China succeeds in reform and opening up because it has harnessed the latecomer's advantage and made proper policy adaptations based on its conditions, said a senior economist in Beijing on Mar. 24.

Justin Yifu Lin, former chief economist of the World Bank, weighed in on China's shift from a planned economy to a market-oriented economy in the past four decades during an economic summit at the annual China Development Forum.

Once one of the world's poorest countries with a per capita GDP of only US$156 (less than one third than that of sub-Saharan Africa in 1978), China has maintained rapid and stable growth averaging a rate of 9.5 percent over the past 39 years and now contributes to around 30 percent of global growth.

"Such high growth rate was unseen in human history," said Lin, adding that China is the only country that has not come under financial or economic crises during the period.

Lin said that China benefited much from the "latecomer's advantage", in which technological innovation and industrial upgrading can be achieved by importing and (or) integration of existing technologies and industries.

According to the Commission on Growth and Development led by Nobel laureate Michael Spence, 13 economies, including China, took full advantage of their latecomer status after World War II and achieved annual GDP growth rates of 7 percent or higher at least twice as high as developed countries' growth rates for 25 years or longer.

China succeeds in its reform and opening up also because it took its time. In the 1980s and 1990s, there was a consensus that neoliberalism offered the best way forward. However, as China embraced opening-up its markets and dismantled its state-run economy, it did so in a gradual and careful manner, Lin said.

The leadership of the time knew, for example, that removing all state support for certain industries could lead to collapse. So they proceeded slowly.

For those industries that are capital-intensive, large in scale, and important for employment and national defense, (the government) kept offering support or subsidies, while for those with comparative advantages, like the labor-intensive industries, it has opened the market for more players to come in, he explained. "This gives rise to China's consistent rapid growth in the past 40 years and helped avoid various crises."

China's GDP grew from US$ 0.36 trillion from 1978 to US$82.7 trillion, raising its share of the world's GDP from 1.8 percent to around 15 percent.

"China's growth offers much hope to the rest world: if managed well, the ‘latecomer's advantage' in other developing countries can produce rapid economic growth and address poverty," he said.

Looking into the future, Lin said China should not be complacent with its achievements and always be prepared for potential dangers. He also advised to keep in good terms with major world economies and help other developing countries in their modernization drive.

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