Award-winning Chinese economist Wu Jinglian spoke Thursday evening on China’s economic achievements and current challenges, arguing that state domination of allocation of resources and monopolies limit the country’s economic advancement.
Wu is the 2011 recipient of the Dr. Kuo-Shu Liang award, which is part of a bi-annual memorial award and lecture series established by the Stanford Center for International Development (SCID) to celebrate the life and accomplishments of Dr. Kuo-Shu Liang, who was governor of the Central Bank of Taiwan from 1975 to 1979.
A reception, attended by approximately 150 guests, preceded the talk in the Gunn-SIEPR building.
Nicholas Hope, director of the SCID, introduced Wu as “one of the foremost Chinese economists of his era and one of the primary contributors of China’s economic reforms.”
Wu began his talk by expressing gratefulness for the acknowledgement of his work but said that more importantly, he sees the award as recognition for China’s economic achievements.
According to Wu, China began instating economic reforms in 1978. Since then, the country’s economy has grown ten fold to become the world’s biggest exporter and the second largest economy today, he said, noting that some predict China will overtake the United States as the world’s largest economy within 10 years.
“It is with confidence that we can conclude the secret of China’s economic rise is market oriented reforms,” Wu said.
Additionally, Wu pointed out three other critical factors to which he attributes China’s explosive economic growth: the efficient use of human and natural resources, the adoption of an export-oriented policy and the import of advanced foreign technology.
Despite China’s miraculous growth over the last three decades, Wu warned that China now faces significant economic challenges.
“We must remain aware that the Chinese economy is far from being perfect,” Wu said. “China’s current economic system is a hybrid of a market economy and a command economy. It is a transitional system that can either evolve into a more advanced market economy or can move backward into state capitalism.”
Wu said he blames state domination of the allocation of resources, monopolies in sectors such as telecommunications and petroleum and the lack of a fully established law-based economy for preventing more reform.
He also highlighted the debate over the effectiveness and sustainability of the “China Model” – the hypothesis that an authoritarian government that controls the economy and society has a greater ability to consolidate resources and accomplish tasks.
According to Wu, advocates of the model say that it allows the government to implement strategies and policies to reflect national interests. Furthermore, proponents say this model allowed the economy to remain stable during the global financial crisis.
Those more skeptical of this viewpoint, such as Wu, argue that heavy reliance on administrative control is unsustainable in the long-term and will lead to negative economic and social consequences.
Wu pointed out that symptoms of macroeconomic troubles have appeared, including asset bubbles and increased inflationary pressures.
“All these symptoms are a warning that if China cannot eliminate institutional obstacles to transform its growth pattern, it will inevitably face economic and social disaster,” Wu said.
“China is standing at a new crossroads,” he added. “More and more people are complaining about the inefficiencies of government institutions and are calling for more reform to benefit the people.”
After the 40-minute talk, audience members posed questions on topics including inequality, domestic consumption and the implementation of the rule of law in China.
“It was a very interesting and relevant talk,” said audience member Caiyao Mai ‘15, a Chinese undergraduate. “The problems he mentioned are crucial issues that the new Chinese government will have to face when they come to power next March.”