Justin Yifu Lin: China Must Lead a New Industrial Revolution

Oct. 16, 2021 (EIRNS)—Justin Yifu Lin, the Chinese economist, now at Peking University, who was once the chief economist at the World Bank, wrote an article in Asia Times on Oct. 11 titled “China Must Lead the New Industrial Revolution.” He declares that the 4th industrial revolution has already begun. On China’s relations with the U.S., he writes:

“Since the U.S. became the world’s largest and strongest economy in the late 19th century, it has repeatedly suppressed the world’s second-largest economies that reached 60% of its GDP in order to prevent them from threatening its economic status. A recent example is Japan in the 1980s.... Based on market exchange rates, China’s economic scale has now reached 70% of the U.S. China’s 5G technology has become the world leader in the new industrial revolution. In the past few years, the U.S. has repeated its old tricks and suppressed Chinese companies with groundless accusations, using all of its national resources. If the U.S. succeeds in suppressing China by means of a blockade in the new industrial revolution, China will not be able to achieve its second centennial goal [“build a modern socialist country that is prosperous, strong, democratic, culturally advanced and harmonious”]. How can China break through the U.S. blockade? It can only do this by working hard to lead the new industrial revolution. Then it will not be blocked, but will reach the technological level of the United States in its developed provinces, and achieve a national per capita GDP equal to half of that of the U.S. by 2049. Therefore, it is a necessity for China to lead the new industrial revolution in order to achieve its second centennial goal by 2049.”

China can succeed, he writes, for several reasons. For one, “human capital has become the most critical element in innovation. Human capital consists of two parts: education and inborn talent. Currently, China’s education from kindergarten, primary school, junior high school, high school and university to postgraduate is not much different from that of developed countries.” But, he adds, China has a far larger population, and the education process will generate more talented people [“geniuses” he says]. Another reason, he asserts, is that China has “the largest range of industries, compared with any other country in the world, and can provide a full range of manufactured products for new inventions which require hardware. The path from an innovative technological idea to the mass production of finished products will be the fastest and least costly in China.”

Most important, Lin asserts that China “should self-confidently use industrial policies to support the new industrial revolution. No matter whether a country is catching up or leading the development of new technologies and industries, its government should proactively overcome market failures to facilitate enterprises’ innovation efforts.” This is in fact a call for China to use American System (Hamiltonian) policies, which have been deserted within the U.S. itself. He remarks that “the government has to use industrial policies to strategically allocate its resources to support the new industrial enterprises that can make the greatest contribution to job creation and economic growth.” Also, “government should focus on supporting the basic research required by enterprises for their development of new products and technologies. Similarly, the government should use industrial policies to allocate its limited resources and capabilities to support basic research.” He asserts that China must not give in to “the American attack on ‘Made in China 2025,’ nor heed the objections of Chinese who oppose industrial policies on the basis of neoliberal thinking. On many occasions and in many articles, I have said that I have never seen a developing country that can successfully catch up with developed countries without industrial policies. Nor have I seen a developed country that can continue to lead the development of new industries without industrial policies.”

He concludes that China “must continue to expand its opening and allow other countries to benefit from its technological innovation ... and the American attempt to suppress China’s new industrial revolution through containment will not succeed.”