Column: China's economy capable of steady annual growth through 2035: former VP of World Bank

by Justin Yifu Lin

BEIJING, July 13 (Xinhua) -- The world is currently undergoing changes unseen in a century. The economy is the foundation of these changes. In the 21st century to date, the most important factor in this dramatic change in the world economic landscape is the rise of China.

In 2000, measured by purchasing power parity, China's economic aggregate accounted for 6.9 percent of the world's total. The proportion rose to 16.8 percent in 2018, an increase of 9.9 percentage points. The share of G8 fell from 47 percent to 34.7 percent.

The rise of China has caused concern about a possible Thucydides Trap with the United States. China is now the world's largest trading nation, the largest trading partner of more than 120 countries and regions, and the second-largest trading partner of more than 70 other countries. The U.S. rivalry with China is a source of uncertainty for all countries in the world.

I believe that when China's per capita GDP reaches 50 percent of that of the United States, the world will enter a new stable pattern.

There are three reasons. First, China's population quadruples that of the United States, and the Chinese economy will be twice the size of the U.S. economy by then.

Second, China's developed regions -- Beijing, Tianjin and Shanghai, as well as the Shandong, Jiangsu, Zhejiang, Fujian and Guangdong provinces along the eastern coast with a combined population of more than 400 million -- will have a per capita GDP equivalent to that of the United States, and their economic volume, industry and technology will also be at the same level, and then the United States will lose its technological supremacy over China.

Third, if large U.S. enterprises do not have access to the Chinese market, they will change from high profitability to low profitability or even fail to produce a profit, and lose their leading position because they will be unable to maintain high investment in research. American jobs and people's livelihoods are inseparable from trade with China, and the United States must have a good relationship with China for the sake of its own economic development, employment success and social stability.

In terms of development potential, China has three advantages.

First, the advantage of latecomers. In 2019, China's per capita GDP in terms of purchasing power parity was only 22.6 percent of that of the United States. From the advantage of latecomers, China will still have an average annual growth potential of 8 percent from 2019 to 2035, judging from the records of successful catching-up countries at a similar level of development.

The second is the advantage of overtaking others by using new lanes. After the emergence of the new economy based on digital technology, China not only stands on the same starting line as developed countries, but also boasts favorable conditions. As a large country with 1.4 billion people, China has the advantage of talent. China also has a large domestic market and many application scenarios, and the world's most complete industrial support system. From ideas to products, the production time and cost will be shorter and lower than in any other country.

The third is the new system for mobilizing resources nationwide to make key technological breakthroughs. As a major emerging country, China may face temporary containment by some developed powers in terms of a few cutting-edge technologies, such as lithography machines, chips, and computer operating systems. However, with the active organization and coordination of the government, China can concentrate nationwide efforts and resources to make breakthroughs in these technologies.

At the current stage of development, China still has a potential growth rate of 8 percent in the coming decade. Taking into account the need to address climate warming, narrowing the gap between urban and rural areas, an aging population and bottlenecks, China is capable of achieving an average annual growth rate of 5 to 6 percent through 2035. With an average annual growth potential of 6 percent from 2036 to 2050, China should be able to achieve average annual growth of 3 to 4 percent during this period.

At present, the world is facing many uncertainties brought about by the impact of science and technology, geopolitics, natural disasters and so on. China has the far-sighted leadership of the Communist Party of China, the unremitting efforts of all the people for national rejuvenation, a vast domestic market, and a huge potential for development. The Chinese nation has ushered in an unstoppable rejuvenation.

In a global political and economic structure full of uncertainties, the stability and development of China will be a certainty. Looking ahead, China will continue to contribute about 30 percent to world economic growth every year, as it has done since the 2008 international financial crisis.Enditem

Editor's note: Justin Yifu Lin is the former senior vice president and chief economist of the World Bank and dean of the Institute of New Structural Economics at Peking University. The views expressed in this article are those of the author and do not necessarily reflect the positions of Xinhua News Agency.