Machines translation (Tencent) of Justin Lin's article on two advantages on China's economic development despite US suppression.
Starting this year, we embark on a new journey towards the second centenary goal.
There are two phased goals in the new journey: one is to basically achieve socialist modernization by 2035, and the total amount of GDP or the income of urban and rural residents will double on the basis of 2020; the other is that by the 100th anniversary of the founding of New China in 2049, China will become a prosperous, strong, democratic, civilized, harmonious and beautiful modern socialist power.
Two advantages of China's Future Development.
The question is, how much potential does China have for further development? Can we still maintain a relatively high rate of economic growth? In this regard, the new structural economics has done a lot of research, and China's future economic growth has two advantages.
One is the advantage of latecomers.
At present, our per capita GDP is just over US $10, 000, compared with US $65000 in the United States, US $48000 in Germany, US $41000 in Japan and more than US $30, 000 in South Korea. There is still a big gap between China and them. The gap of per capita GDP represents the gap of per capita labor productivity, while the gap of per capita labor productivity represents the gap of the advanced level of technology and industry, which means that we can make use of the advantages of newcomers to catch up in the process of development. From the middle of the 19th century to the present, the economic growth of developed countries has been quite stable, maintaining an average annual growth rate of 3% to 3.5%. Of this, 2% came from the increase in labor productivity, and 1% from the increase in population. After reform and opening up, China's growth rate is two or three times that of developed countries, precisely because we have given full play to the advantages of latecomers in technological innovation and industrial upgrading, taking advantage of the gap with developed countries to introduce advanced technology and digest innovation. As the cost of innovation is lower than that of developed countries, our speed of development is also faster than that of developed countries.
The other is the advantage of overtaking by changing lanes.
After the emergence of the new economy based on digital technology, the product R & D cycle becomes shorter, mainly relying on human capital investment. In terms of human capital, there is not a big gap between China and developed countries, and there are even advantages. Human capital consists of two parts, one is genius, the other is acquired well-educated ordinary people. The number of geniuses accounts for about 1% of the total population in any country. As a country with a large population, China certainly has the largest number of talents in the world. In terms of acquired education, the education level of kindergarten, primary school, junior high school, senior high school, undergraduate and graduate students in China has improved rapidly in recent years, and the gap between China and developed countries has been very small. Therefore, China has more advantages than other countries in the new economy, such as big data and the Internet industry, which are mainly invested in human capital.
The two advantages are of great significance to China's future economic growth.
Judging from the advantages of latecomers, the gap between us and the developed countries represents the potential of our economic growth. China's per capita GDP (at purchasing power parity) in 2019 is only 22.6% of that of the United States, equivalent to the level of development of Germany in 1946, Japan in 1956 and South Korea in 1985. As a result of taking advantage of latecomers, Germany achieved an average annual growth rate of 9.4% for 16 consecutive years from 1946 to 1962, and Japan achieved an average annual growth rate of 9.6% for 16 consecutive years from 1956 to 1972. South Korea achieved an average annual growth rate of 9% for 16 consecutive years from 1985 to 2001, and South Korea experienced negative growth due to the East Asian economic crisis in 1998. Referring to the experience of Germany, Japan and South Korea, if we also make good use of the advantage of latecomers, China also has the potential to grow by an average of 9% for 16 consecutive years.
The average annual population growth rates of Germany, Japan and South Korea in the above 16 years are 0.8%, 1.0% and 0.9% respectively. Even if China considers aging and the population does not grow, in terms of the advantage of latecomers, relying solely on the growth of labor productivity, China still has an average annual growth potential of 8% by 2035 and 6% from 2036 to 2050.
And look at the advantage of overtaking on another lane.
Since big data and the Internet industry had not yet emerged at that time, Germany, Japan and South Korea did not have this advantage. Changing lanes to overtake is based on the development of the new economy, a very important feature of the new economy is the emergence of unicorn enterprises. A startup is less than a decade old and has not yet gone public, but the market is valued at more than $1 billion. This is the so-called unicorn. In 2019, there are 484 unicorns in the world, 206 in China and 203 in the United States; in 2020, there are 586 unicorns in the world, 233 in the United States and 227 in China.
From these data, we can see that China and developed countries have the conditions to compete directly in the development of these new economies with short R & D cycle and human capital investment. If we give priority to the production of software products, China also has the advantage of being the largest application market for software products in the world; if we give priority to hardware production, China also has the best industrial facilities in the world. This overtaking advantage of changing lanes will further enhance our confidence in the future growth potential of our country.
Don't be too pessimistic in the face of US suppression
Taking advantage of the newcomers is an important reason for China's rapid economic growth. Some people may also ask, now that we are suppressed by the United States and if we cannot import advanced technologies from the United States, will our growth potential be greatly reduced? We know that the United States is not the only developed country in the world with advanced technology. If high-tech enterprises in other developed countries do not sell their products to China, it will also pay a huge price or even give up its lead in the high-tech field. 30% of the market for high-tech products such as chips is in China, and if companies ignore the Chinese market, the industry is likely to change from being highly profitable to marginal or even losses. And the characteristic of high-tech products is that iteration is particularly fast, enterprises must ensure a large amount of R & D investment to maintain the advanced advantages of products, and a large number of R & D investment can not be separated from corporate profits as a guarantee. Therefore, the act of the United States sanctioning China is actually "killing one thousand enemies and damaging eight hundred." If we consider purely from the perspective of corporate profits and future competitiveness, I believe there is not a single American company that is unwilling to sell its products to China. German companies with advance technologies will not face the plight as American companies.
German Chancellor Angela Merkel has been saying in meetings with Trump or on the phone with Biden that Germany wants to maintain friendly relations with both the United States and China. By the same token, the same is true of high-tech enterprises in Britain, France, Japan and South Korea, because they do not want to lose the huge Chinese market in order to maintain the hegemony of the United States in the world. What if the United States does not sell products with the most advanced technology in the world to China? In my opinion, there may be such technologies, but not too many. Since there are not many, we will concentrate our efforts on tackling technological difficulties with the new national system. With our current economic, technological and industrial strength, there is hope for breakthroughs ranging from a year or two to a long period of three to five years.
The friction between China and the United States caused by great changes not seen in a century will last for a long time, but I believe that China's economy still has the potential to grow by 8% a year by 2035. Even if we have to deal with a range of issues from aging population, carbon neutralization, rural revitalization and high-quality development, China is likely to achieve an average annual growth rate of about 6 per cent, ensuring the 4.7 per cent annual growth required to achieve the target of doubling GDP by 2035 from 2020. By 2030, China's economy could overtake the United States to become the world's largest economy, even at market exchange rates. By 2049, China's per capita GDP will reach half that of the United States, and the per capita GDP, economic scale, industry, and technological level of the "three cities and five provinces" in China's economically developed areas are comparable to those of the United States.
