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China can achieve growth target through innovation: Nobel Prize-winning economists

Updated: Apr 14,2016 8:23 PM     Xinhua

Several Nobel laureates and renowned economists have said that China has the ability to achieve its growth target for 2016, with innovation as an important engine to boost the economy.

In recent interviews with Xinhua, winners of the Nobel Prize in Economics -- Joseph Stiglitz, Michael Spence and Edmund Phelps -- all agreed that China’s annual growth target of 6.5 percent to 7 percent for 2016, as announced by Premier Li Keqiang in March, is within a viable range.

“I think the growth target is realistic,” said Spence. He also expressed the hope that China could focus more on the quality of the growth.

Stiglitz said that although facing a sluggish global economy, China can realize a 6.5-percent economic growth if it adopts rational economic policies and “responds quickly to the global slowdown.”

He pointed out that China still lags behind developed countries in terms of productivity.

“It is important for China to close that gap. If it could close that gap, it would grow even faster than the 6.5 percent,” he added.

Meanwhile, Phelps believed that three factors would contribute to China’s continued economic growth: technology transfers from the industrialized countries to help boost productivity; entrepreneurship and innovation to bring down production costs; and massive urbanization to provide sustained growth.

“Most of what was going for China before is still present and is still pushing productivity ahead,” he said.

The three US economists also endorsed the Chinese government policy of encouraging entrepreneurship and innovation, stressing the key role of innovation in economic growth.

“The Chinese have always been very entrepreneurial people,” said Phelps. “Innovation is alive and is developing in China, that will go on and nothing will happen to derail it.”

Phelps said the growing number of startups in China is somewhat attributable to the government’s encouraging policies, which have prompted banks to provide greater financial support for new entrepreneurs.

He suggested that the education system in China should also focus more on fostering a passion for innovation.

According to Spence, to fully tap the potential of its vast domestic market, China needs to promote innovation in its manufacturing sector so as to further boost productivity.

He noted that there will be innovation in the service sector as well. “The digital technology in logistics and service provisions is powerful, there’s lots of room. It will be, not the only, but an important driver of growth.”

Citing China’s contribution to the development of solar panel technologies, Stiglitz said the country has the ability to play a leading role in technological innovation, particularly in the fields closely related to well-being and sustainability.

For example, he said there’s more room for China to be innovative regarding environmental technologies, which have so far received scant attention and funding from Western countries.

As the Chinese economy shows signs of a slowdown in a transitional period featuring structural reforms, the world is watching with both hope and anxiety.

Spence told the South China Morning Post in March that China is well on its way to shift to a growth pattern better suited for future prosperity.

“One thing China has been very good at is managing the process, making steady progress and not trying to do everything at once,” he was quoted as saying.

Christopher Pissarides, also a Nobel laureate, said last month at an economic forum held at Peking University that there’s no factual basis to be pessimistic about the Chinese economy.

“What I see is that China is actively promoting its economic restructuring,” said the British-Cypriot economist, “and I’m full of confidence about the prospect of the Chinese economy.”