Former World Bank Chief Economist emphasizes collaboration between China and U.S.
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The Ford School of Public Policy hosted a policy talk Wednesday afternoon featuring Justin Lin, former World Bank Chief Economist, on the future of economic relations between the U.S. and China.
Moderated by Associate prof of Public Policy John Ciorciari, the director of the International Policy Center, the talk began with Lin offering a general overview of the recent developments in the Chinese economy. Though the Chinese government announced Wednesday that growth in GDP for the last economic quarter was 6.7 percent, Lin acknowledged that recently, growth has been a disappointment and compared to past years, this rate is low.
However, Lin said China is a transitional economy moving into an era in which domestic consumer spending will drive growth. He added that other emerging economies, like those in Brazil and Russia, have also seen their growth rates decline in recent years.
Comparing China to India, which is also going through a period of economic growth, Lin said China is not struggling, but is merely suffering from cyclical and external factors that do not require structural changes to its economy.
“To make adjustments in economic structure is very difficult,” Lin said. “It is very important to understand the true causes … and the main reason is cyclical.”
However, shifting away from China, Lin argued that the United States’ economy does need to undergo structural changes for it to fully recover from the 2008 financial crisis.
"In the short run, general structural reforms are important in raising the economic growth rate,” Lin said. “We need to have an innovative way to make the structural reform … and that requires political leadership.”
LSA junior Paul Miriani said Lin’s argument that the Chinese economy does not require structural changes, but that the American economy does, came as a surprise.
“That is not an argument that I have ever heard before,” Miriani said. “It was a lot more critical of (Obama’s) administration and the eight years (in which) the U.S. has not done what is necessary is a different perspective.”
Ann Arbor resident Charles McIntosh said he wished Lin would have talked more about the differences between the U.S. economy before and after 2008.
"I do not think that he talked about it enough, and what struck me about the difference before and after 2008 is we did not talk about public investment and corporate investment,” McIntosh said. “However, I actually think his views fit in pretty well with a lot of economic views on the right in the United States today and I do not find it a particularly surprising suggestion that economies need to restructure.”
During the event, in reference to Chinese and American economic interaction, Ciorciari asked Lin about his thoughts regarding China’s exclusion from the Trans-Pacific Partnership. The TPP is a trade deal involving the United States and 11 other Pacific Ocean nations, including Japan, Australia and Canada.
“To exclude China from the TPP is not a development because China is now one of the largest trading countries in the world,” Lin said. “I don’t think this is economically advisable because not only is it not good for China, it is not good for all economies.”
When asked by an audience member whether he thought that the criticism levied by politicians in the United States toward China for alleged currency manipulation and other unfair trade practices is reasonable, Lin said he believed that the focus of talks about United States-China relations should be about the benefits they brings to both countries.
“To maintain good economic relations is certainly good for China and for the U.S.,” Lin said. “Politicians like to find a scapegoat.”