Lin Yifu stated that the practice of reform and opening-up has proven that this reform model is an important reason for China to maintain economic stability and achieve relatively rapid growth. It is also the reason why China can still contribute about a certain percentage to world economic growth annually even when the global economy is in a downturn cycle.

Authors: Pang Wuji, Yin Qianyun

From year to year, China's economy has grown at an average annual rate of nearly %, contributing the highest average annual rate to world economic growth. However, mainstream Western economic theories have repeatedly failed in explaining China's economic issues.

Renowned economist and Honorary Dean of the National School of Development at Peking University, as well as the Dean of the Institute of New Structural Economics, Justin Yifu Lin, believes that the creation of China's economic miracle is precisely because China did not copy Western economic theories, but instead followed a path suited to its own national conditions.

Over the years, he has been dedicated to researching and solving the "Goldbach Conjecture" of economics—the Chinese economic problem—and strives to explore a new path of economic development for developing countries through China's experience.

Why does China succeed without choosing to replicate the Western path? What does the success of China's development path mean for other countries? In a recent interview with China News Service's "East-West Question," Lin Yifu mentioned that China offers a new model for other countries: to liberate their thinking, seek truth from facts, base their actions on their own conditions and excellent traditional culture, and forge their own path to modernization.

"The people are my siblings, and all things are my kind." He mentioned several times in the interview the concept of "people as siblings and all things as kind" by Zhang Zai, a philosopher of the Song Dynasty. In his view, the cultural characteristic of "people-centeredness" in China is beneficial not only for national rejuvenation but also for the construction of a community with a shared future for mankind.

The vitality of the China-style road

For a long time, some scholars attributed China's backwardness to the conservatism and obstinacy of Confucian culture, believing that for China to achieve modernization, it must follow the path of the West.

It is undeniable that after the Industrial Revolution, Western countries mastered new technologies and production methods, leading to industrialization and modernization, which resulted in a great divergence in the world.

However, Lin Yifu believes that China's innovation capability is in no way inferior to that of the West. Before the Industrial Revolution, China's science and technology had once led the world. Although it subsequently failed to catch up with that wave of industrial revolution and gradually fell behind Western countries, China is now steadily narrowing the gap with developed nations.

Especially in the context of the Fourth Industrial Revolution, China is not only on the same starting line as developed countries, but also leading in several strategic emerging industries represented by the "new trio".

"Both Chinese and Western people are inherently creative; we have no inherent disadvantages," mentioned Lin Yifu. He noted that Chinese civilization is the only civilization in the world that has never been interrupted, and we have led the world in the past and faced challenges. We should be more confident in our ability to face difficulties and seize opportunities.

In his recently published new book "Understanding the Chinese Economy: The Path to National Rejuvenation Amid Accelerating Changes of the Century," he discusses that the ethical value centered on "benevolence" is not only compatible with the market economy but also continuously adjusts and innovates according to the times and environment to meet the needs of the economic foundation, demonstrating strong vitality.

In the past, developing countries commonly held a "pilgrimage to the West" mentality in their pursuit of modernization. In reality, as Justin Yifu Lin stated, after World War II, many developing countries that followed the Western path have long been trapped in poverty or middle-income traps, with few being able to narrow the gap with developed countries.

He believes that China, by continuously infusing new vitality into its excellent traditional culture, is forging a path of modernization with Chinese characteristics. This approach not only serves as a crucial guarantee for the great rejuvenation of the Chinese nation but also offers new insights for other countries around the world.

That is to say, each country should, in light of its own characteristics, fully utilize the vitality inherent in its culture to propel its own path of industrialization and modernization.

Lin Yifu's new book "Understanding the Chinese Economy: The Path to National Rejuvenation Amid Accelerating Global Changes" is provided by Peking University Press.

Why does this path in China work?

In the process of exploration, opening up, and development, the path China has taken has always been accompanied by skepticism. Since the reform and opening up, the gradual dual-track reform implemented by China was once considered by mainstream Western economic theories as a poor method of transition. This is because the prevailing view at the time was that achieving economic transformation required the complete elimination of government intervention, and the promotion of privatization, marketization, and liberalization.

However, China's economy has maintained stability and rapid development, while there have been no successful cases of countries that have truly implemented "shock therapy."

Lin Yifu believes that during the reform process, China has implemented the approach of "old methods for old issues, new methods for new issues." For capital-intensive industries related to national security, protective subsidies are provided to maintain stability; for labor-intensive industries that align with comparative advantages, market access is liberalized. While motivating entrepreneurs, industrial zones and export processing zones are established to transform these industries into competitive advantages.

During the process of stable and rapid development, capital has increased rapidly, and the original industries have gradually aligned with comparative advantages. As a result, enterprises have gained self-sustaining capabilities and no longer require protective subsidies. Consequently, China has completed its transition to a well-established market system, enabling the effective functioning of both the market and an active government.

Lin Yifu stated that the practice of reform and opening-up has proven that this reform model is an important reason for China to maintain economic stability and achieve relatively rapid growth. It is also the reason why China can still contribute about a certain percentage to world economic growth annually even when the global economy is in a downturn cycle.

On [specific date], the weather in the Lujiazui area of Shanghai was clear and sunny, attracting numerous tourists to take boat tours. Photo by Zhang Hengwei, China News Service.

Both an effective market and a proactive government are essential.

Local governments, as a significant manifestation of a capable government, have been a crucial driving force behind China's economic growth over the past few decades. However, in recent years, local governments have faced increasing debt pressures and numerous other challenges.

He mentioned that, in fact, compared to the vast majority of countries internationally, China's overall debt level is not high. The biggest issue faced by local investment platforms is the mismatch between short-term debts and long-term investments: infrastructure construction takes a long time, while bank loans are mainly short-term, leading to a mismatch in terms.

In response to the current situation, the central government has implemented several reforms, such as issuing special bonds by the central government and the central government issuing bonds on behalf of local governments. With the reduction of local government debt, they can play a more significant role.

"The principle of effective markets and proactive governments as the fundamental tenets of economic development remains unchanged," said Lin Yifu. We need effective markets to motivate entrepreneurs, and we also need proactive governments to help entrepreneurs overcome bottlenecks in infrastructure or systems that arise during technological innovation and industrial upgrading, thereby making the market truly effective.

Major changes unseen in a century have entered a new stage

The informatization, digitalization, and intelligentization of the Fourth Industrial Revolution have provided China with more opportunities.

Justin Yifu Lin mentioned that the automobile industry is a very clear example. During the stage when the automobile industry was centered around fuel engine technology, China faced a significant gap in the process of catching up. However, the emergence of electric vehicles and autonomous driving technology has allowed us to achieve a "lane change overtaking."

On the first working day after the end of the Spring Festival holiday, a new energy vehicle production workshop in Qingdao, Shandong Province, was bustling with activity. Photo by Zhang Jingang, China News Service.

He believes that long-term economic growth primarily stems from the continuous improvement of productivity levels. China has the advantage of being a latecomer in traditional industries, and in emerging industries, it benefits from a large talent pool, a vast market, and integrated industrial support, enabling it to maintain faster development.

By the year, China's per capita income should reach or even exceed a certain percentage of that of the United States. Lin Yifu stated frankly that the unprecedented changes in the world over the past century will enter a new stage.

He explained that if China's per capita output reaches half that of the United States, our economic scale would be twice that of the U.S., and we would be on par with the U.S. in most high-tech fields. Additionally, the U.S. could also benefit more from trade with us.

"When the two major powers, China and the United States, manage their bilateral relations well, it will provide a stable anchor for the construction of a community with a shared future for mankind." Justin Yifu Lin believes that the changes in the world structure will move from uncertainty to certainty, entering a more stable, peaceful, and prosperous situation.

Interviewee Profile:*

Lin Yifu interviewed by a reporter from China News Service. Photo by Cao Xufan.

林毅夫，北京大学新结构经济学研究院教授、院长，北京大学南南合作与发展学院院长，北京大学国家发展研究院名誉院长。2008年被任命为世界银行首席经济学家兼负责发展经济学的高级副行长，成为担此要职的发展中国家第一人。2012年在世界银行的任期届满，返回北大，继续教学研究工作。现任全国政协常委、经济委员会副主任。膺选为发展中国家科学院（原第三世界科学院）院士及英国科学院外籍院士，并获英法美加香港10所大学荣誉博士学位。主要著作：《论中国经济》《超越发展援助》《解读中国经济》《新结构经济学》等二十余册，并在国内外学术期刊发表100多篇论文。

Original Title: "Lin Yifu: Chinese-style Modernization Sets an Example for Developing Countries - East-West Inquiry" Text Editor: Xu Huang Guan Image Editor: Cui Chuqiao Layout: Ding Baoxiu Proofreading: Wei Yuan Responsible Editor: Song Fangcan

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