.
- Text by Lin Yifu
/Ba Jiuling
Internationally, there is such a "magic curse":
When a country's GDP reaches 60% of that of the United States, the most powerful country in the world will be in the "U.S. Driven by the value of supremacy, he kills challengers.
In the 1980s, Japan gradually became stronger, and its GDP once reached 60% of that of the United States. Subsequently, the United States launched a series of sanctions and suppression measures against Japan. Today, Japan's GDP is only 24.3% of that of the United States. The Soviet Union and the United States had been at odds for decades, but they eventually ended up being forced to disintegrate.
As the world's second largest economy, China's GDP has reached 71.8% of that of the United States. The relationship between China and the United States has also added competition and confrontation on the basis of cooperation.
Can China resist US repression? Where will China's economy go? Lin Yifu, the Kinmen company commander who was born in Taiwan, China, and studied under Nobel Prize winner Schultz, who crossed the Taiwan Strait alone, gave his own views.
As the first returnee with a Ph.D. in economics to return to China after the reform and opening up, Lin Yifu has long been a highly relied upon "Zhongnanhai economic think tank." He is based on China's national conditions and has unique insights into Chinese phenomena. He also served as the chief economist of the World Bank and has an international perspective. In his new book "On China's Economy" , we can stand from his perspective and understand the current situation of China's economy in detail. We can also use Professor Lin's wisdom to get a glimpse of the future of China's economy.
01. China’s confidence
Why can China become the world’s second largest economy and is expected to surpass the United States in 2030 and become the country with the highest economic aggregate? In the author’s opinion, China’s confidence mainly lies in the following aspects.
◎ The first one is open economy . Since 1978, China has begun to open its eyes to the world. It has implemented the household responsibility system in agriculture to liberate farmers' enthusiasm. It has also established special economic zones on the southeast coast to re-establish economic and trade ties with foreign countries.
◎ The second one is that the macro is relatively stable. In the 1980s and 1990s, many developing countries, including China, were transforming into market economies . However, their transformation was greatly affected by "neoliberalism". This kind of development at that time Mainstream thinking advocates privatization, marketization and liberalization.
However, almost all countries that followed this transformation strategy, led by the Soviet Union, encountered setbacks. Because "neoliberalism" neglected to subsidize and protect capital-intensive, technologically advanced heavy industries without government intervention and support, these enterprises quickly suffered defeat in the fierce market competition.
But China is different. During the transformation, we implemented a "dual-track progressive transformation" strategy. We provided subsidies and protection to traditional heavy industries such as steel and automobiles and some enterprises that lacked viability, thereby maintaining social stability. As for some labor-intensive industries such as clothing and private enterprises, China has upheld an open attitude and given private entrepreneurs the opportunity to pursue personal wealth and value.
Therefore, although in the eyes of Western economic thought, dual-track system is a deviant strategy, it has unexpectedly allowed China to steadily pass the transformation threshold. Outside of China, Vietnam , Mauritius , etc. It is precisely through this dual-track system that the country has successfully transformed.
From continuous exploration of concepts and systems to overall leadership, it is the confidence for China's economic development.
02. China’s Challenges
What threats is China’s economy facing? In the author's opinion, China's economy is facing two major challenges: the COVID-19 epidemic and Sino-US trade friction.
◎ The first biggest challenge is the new coronavirus pneumonia epidemic.Beginning in January 2020, the COVID-19 epidemic broke out. Production and work were suspended across the country, consumption dropped, and the economy came to a halt. Although the government has quickly controlled the spread of the epidemic and the economy has recovered quickly, the emergence of high-threat mutant viruses such as delta and unpredictable epidemic control measures will bring greater uncertainty to the normal operation of China's economy. sex.
◎ The second biggest challenge is Sino-US friction. During the Trump period, the United States tried to alleviate the Sino-US trade deficit by imposing additional tariffs on Chinese products. As the Biden administration announced the "Strategic Competition Act of 2021," the United States continues to impose tariffs on China's technology Sanctions and suppression in various fields have become an indisputable fact.
We must see that the United States is still the country with the most advanced technology and the most powerful military in the world. When it continues to suppress China under the strategy of "U.S. interests first", China-U.S. relations will inevitably face great challenges. Uncertainty. In the future, China's economy will inevitably continue to develop under the dual background of the epidemic and Sino-US friction.
03. Response and development
So, how should China resolve these challenges?
In the view of Professor Lin Yifu, the most important thing for to solve problems is to maintain concentration, continue to deepen reform, expand opening up, and do our own thing well.
Until 2030, China still has an annual growth potential of 8% and can achieve an annual growth of 5% to 6%. If it can achieve this goal, China will surpass the United States and become the world's largest economy. According to the vision of the 19th National Congress of the Communist Party of China, China will become a powerful modern socialist country in 2050, and its per capita GDP will reach 50% of that of the United States. By then, the United States will be "convinced."
Why do you say this? In 2010, the scale of China's economy surpassed Japan's. The Japanese rightists felt very uncomfortable and began to create the Diaoyu Islands incident. Sino-Japanese relations became tense. However, with the vigorous development of China's economy, China's GDP reached 2.8 times that of Japan, and Sino-Japanese relations have eased. , Therefore, only by immersing yourself in development and doing your own thing well can you solve the problem.
In addition, China's current per capita GDP is just over 10,000 US dollars, which is still far behind the United States' 62,000 US dollars and Europe's 40,000 US dollars. These gaps mean that we still have huge room for technological innovation and industrial upgrading. We can still catch up by absorbing advanced foreign technology and experience and giving full play to the advantages of "latecomers".
Moreover, China has a large market of 1.4 billion people, and there are many available policies and means. Under the harsh external environment, as long as we deepen reforms and expand opening up, especially in accordance with the new development concept and the domestic cycle as the development By promoting the dual cycle of domestic and international and , we can achieve steady growth during the "14th Five-Year Plan" period based on institutional advantages.
From a macro perspective, the Chinese government's debt accounts for less than 60% of GDP, while the debt of developed countries generally exceeds 100%. This means that my country's fiscal policy has more room for utilization, which is enough to support the government's implementation A series of policies to help economic development, such as tax cuts and fee reductions, and financial support.
More importantly, in the fields of intelligent manufacturing, 5G technology, artificial intelligence, etc., China and developed countries are on the same starting line. If we make a breakthrough in technology, we will soon be able to take advantage of the domestic market and develop scale. economy, thereby promoting economic development and narrowing the distance between developed countries.
In the author’s opinion, as long as we maintain our composure, make good use of our advantages, and persist in reform and opening up, no matter how bad the external conditions are, China’s giant ship can still ride the wind and waves.
04. Postscript · New Structural Economics
Have you ever thought about the question why economics masters have been born in European and American countries before, but never appeared in China? In the author's opinion, when Britain led the industrial revolution , British economists explained the British economic phenomenon better, so there were many masters. When the United States became the center of the world, American economists also began to rise.Nowadays, the world's economic center is gradually shifting to China, but old economic theories alone cannot perfectly explain the new economic phenomena occurring in China.
Therefore, the author believes that it is necessary to use China's path to lead the theoretical trend of world economics. In the book, Professor Lin Yifu once again elaborates on his "new structural economics", answering questions such as what new structural economics is, how to use it to study the Chinese economy, and how to conduct research.
At a time when "learning from the West" cannot provide more useful guidance for China's development, China should break out of the cage and find its own set of economic theories. Therefore, if you want to have a deeper understanding of the logic behind China's economic phenomena, it is highly recommended that you read "On the Chinese Economy" by Professor Lin Yifu.
This is an era that belongs to China. This is an era that requires Chinese theory .
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