I don’t know how to separate in my mind what I fear and what I expectand what I hope! But when I think back, there have been other times whenanti-trade movements in the US and elsewhere have been popular. For example, in the 1970s and 1980s there was a strong belief in the US that trade with Japanwas unfair and destructive. In the late 1990s and early 2000s, there were anti-globalization protests in cities all over the world. What often seems to happen is that when it seems like a trade war might be starting, and certain smaller actions are taken to limit trade, it then becomes very clear thatlimiting trade has specific and large costs. Limiting trade is a little like touching an electrified fence: after doing it, most people feel the shock and back away. I hope that any trade war is short and small. Trade is about finding ways to create win-win scenarios for both countries; trade wars usually end upas lose-lose scenarios for everyone.
China’s economic growth in the last 40 years is one of the most amazing events in world economic history. Economists and historians will still betalking and writing about it in 50 years, and in 100 years. China will certainly become the largest economy in the world very soon—by some measures,it already is. But the most powerful country is a different question from the biggest economy. On a per person basis, per capita GDP is going to be muchlower in China than in high-income countries like the US and western Europe fordecades to come. Power doesn’t have a simple formula. It involves diplomacy,technology, and even the extent to which a country is trusted or admired byothers.
There’s a basic formula for economic growth. It has four ingredients:investment in physical capital, workers with more human capital (that is, skilland education), new technology, and mixing these first three ingredients together in a situation where there are incentives for innovation,entrepreneurship, and hard work. The early stages of China’s economic development focused mostly on high levels of investment in physical capital andchanging the incentives for entrepreneurship and work. But in the last coupleof decades, there is an ongoing shift toward more growth coming from humancapital and new innovation and technology.
I think most Americans have both feelings. It’s common to hear Americanstalk admiringly of how quickly China has built its cities or its train system.
But there is some worry, too, which seems natural to me. Imagine that you are living in a city in China, and although your city is doing just fine, anearby city has extremely rapid growth in population and economic output. You would wonder what is happening in that other city, and be concerned that the growth of that other city might in some way create changes and costs for yourcity.
问： “后发优势”和“后发劣势”这两个经济概念，你认为哪个更重要？中国经济学家杨小凯所说的“后发劣势”（经济学家沃森提出，英文为“Curse To The Late Comer”），指的是发展中国家模仿发达国家的技术，而忽略模仿发达国家的制度，短期效果较好，长期则有较大隐患，甚至可能失败。你觉得中国会面临这个问题吗？
The advantages of backwardness, of course, is a famous term from an economics research paper written back in the early 1960s. It pointed out that when a country is poor it can benefit by selling to countries with higher incomes, and also by using technology already developed in other places. But the disadvantage of backwardness is that a country has lower income, which isoften combined with lower levels of education, health, environmental protection, ability to travel and relax, and other nice things. The disadvantages of backwardness are more important.
As I understand the arguments about a “latecomer curse,” a common topicwas that although China’s economy had grown with large use of energy and raw materials, it was hard to keep having ever-more energy and ever-more rawmaterials—and there were environmental costs as well. The “curse” argument iscorrect in saying that China could not keep growing in exactly the same way.The sources of China’s growth in the future need to be different from the pastsources of growth. But this is not unusual. For every country, economic growth involves an ongoing process of transformation and change.
In which areas should China improve if the nation wants to pursuelong-term, steady development?
I’d point to three areas. First, China needs to “rebalance” its economy(as the economists say) so that its growth that is based on higher levels ofdomestic consumption, rather than higher levels of exports or physical capitalinvestment. Second, China has successfully created an educational system thatgets everyone through nine years of school, but it now needs to aim at getting almost everyone through 12 years of school—and more students attending college, too. Third, China’s financial system still needs to develop. A sturdy financial system both encourages and places limits on risk-taking. But some of China’s bank lending and corporate bond borrowing seem to offer reasons for concern.
If you take the size of the economy (GDP) and divide by population, China is now at about 25% of the US level. China’s economy has strong momentum,and as long as the country keeps embracing the needed changes, I expect it will continue growing at a strong pace. In 20 or 30 years, maybe the middle-income trap will emerge as a problem, but I don’t see it as a problem for China’s economy in the short-term or the medium-term.
China might want to look at some US institutions and industries that have been fairly successful over time and see if there are lessons to be learned. For example, many of the world’s top colleges and universities are inthe US. The US has some of the world’s largest financial markets, used bypeople all over the world. The US has a number of the world’s leading companiesin logistics, the business of delivering goods and services. The US economy hasa long tradition that many small companies get started, and a few grow intonational and even global giants.
The idea of starting companies based on inventions has deep roots in US history. When Europeans were settling in North America, a common situation wasthat land and natural resources were plentiful, but there was comparatively little labor. Thus, finding innovations and machines that reduced the need forlabor was quite valuable. When the Constitution of the United States was written about 240 years ago, it actually included a requirement that the brand-new US government would establish a national patent office. The US has shown a willingness over itshistory to allow new companies to grow, even when it means hardship or evenbankruptcy for the previous generation of companies.
There are obvious choices of highly prominent Chinese companies like Alibaba, Baidu, and Tencent. I’ve always been impressed by Haier; in fact, I have a small Haier refrigerator in my office to keep my supply of Diet Cokecold. Haier seems to combine high-quality manufacturing with an ongoing push toimprove its technology.
But what I admire most are those people running smaller companies and trying something really different. Only a few of them will succeed in a bigway, but the jobs they create, and the knowledge and experience they build, is so important in keeping the economy moving forward. As one example, a few months ago I met the founder of Emotech, a company which is working on the human-robot interface, trying to create robotic personal assistants which show emotion in a physical way, with motion and lights. On future visits to China, I hope to meet some people running smaller and medium-sized businesses, not just the well-known giant firms.
Many countries have had companies that are state-owned. As one example,about 10% of the economy of the United Kingdom was state-owned companies in the 1970s. The problem with any state-ownedcompany is how to provide incentives for efficiency and innovation if there isno competition. For example, the government to compare the efficiency of thecompany to firms from the same industry in other countries, or require that thecompany expand service and reduce prices over time, or allow private firms tocompete with the state-owned firm. Of course, if government subsidizes state-owned firms whenever they make losses, the incentives for these firms to improve are reduced. In China, many state-owned firms, especially the smaller ones, have already shifted to private ownership. I expect that shift will gradually continue over time.
US companies complain about their relations with government all the time, too! There’s an old saying among economists that “government should steer, not row.” It means that although government can offer overalldirections, including regulations and taxes, businesses need to be the ones that run the specific details of their own operations. If government is trying to get involved in details, sometimes all a business can do is try to limit itsinvolvement and draw back from a certain project or product.
Most American entrepreneurs are perfectly willing to follow governmentrules, but they complain that the rules often do not seem clear or simple. As a result, entrepreneurs complain that it takes a lot of time and energy just to figure out what is needed to follow the rules—and even then, they may sometimes feel uncertain as to whether they have actually succeeded in following the rule. Other complaints are that broader government systems are not always performing well: for example, that schools are not providing workers with the right education and skills, or that roads,railways, and transportation systems should be improved.
China is still a middle-income country in the world economy. The steps that are needed to move from middle-income to upper-income are just as large asthe steps that China has already been taking during the last four decades. I’m not sure what the next round of policy reforms will look like, but to continue China’s fast pace of growth, the ongoing policy changes will need to be large, too.
One big emphasis of China’s government in the last few years has been the need for reform of the financial sector, and this seems important to me, too. Many of the problems that the US and the world economy experienced during the Great Recession of 2008-2009 emerged from the financial sector. In China, there are changes underway in the regulation of banks, insurance companies, and securities firms. The People’s Bank of China has been evolvingin how it carries out monetary and credit policies. One important lesson from global experienceis to pay close attention when the amount of borrowing and credit risesdramatically in any given area of an economy, because sometimes it is a danger sign.
泰勒：早在19世纪，一位伟大的英国经济学家和哲学家约翰·斯图亚特·穆勒(John Stuart Mill)就注意到，在他那个时代，许多英国人认为爱尔兰人懒惰、醉醺醺的。但穆勒注意到，当这些爱尔兰人移民到美国时，他们似乎突然变得勤奋而富有。穆勒观察到，人们的行为方式往往取决于他们所处的环境。我非常喜欢见到中国人民，但无论我走到哪里，我都喜欢与那些想与我分享趣事并乐意和我交谈的人见面。无论我走到哪里，我都尽量避开那些刻薄、不友善的人。
Back in the 19th century, a great English economist and philosopher named John Stuart Mill noticed that many English people of his time viewed the people ofIreland as lazy and drunk. But Mill noticed that when those same Irish people emigrated to the United States, they suddenly seemed to become hard-working and productive. Mill observed that the way in which people act is often determinedby the situation in which they find themselves. I have very much enjoyed theChinese people I have met. But everywhere I go, I enjoyed meeting people whowant to share my interests and want to talk with me. And everywhere I go, I tryto avoid people who are mean and unkind.