 Welcome to Economics and Beyond. I'm Rob Johnson, President of the Institute for New Economic Thinking. I'm here today with my friend Justin Lin, who is the Director of the National School for Economic Development in Beijing, and he is the former Chief Economist of the World Bank. Justin has worked in many contexts with INET, but particularly on the questions of development in Africa and the relationship of US and China to that process. We held a meeting together at his headquarters in Beijing in 2018. I found it to be one of the most well-crafted meetings and learned a great deal in a very short time. So it's a delight to be with you tonight, Justin. Thank you for joining me on the INET podcast. Thank you, Rob, for the nice words about me and my institute. And also for your invitation to have this in our conversation. I'm delighted to do that. And certainly the concern in the world today is the pandemic, COVID-19. And I think for the COVID-19, it's a reminder that how vulnerable of humanity, no matter how developed we are, but in the face of the nature, we need to be humble. And also it's a reminder that we need to work together because unless we win the victory in every country, in every corner over this pandemic, otherwise we cannot claim the victory. And I hope that we will work together to help each other and to overcome the current challenges in the developed and the developing world. Well, I do think that INET is very dedicated to working with you. And I think you underscore many very important challenges. Beginning with the pandemic, leading to the US-China relationship, leading to the relationship between these two major countries in development in many regions and related to the global challenge of climate change. We cannot afford not to cooperate in many of these areas. And so I look forward to your thoughts in each case. In the case of the United States relationship with China, what do you see as the dynamic now? What is happening? What gives you concern? And what do you recommend? Well, the US-China relationship certainly is one of the most important concerns in the world like the pandemic because it's going to affect US, China, and other countries of the world. And I like in fighting against the pandemic regarding the US-China relations, the message is also the same because cooperation is essential for the well-being of the people in the US, in China, and in the rest of the world. And for the US-China tensions, to me, I was caught by surprise. I received my education in the US and I have been taught that development is a human right and a competition is good. And we need to have well-competitions in the markets. Now facing the challenges in the US-China relations, I find many principles that I learned. I took them into my heart and I put them into practice has been challenges. And I hope we can put politics and a issue aside and come back to the fundamental principles of humanity to respect the right of development in every country and to understand development in one country is not only important for the country. It is also bringing benefits to every country in the world. And we all have the wisdom to overcome the differences and to come back to the basic principle of humanity in dealing with the China-US relations. You've been what you might call a principal visionary of what you've come to call new structural economics. And I remember when we met in Beijing in December of 2018, you spoke about things that are what you might call quite different than many Western economists focus on. When you're looking at the Chinese development at this stage, or for that matter, when you're looking at the evolution of the United States through the lens of new structural economics, what is it that you see as the major challenges facing each country in these next years? I think that the major challenges is that we need to change the reference in our judgment about other countries. In the past, the academics were in the international relations, that the developed country or the academics, the theory developed by the academics in the developed country always used the developed country as a reference to see what the developed countries have and what the developing countries do not have or to look at the fact that developed countries can do well and the developing country could not as well as the developed country and then hope as well as advise the developing country to own what the developed country have and to do like the developed country. I think the intentions are good but the results often are disappointing. And for the new structural economics, I'd like to change the reference back to the developing country or back to every country. Allow every country to look at what they have and based on what they have, what they can do well and help them to scale up what they can do well and that is the change in the reference point. And we need to respect every country's right to do well based on what they have instead of trying to judge or sometimes force the other country to own what the developed country have and to do like the developed country. At the end, unless we allow every country to do well, to become prosperity, otherwise we cannot have a peaceful, prosperous, poverty free world. And this is something I learned from the new structural economics and I'm convinced by this way, we respect each other and we can have a much better world in the future. And to do with respect the right of other country, the right of development and that will bring us a peaceful and prosperous world in the coming years. And that is good for every country because unless we can find a way that will help the underdeveloped countries to become prosperous, otherwise the underdeveloped country, the people will not be happy about their situation. Social political instability will erupt from time to time and you're going to see the all migrations from the underdeveloped country or community and that will cause social tensions in the developed part of the world also. And so, you know, the good intention is not enough and from a few successful countries experiences, I generate those kinds of principles. I find the successful country, they always look at what they have and try to do based on what they have and scale up that. That is one of the major message from the new structural economics and I hope that will also contribute to the resolution of the conflict in the world. In the case of U.S. and China cooperation, many people emphasize the powerful dangers associated with what I call the specter or the possibility that we will not address climate change adequately. That issue I sense is quite important, but I'm interested in your perspective along with climate or first, do you agree that that is an important issue for collaboration and secondly, what other issues would you put at the front of your concern that require U.S. and Chinese collaboration and cooperation? Well, certainly climate change is a threat to the humanity again, just like the pandemic. It's real and it will come if we do not take actions. Now, otherwise, we are going to see the rise of the sea level. We are going to see the extreme weather getting many parts of the world and so we should not do business as usual. We should take green actions to contend it and to mitigate the dangers and that requires global effort. And as you know, China is committed to that. China is a secretaries of the Paris Accord and China over delivers a commitment according to the international agency's evaluations. So China has every intention to work for that because China understands it's a threat to the world, but it's also a threat to China. And we need to have a global cooperation because it's a global challenge unless we work together. Otherwise, we cannot win the victory just like the pandemic and other things like poverty, like hunger, like the 17th, you know, sustainable development goals, all that we need to join hands to support each other. And the U.S. now is the most powerful country and we hope U.S. will play its leadership role in bringing together the effort in the world to fight these global challenges, including the current pandemic, future pandemics, climate changes, hunger, properties, and many other challenges in the world. And that's how at this kind of crucial moment to have a, you know, cooperative friendly relation between U.S. and China certainly is the foundation for the cooperation in the world. It has been a source of great concern to me how the American administration has sought to scapegoat or blame China for the pandemic. And I don't, myself, have a deep understanding of how things have developed. But can you describe to me the state of where things are vis-a-vis the pandemic in China currently and also the ramifications for the Chinese economy that have emerged in association with the pandemic? Well, China was caught by surprise about six months ago because it first uprooted in Wuhan. At that time, we did not know how deadly, how contagious the COVID-19 was. But luckily, through the effort of the Chinese government, Chinese people, now the pandemic is under control. And life is returning gradually back to normal. Certainly, we still need to be cautious about the possibility of second outbreak because, as I said, unless every country, every corner in the world that wins the victory over the pandemic, we cannot say we have a victory over the pandemic. But by and large, the life in China has returned to normal. And certainly, in the first quarters of the year, we see a sharp dip in the economy, but I'm confident the production, the consumption, the business activities will return gradually to normal. And we should still have a positive growth rate this year. Do you see, as you observe the United States, things related to the pandemic that you think this country is not handling as well as it could? Yes, I think that, as you say, in the US, there's a tendency to use China as a scapegoat for this pandemic. But it won't help because if you do not try to understand the root of the problem and to use other countries as scapegoats, the problem will still be there. And you are not prepared to cope with the problem. And so, as you see, China was caught by surprise, but China was able to bring that under control. And the US, with all the information that made available from China, as well as the health system, the economic power, but the US has been affected, the most serious in the world. So that shows, yes, we have some problems, we have some challenges in the now and in the future, but it's better to face the problem challenges, to understand the roots, the reason, the causes of the problem in an objective scientific way. And that will help you to find a solution. And to use other countries as a scapegoat. It seems to be politically convenient, but you're going to pay a high cost for the ignorance. So that's a lesson that we learn in this, in a branding war of the pandemic. But I think this doesn't also apply to other challenges, like climate change, or the poverty, or the hunger, or social, other social economic or political issues. In the realm of macroeconomic policy, what has China done to try to mitigate or diminish the depressive effects associated with the propagation of the pandemic and the way in which people had to be quarantined or locked down? What kind of response, central bank, fiscal policy, other instruments of policy have been used in China? Certainly, because the pandemic, the lockdowns sharply reduce the demand, causing the unemployment issues, causing the sharp dip in the economic activities. Now things gradually return to normal, and the government needs to support less likelyizations. And the normal tool, as you know, the expansionary physical policies that the Chinese government will issues the spatial bonds about one trillion yuan to help the local government replenishment of their physical capacity, and also the Chinese government will raise the debt ratio from 2.8% of GDP to 3.6% of the GDP this year in double means. Another one trillion yuan that allows the government to support some production activities. And the monetary policy wise, the central bank has lowered the reserve ratios and also issues spatial instrument to increase the credit supply to the business community. Fundamentally, we need to protect the enterprises, especially the small and medium-sized enterprises. They have been hit very seriously in the first quarter of this year, and to protect the enterprises also means to protect the employment. And as I say, things in China now has gradually returned to normal, and I think, you know, the situation will improve. And I just see the World Bank release its forecast for China this year, and the World Bank's forecast China will have one percentage point of growth rate this year. And the world, you know, is likely to have a negative 4% dip in the growth rate, and the high-income country, you know, some of them will have 10% reduction in their GDP and or 8% reduction in their GDP. So overall, the early return to normal and our Chinese economy to weather through this challenge in a much better way. You both through your work at the World Bank and with regard to new structural economics have spent a great deal of time focusing on the developments of Africa and the relationship between China and Africa. My friends who are in Africa have said to me that on the one hand, the pandemic makes their people vulnerable because they don't have the well-developed health systems that the advanced countries have created, though those are clearly found to be lacking in many respects, as we all now know. But in Africa, people looking for a silver lining, looking for some good news, talk about how the younger average age of the citizens means that the population may be somewhat less vulnerable than in countries where the populations average age is much older. I don't pretend to have anywhere near your sensitivity or expertise in Africa, but how first, how do you see the pandemic affecting the African continent? And then we'll move on to the next phase of China's relationship with Africa. I think so far, all the statistics shows the African country, they weathered through this pandemic much better than other parts of the world. And one reason, as you said, because their age structure allows them to have a better position to meet the challenges. And also the lessons learned from other countries, so although the health system is not as well developed, but the governments there take the precautions. And the people there also take the precautions and hope that the pandemic can be controlled there. But certainly we need to be careful because, as I said, unless we win the victory in every corner of the world, otherwise the danger of outbreak will be there. And hopefully, you know, African countries can cope with the challenges. And especially, you know, we can have the vaccines soon and with the vaccines, then we will have the confidence that we can win the victory. And but looking forward, the pandemic will bring temporary shock and challenges. But there are more long-term challenges in African countries. And so we also need to find a way to help the African country to meet the long-term challenges, the development, the employment, the poverty, and the climate changes. And for that, I think that China as well as other developed communities have the obligation and the moral obligations for helping African countries to meet the challenges and to, you know, achieve the goals promised by SDGs. Well, I sense from people from the INET community who you met, some Camilla Thulman, Folasade Sole, that the tension related to climate change in an equatorial region, where so many depend upon subsistence farming as a source not only of nourishment, but also as a platform of social stability. And with a young demographic where the population is said to be the working age population over the next 40 years, as I have read, will go from 1.25 billion to 2.6 billion people. We have a development strategy now that does not easily replicate what Japan, Korea, Taiwan, and China have done based on infant industry protection and the, we might call, the engine of manufacturing. With automation, global supply chains, it's very hard to see what the next phase will be, though I know there are optimists, some like your countrymen who work at the Lujan Academy, speak as though the ability to integrate markets through electronic internet infrastructure. May create potentials that here to for were not available as part of a development strategy. But I'm curious what you would prescribe for much of the continent of Africa to meet this challenge over the next 40 years with a growing population and what structural ingredients are necessary for them to say rise to this challenge and create greater and greater prosperity for their people? I think there are some still a window of opportunity for African countries. As you mentioned, their population is very young and the job need for the young people is huge. And unless they can find decent job, otherwise they will not be happy. Namely, the social political stability in their country cannot be maintained. And if there's no social political stability and hope for prosperity in their country, legally or illegally, they will migrate to the developed country in Europe to the US and causing all kinds of difficulties in adjustment. In the recipient countries and so how to find the decent job for the 1.2 billion young people and 2.6 billion young people working age people in the future will be a crucial issue for African country and for the world. And we are talking about the artificial intelligence AI, we are talking about the robotics, we are talking about the automation that seems to be a threat for jobs. But I think those kind of things may happen in the future, but there are still some years there. Those very labor intensive manufacturing, the cost for automation is still much higher. Then employing the labor workers to work on that. And I think that from my adjustment, there are 15, 20 years of window of opportunity there. And the African country need to capture that opportunity. Otherwise, by the time when those jobs replaced by robots, then unless they have the capital wealth to employ to buy robots, otherwise, they will have no means to earn their difference. And so how to acquire those kind of capital, then you need to turn your level force into working level force now, they can earn their wages not only for their difference, but they can also save the capital for the future. So I think that there's still a window opportunity for African country, and it's very important for the global communities to help African country to capture the window opportunities. And China certainly is a member of the global communities. China, on the one hand, will release many of those kind of labor-intensive jobs due to the rising of the wages in China. And on the other hand, now China is becoming the largest economy in the world. Already, by the protection popularity and by market change rate, I think China will become the largest economy in this decade. And also, China will become a high income country, so China need to share more responsibilities. But I think it's not China alone. We need to work together because if African country can produce those kind of labor-intensive goods, and they need to have market for that. And those markets are in the developed country, in Europe, in the US. And I think we need to work together to help African countries and helping African countries means helping ourselves. So hopefully, that this, you know, not just hope and it will be a reality. And how to make that become a reality. As I said, in the past, we always use the developed country as a reference, hope the developed country, you know, what developed country owned, what developed country can do well, will be difficult in the developing country. And the intentions certainly was good, but the result was poor. And we need to change the reference. We should look at what the African country have now. And as you mentioned, they have a lot of young labor. And if they can do well, I think there will be very intensive industries. So we should help them to scale up what they can do well on those kinds of labor-intensive industries. If they can scale up those kind of industries, they can create a lot of jobs and allow the young people to have decent earnings. And they can also save and they can increase their capitals. So those days that everything can be replaced by robots, they will have the means to employ those kind of robot. And they can enjoy the same prosperity as we have. So I'm delighted to have this opportunity to have this conversation, but I have been late for another commitment. Well, then I think we should bring things to a close. But I guess my last question to you would have been, has China's development strategy vis-a-vis Africa changed as a result of the pandemic? Or is it on course with the kind of policies, goals, and collaborations that you and I discussed as recently as December of 2018? Well, as you know, China has a reputation for sticking to the basic principles. And once the basic principle is adopted, China will not change that. Just like China proposed the peaceful coexistence, five principles for that in the 1960s. And China has been uphold those kind of principles. And so similarly, in terms of China-African cooperation, the basic principles will not change. China still commits to that. And certainly, the priority may adjust a little bit. Currently, every country is fighting against COVID-19, and China certainly devotes more effort to support African countries to cope with the COVID-19. But China is still committed to help African countries, to join hands with African countries to develop in African countries, and they will be good for African countries, and they will also be good for China, and for the rest of the world. Okay. Well, thank you. Justin, it's always nice to hear your thoughts. And it certainly helps us to understand both China Africa and the challenges that the world faces. I hope that in a few months' time, perhaps after the US presidential election, I can call you again and we can do another chapter for this podcast. But for now, I want to thank you for being our guest tonight and for sharing all of your insights with our audience. Thank you very much, Rob, and looking forward to our next podcast. I agree. I look forward to it as well. So, thank you. Thank you. Good night. I look forward to it as well. And check out more from the Institute for New Economic Thinking at InetEconomics.org.