Professor Justin Lin Yifu Photo: Liu Yang/GT

“I am fully confident that China will achieve the economic target [set out in this year's Government Work Report]... Moreover, during the 15th Five-Year Plan period (2026-30), China’s potential annual growth rate could still be 8 percent,” Justin Lin Yifu, dean of the Institute of New Structural Economics at Peking University, said during a salon discussion held by the China Public Diplomacy Association on China’s economic development on Monday.

China targets an economic growth of 4.5 percent to 5 percent this year and will strive for better in practice, according to this year’s Government Work Report. During the salon discussion, Lin expressed his confidence for the country to achieve the target, noting China enjoys several advantages in driving economic growth and fostering new productive forces.

First, China’s current per capita GDP is around $14,000, and there is still a gap compared with developed countries, which typically have per capita GDP of $40,000 to even $60,000. This gap reflects the overall difference in productivity levels. “The vast majority of China’s industries are still in the catch-up phase, and being in a catch-up phase brings the advantage of a ‘latecomer,’” Lin noted.

According to Lin, from historical experience, China’s current catch-up stage is roughly comparable to Germany’s in the 1940s–1950s, Japan’s in the mid-1950s to 1960s, and South Korea’s in the mid-1980s to early 1990s. During their respective catch-up phases, all these countries sustained per capita GDP growth of 8 percent or higher annually for more than a decade. Therefore, judging from both growth potential and the “latecomer advantage” in catching up, China should still have a growth potential of 8 percent per year, Lin said.

Second, compared with Germany, Japan, and South Korea at that time, China has one major advantage that they did not have: the opportunities brought by the fourth industrial revolution, Lin said, noting that in this revolution, China is not only starting from the same line as other countries, but also enjoys four distinct advantages when seizing these opportunities.

First, China enjoys a clear advantage in talent. Capturing the fourth industrial revolution depends critically on talent in science, technology, engineering, and mathematics (STEM). China produces approximately 6 million STEM graduates each year — the highest number in the world, Lin said.

Second, measured by purchasing power parity (PPP), China is already the world’s largest economy and possesses the largest ultra-scale domestic market. This means China has the greatest variety and number of application scenarios. Third, when the technologies of the fourth industrial revolution require hardware, China boasts the most complete and comprehensive industrial system in the world, along with the strongest supply capabilities for all kinds of hardware. As a result, any idea can be turned into a product faster, at lower cost, and with greater market competitiveness in China than anywhere else, Lin noted.

In addition, China has an institutional advantage. It is good at leveraging an efficient market to motivate entrepreneurs and engineers, while also making effective use of a capable government to help enterprises overcome bottlenecks in technological innovation and industrial upgrading, he noted.

"Therefore, when all these advantages are combined, I believe that China should still have the potential to achieve 8 percent annual economic growth during the 15th Five-Year Plan period and even through the 16th Five-Year Plan period,” Lin said. 

However, how much of this potential can actually be realized will ultimately depend on both domestic and international market conditions, he added.