Will China become the world’s economic center by 2030?

By Li Qiaoyi Source:Global Times Published: 2017/3/30 18:48:42

Long Yongtu Photo: CFP 


Justin Lin Yifu Photo: CFP


Illustration: Peter C. Espina/GT

Editor's Note:

At a panel discussion on Sunday at the Boao Forum for Asia Annual Conference in Boao, South China's Hainan Province, former World Bank chief economist Justin Lin Yifu (Lin) crossed swords with Long Yongtu (Long), the outspoken former chief negotiator for China's entry to the WTO, concerning two much talked about topics - whether the global economy's center of gravity will shift to China by 2030 and what the factors behind the success of Chinese telecom equipment behemoth Huawei are.

The Chinese economy's global rise

Lin: Indeed Chinese economists currently don't have much international influence. However, it is believed that the 21st century will be the century of Chinese economists, as the center of world economics has come across as shifting along with the changing center of the global economy. The world's renowned economists used to be either British or foreigners working in the UK. After World War II, the famous economists have been either Americans or foreigners working in the US, as the global economic center has shifted to the US which renders theories explaining US economic phenomena a matter of the utmost importance.

If China's economy can maintain roughly 6 percent growth under the new normal, it will become the world's largest economy by 2030. Still, China has a long way to go to catch up with other developed countries, but it's inevitable that the main center of the world's economy will relocate to China which will also be the research center of world economics. We must be confident about that and ready the economy for future opportunities. It is expected that the contribution of Chinese economic theories by then will be on par with the country's contribution presently in the fields of air conditioners, smartphones and industry sectors.

Long: You have great ambitions. China will possibly be the largest global economy by 2030, but the country won't necessarily become the global economy's center of  gravity. To become the world's economic center is not a question about quantity but about quality. If China discontinues institutional reforms of its economy, there will be no such person as an economist, for the Chinese economy falls within the framework of a huge planned economy. Under this framework, so-called economists in the country are merely professors and experts who read into planned economic policies. They are not actual economists.

Factors behind Huawei's success

Lin: China's industrial policies were behind Huawei's success. The country used to impose fairly high tariffs on imports of program controlled computers, making it possible to leave sufficient room for enterprises - which were on the threshold of importing some simple middleware components to be assembled domestically - to be profitable.

Meanwhile, the country encouraged the use of homegrown products in second- and third-tier cities. Certainly I believe another factor behind the success was that there was not an exclusion of private businesses and so long as the product quality was okay, it would be accepted in the second- and third-tier cities, be it produced by State-owned enterprises or privately run enterprises. An environment of fair access was created in the context of certain industrial policies, and then entrepreneurship came into existence, enabling the development of both private and State-owned businesses. 

Long: I asked Huawei's management why the company achieved its success. And the answer given was: The company was at that time not given a chance to do business at its home market. Domestic telecom equipment manufacturers were all State-owned, therefore China Telecom and China Mobile just purchased from State-owned telecom equipment vendors. Huawei had no choice but to go outside of the country. As such, the company began building its presence in Africa and Asia before extending its reach to Europe. The initial stage of Huawei's development was generally about its venture in overseas markets, and thus the company's pioneers had nurtured the spirit of endeavor and innovation beyond the home territory. They did it and came back to the home market with a huge success. And then some of the country's big telecom operators started procuring Huawei equipment, adding wings to the tiger.

At the beginning, nevertheless, the company was embroiled in cruel competition in the global market, pitting itself against Cisco and Ericsson. So there's still a long way to go for China to cultivate a domestic environment that allows more fair competition.

Posted in: INSIDER'S EYE

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