Justin Lin Yifu: 'China is big enough to face the challenge of tariffs'
Justin Lin Yifu is the theorist of New structural economics, esteemed former number two at the World Bank, top advisor to the Beijing government
3' min read
3' min read
Taiwanese by birth, New structural economics theorist, esteemed former number two at the World Bank, top advisor to the Beijing government. Justin Lin Yifu is the star of the Asian financial forum organised by the Hong Kong government and the Hong Kong Trade Development Council on the topic of the New Growth Engine.
Professor, you have your finger on the pulse of the Chinese economy. As Donald Trump's threat of tariffs approaches, what are the risks for the economy and, in particular, for Chinese exports?
China is a great economy that can seize opportunities and has all the capabilities to do so. The US president's imposition of tariffs on Chinese goods is not good for the United States. China is big enough to face any challenge. One has to remember that it still contributes 30% to the global GDP. There are difficulties everywhere in the world, but our conditions in Mainland China and Hong Kong are still the best, we should have confidence.
Beijing has recently adopted major changes to trigger a new growth engine.
Of course, among the most important decisions is the monetary policy changed to 'moderately accommodative'. combined with a more proactive fiscal policy. Faced with the pressure of the economic crisis, China must make good use of the policy space at its disposal. And in these two areas it has plenty of it. In the past year, while other countries resorted to quantitative easing, we were cautious. We have an active fiscal policy, but the Chinese government's debt ratio is more than 60-70% of GDP, one of the lowest levels in the world. So as the economy moves through the business cycle, we will take a combined approach.
What can be done to boost domestic consumption, which, as we know, remains a problem for China's shifting economic structure?
Current measures to support consumption, such as exchanging old products for new ones and turning them into products such as mobile phones, smart electronic bracelets, and household appliances, will help stimulate consumption, but only in the short term. In the long term, we must emphasise both investment and pricing. In the long run, if the economy is to develop well, it must be based on improved productivity, technological innovation and continuous industrial modernisation. If the level of productivity continues to improve, employment, income and consumption will increase. When stimulating growth through investment, it is necessary to make good use of resources to support economic growth. In the past, production capacity has not been utilised properly.
What future do you see for the overseas expansion of the Chinese economy?
When China's GDP per capita reaches $13,000, some domestic companies will inevitably go global. This level of GDP will also be beneficial in helping other countries to develop their manufacturing industries, to exploit their added value to enter even non-traditional international markets other than their current ones.
