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BBC economist Dr Linda Yueh gives lecture at LSBU
Dr Linda Yueh, the BBC's chief business correspondent, gave a lecture at London South Bank University (LSBU) this week on China's economic growth and the making of a superpower.An internationally-renowned economist, corporate lawyer, financial writer and journalist, Dr Yueh's lecture focussed on to what extent China's economic growth is sustainable - and the difficult decisions that China faces ahead in continuing its peaceful rise.
A Fellow in Economics at Oxford University and former adviser to the World Bank, European Commission, Asian Development Bank and others, Dr Yueh's specific interest in China's meteoric growth came from a question posed to her at a conference a few years ago: what actually drives China's growth? It is a question that economists have struggled to unpick.
"Many developing countries find it fairly easy to maintain growth for twenty years or so", explained Dr Yueh. "But China, exceptionally, has expanded at an average annual rate of 10 per cent for more than 30 years."
Driving the scale of those figures home, Dr Yueh pointedly noted that China's economy doubles every 10 years; at current growth rates, it will take well more than 70 years for Britain's economy to do the same.
Dr Yueh's lecture explored two main strands: firstly, the drivers of China's economic growth since market-oriented reforms began in 1979; secondly, the 're-balancing' challenges and difficult decisions that China faces in the next 10, 20 and 30 years.
In particular, China faces crunch time in avoiding the so-called 'middle-income country trap' where developing countries' growth rates slow and never join the richest nations. South Korea and Singapore are notable in having avoided this trap but many others stagnate. China is also in the most unusual position of being the world's second-largest economy but also in the lower half of per-capita income.
So how can China sustain its growth? Dr Yueh explained that developing economies tend to 'imitate' successful economies rather than 'innovate' and that will eventually reach its natural limit. And unlike many other developing countries, women are already highly involved in China's labour market, presenting another structural challenge for continuing growth.
Dr Yueh outlined China's 're-balancing' challenges as increasing its reliance on its own market and less on exports; raising domestic consumption and reducing inefficient savings; growing the private sector and reducing distortions from the state-owned sector; increasing innovation as 'imitation' limits are reached; and continuing to 'go global'.
Illustrating the productivity challenges - and opportunities - of China's state-controlled sector, Dr Yueh used a personal anecdote of her experience with her secretary in a previous legal role who formerly worked for a Chinese SOE.
"My secretary told me that the biggest difference between me and her old boss [at the Chinese state-owned enterprise] was that her old boss was happy if she did any work in a day at all... whereas I expected it."
After the lecture, Dr Yueh fielded a number of audience questions including the direction that China will take in developing its social security and the structural limitations of China's state-controlled banking and lending systems.
The lecture was held to celebrate Dr Yueh's new book, China's Growth: The Making of an Economic Superpower.