Jim O’Neil, a British economist and professor at the University of Manchester, who coined the term “BRIC” economies — referring to Brazil, Russia, India, and China — is the former Chairman of Goldman Sachs Asset Management.
In 2003, O’Neil and his colleagues at Goldman Sachs made several predictions about the world economic pattern in 2050, saying the world will be completely different if the BRIC economies and other new economic entities can achieve their expected growth.
More than a decade after O’Neil put forward the term “BRIC”, China has taken the lead of the four countries, in economic aggregate and also importance to the world economy. According to the World Bank, by the end of 2014 China’s economic aggregate reached over 10 trillion calculating by market rates.
This figure is 1.5 times the total amount of the other three BRIC countries, and much more than the total amount of France, Germany, and Italy. It is twice as much as the figure for Japan and, in his 2003 report, O’Neil and his colleagues said China will catch up with Japan in economic aggregate by 2015.
Judging from the economic aggregate and economic growth, the other three BRIC economies also performed well in the past decade. But only China’s growth exceeded the expectations of the economists. O’Neil said recently that due to the contributions made by China, the BRIC economies may become an economic group as important as G7, possibly as soon as in 2025.
Compared with the growth of GDP, people’s personal wealth is the key element affecting their lives. But it is generally recognized that China’s population is basically stable, which means changes of per capita GDP will follow the growth of the total GDP. Additionally, several thousand millions of Chinese people were lifted out of poverty over the past 30 years, which is a great contribution to the UN’s Millennium Development Goals.
According to official statistics, over 50 percent of Chinese people live in cities, which is a good progress compared with the situation 20 years ago. O’Neil said that urbanization is a driving force for economic growth judging from history and the experiences of various countries, as it allows citizens to promote the development of the economy — as producers as well as consumers. Thus, China’s economy still has much development potential judging from the urbanization rate.
O’Neil also made some suggestions for China. He said that the most important thing is to carry out plans to allow migrant workers to enjoy the same benefits and public services as other citizens. He added that if a large population floods into cities, this naturally represents a big challenge. Also, if this problem cannot be solved, the personal savings rate of migrant workers will be high as they need more capital to get the same resources other citizens enjoy, like health care services and insurance. China is trying to address this issue, and improving the living standards of migrant workers will also boost economic development.
O’Neil discussed the Chinese government’s efforts to drive the economy by increasing consumption rates. According to official statistics, consumption accounts for a rising proportion of the total GDP — which reached 51.2 percent in 2014. O’Neil said that consumption rates should continue to increase, adding that it is also important to build reliable social insurance and medical systems and improve pension plans, as these measures can increase consumption, thus reducing the high savings rate.
He also stressed the importance of quality of economic growth, saying this is what a more civilized economic entity and society needs, and it is also consistent with the goal of reducing pollution and saving energy.