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China will continue to be a global economic engine: Justin Yifu Lin

(People's Daily)    15:52, June 23, 2016

China will remain a major driving force for the global economy, Justin Yifu Lin, former chief economist of the World Bank, wrote in a recent article published in the People’s Daily.

Citing the country’s favorable investment conditions, Lin played down concerns over the world’s second largest economy by writing that he believed that China is capable of maintaining a medium-high rate of economic growth.

Such point of view was also stressed by Chinese President Xi Jinping in the Silk Road Forum and Poland-China Regional Cooperation and Business Forum held in Poland on Monday.

“China is confident to maintain economic growth at a medium-high speed,” Xi said, adding that China welcomes all countries to share the dividends of China's fast development.

Lin explained that China's enormous potential for industrial upgrading would create huge investment demand when it came to infrastructure, environmental protection and urbanization.

These investments, with high economic and social returns, will not only create demand and increase employment in the short-term, but also improve economic efficiency and quality in the long run.

He also noted that the experience of developed countries cannot be applied to China’s prospects as the latter’s economy is more resilient and has greater potential and room to maneuver.

“Low domestic demand hindered the growth of developed countries, but China can offer abundant investment opportunities. This is the biggest difference between China and developed countries,” he explained.

The scholar also underlined China's favorable investment conditions and advantages, such as a low ratio of government debt and huge public savings and foreign exchange reserve.

According to Lin, the lower liabilities of China’s central and local governments means there is plenty of room to maneuver when it comes to the country leveraging infrastructure investment.

At the same time, with savings amounting to nearly 50 percent of its GDP, China can support more nongovernmental investment through preferential policies. Its foreign exchange reserve totaling at $3.3 trillion also tops the world.

In addition, its high interest and reserve ratio provides more space for the government to boost investment by increasing monetary supply. Lin noted that effective investment based on exploitation of these favorable conditions will increase employment, income and consumption.

Even with weak export growth, China will be able to contribute to more than 30 percent of the global economic growth over the next five years by maintaining an annual growth rate of more than 6.5 percent, Lin noted. 

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Editor:Wu Chengliang,Bianji)

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