An unexpected advocate for lower growth in China
Score one for the International Monerary Fund. In its latest review of China’s economy, it called for Beijing to stop worrying so much about GDP growth and focus more on reform.
At a Peking University conference co-hosted by the IMF, it found an influential and surprising ally: Justin Yifu Lin, the former World Bank chief economist and tireless cheerleader for the state of China’s economy.
Mr. Lin famously – and controversially — has said that China has the potential to grow 8% annually for 20 years, starting in 2008. Even so, he said at the conference that China should lower its growth target in 2015.
First, he picked a 7% rate from 7.5% this year. Then, in response to a question, he said he preferred a range of 7% to 7.5%. Either is pretty close to the IMF’s recommendation, which called for a growth target of 6.5% to 7%.
Setting its sights lower would give China the space to work on some of its more pressing problems, including soaring debt levels and a faltering real-estate market, IMF officials have said.
At the conference, Mr. Lin reiterated his view that 8% growth was achievable but said that it required “favorable conditions”— and those conditions may not occur next year, particularly because growth is slow elsewhere in the world.
Mr. Lin’s pushing of a lower target is significant. In China, academics play a big role in policy debates because they are seen as less self-interested than Chinese agencies, and the Peking University professor is among the more influential of those academic voices.
China’s government will start debating its 2015 growth target late this year and should announce it in March 2015.
The IMF essentially used Thursday’s conference as a way to start lobbying China to adopt its recommendation. IMF officials will take their arguments to Chinese financial agencies on Friday.
Reported by: Bob Davis
Source: The Wall Street Journal
Edited by: Arthars