Top economist: China can grow for long time

Updated: 2015-01-08 07:14

By Amy He(China Daily USA)

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Chinese economist Justin Lin, discounting the naysayers, believes China can maintain strong economic growth for another decade or more.

"It's not only in the coming one or two years," Lin said Wednesday in New York. "I think that there's an opportunity for China to maintain this kind of robust growth rate continuously for another 10 or 15 years."

Despite pessimism from experts that China is headed for an economic downturn and may be unable to meet its growth targets, Lin said that the deceleration is a natural course for a developing country, one that has matured only in the last few decades.

Top economist: China can grow for long time

Justin Lin, professor and honorary dean at the National School of Development at Peking University

"The downward pressure is still very heavy," Lin said at the National Committee on US-China Relations' annual China forecast forum at the New York Stock Exchange. "Under this kind of situation, people think that this is the first time that China has experienced a long period of deceleration in growth rate, leading them to think that this is caused by structural internal problems, and that those problems are hard to deal with.

"Certainly, China is a transition economy," said Lin, 62, a former chief economist at the World Bank. "There are many structural problems in China. But I argue that the main reason for the deceleration is not due to internal structural problems but external and cyclical problems."

Other emerging economies - Brazil and India, for example - are in similar economic development phases now and have sustained periods of deceleration as well, sharper than those of China's, Lin said..

Lin said that much of what China faces in the coming years will depend on the financial situation in developed countries, such as the United States, those in the eurozone, and Japan.

A hit to those three regions and a slow recovery means that export-led economies like China's will continue to see slowing growth.

That is not to say that China's problems are unique or due to internal issues, he said.

Critics of the Chinese economy also point to the government's prioritizing investment-led growth instead of consumption-led growth, but Lin called those criticisms unfounded and said China's consumption rate is "robust".

"If you look at the reality, consumption in China has always been very robust in the past 36 years," he said. "On the average, it's about 8 percent per year, and even in the last two, three years, consumption was about 8 or 9 percent."

The rise of the middle class in China has led to strong consumption of goods and services in recent years, though experts have cautioned that after dramatic acceleration in the last decade, the middle class will temper consumption in the coming years.

"Overall, the momentum of their wealth generation will slow dramatically after a decade of remarkable acceleration," said a 2015 forecast from consulting firm McKinsey & Co.

"China is a developing country, and we know that for developing countries and developed countries, if you want to have sustained growth for a long period of time, you need to have a continuous stream of technological innovation and also in industrial upgrading," Lin said.

"That is the only way to have sustainable long-term growth."