Beyond Keynes: A Conversation with Justin Yifu Lin

In May 1979, Justin Yifu Lin—a 26-year-old company commander in the army of the Republic of China and a recent graduate of the MBA program at National Chengchi University-defected from Taiwan to mainland China by swimming across the straits to Fujian Province, leaving behind his pregnant wife and three-year-old child. Seven years later, after obtaining a Master's degree in Marxist political economy from Peking University, he became one of the first citizens of the People's Republic of China to receive a PhD in economics from the University of Chicago. Reunited with his family, and returning to China, he became a professor of economics at Peking University and founded the Beijing-based China Center for Economic Research. In June 2008, he became the chief economist of the World Bank, the first ever from a developing country. In a conversation with World Policy Journal editor David A. Andelman and managing editor Justin Vogt, Lin explained his vision of the global recovery and the role of the World Bank in helping developing nations grow and prosper.

World Policy Journal:

In the World Bank's latest "Global Economic Prospects" report, you suggest that the rather sharp economic growth you're projecting for many of the leading developing economies-8.7 percent for China, for instance-is imperiled by the fragility of Western developed economies. Doesn't that minimize the role of China's dramatic internal growth, as more and more of the nation is brought into the world economy? How can you have it both ways?

Justin Yifu Lin:

As you mentioned, we forecasted China's growth rate this year is likely to be 8.7 percent, a drop from 10.1 percent in 2010. Certainly the slowdown in the growth of exports is one contributing factor, because of relatively low growth in the high-income countries. But equally important is the inflationary pressure in China's domestic economy. China's economy now has returned to, even exceeded, its potential growth rate. Certainly, we expect the growth rate is likely to slow somewhat. But 8.7 percent growth is exceptionally high in this global environment.

WPJ:

China has become the world's second largest economy. In many ways, though, it's still a developing nation. Can the Chinese model be transported to Africa, the poorer stretches of Latin America, other parts of Asia? Would that model work in those places?

JYL:

We can learn many lessons from other countries' experiences. But I try never to expect to transplant other countries' models to China, because the specific opportunities in China will be different from other countries. And you know, I think we cannot directly transplant China's models to any other country, including other middle-income countries or developing countries, even less so in high-income countries. But there's always something that we can learn from other people. As the Confucian saying goes, if you walk with two people, you can always draw inspiration from the successful one and avoid the mistakes of the unsuccessful one.

WPJ:

You're in a position to take the Chinese model and roll it out across the world. Do you see that as your mission, in a way-to help the world understand how the Chinese model can become more universal?

JYL:

Oh no, I do not have that ambition. I do bring, I think, an optimistic attitude. In every country, we encounter problems, but every problem has a unique solution. And if we are pragmatic, we can identify those problems and mobilize national resources with the help of the international community. Then even a poor country will be able to turn around its destiny within a generation. In 1979, when I was a boy in Taiwan, China was poor, clueless. Actually, it was poorer than most countries in Africa. It's not that China doesn't have any problems today. But I think that as long as you have the motivation, and you have aspirations, and you are willing to address your problems, then there's a way to build opportunity. I think every country...