ZHU Min Chair, NIFR; Former Deputy Managing Director, International Monetary Fund (IMF)
Zhu Min, Chair of Tsinghua University National Institute of Financial Research (NIFR) and Former Deputy Managing Director, International Monetary Fund (IMF) delivered keynote speech at the Opening Ceremony of Tsinghua PBCSF Global Finance Forum 2019, sharing his insights on the global economy and stressing the importance of high-tech in the development of nation’s manufacturing sector.
“China’s economic development has reached a crucial point,” said Zhu Min,” the focal point of China becoming a high income country is the restructuring of industry structure and promoting productivity.” He expressed his confidence in becoming the leading high-tech manufacturing country by 2025. The most significant constraints of China are balancing the supply-side even they have demands. That is why China is implementing supply-side reform.
China needs to focus on AI development, according to Zhu Min. He said that AI could help to boot China’s GDP growth rate from 6.3% to around 7% by 2035. AI can bring enormous explosive growth from 7 percent to 70 percent for logistics’ sector, which now counts 15% of GDP as 12 trillion RMB. Only five years ago, China’s volume of industrial market was at the same level as Germany. Now, China is the total sum of the US, Japan, and Germany.
Now, China is entering into the high-income stage, the development of China is at a historical crossroad. “If we cannot go further, we will go into traps which previously trapped Mexico, Malaysia, and Brazil. Or, we will be another Korea,” said Zhu Min. “If we would catch up with USA, we should learn from the past lesson of Latin America’s crisis,” he added.
Zhu Min reminded that the productivity of industrial sector is 120% of that of service industry. Thus, one percent increase in weighing of service sector brings 20% percent loss in overall productivity. So he emphasized the importance of accelerating productivity.
China is also considered as the leading E-Commerce economy in the world with higher productivity in financial service, but commercial services, including internet and computer-based services, still need to develop its productivity. To boost the productivity of the non-market sector, China also needs to continue reform and opening up economy even further. Zhu Min suggested that “We need to open up services, health care, culture, entertainment, education, and in particular financial services.” He emphasized that China is liberalizing design, auditing, logistics, e-commerce and other services, but also accelerating the opening up of power activities, aviation, railway, oil and gas, postal services, and municipal services. “In this way, we can improve the productivity of these service sectors, especially non-market services,” he said.
