Nobel Economists Summit of ChinaCFP

Poised at the critical point of the next development cycle， China is facing increasing need for economic reform. If anyone is qualified to help resolve the new situations and changes in Chinas economic performance， it would be Nobel economists. And recently they gathered at the Nobel Economists Summit of China for this very reason.

Co-sponsored by the New Huadu Business School， the Center on Capitalism and Society of Columbia University， and Institute for Strategic Studies of Peking University and organized by Peking University Business Review， the first Nobel Economists Summit of China was held in Beijing from March 18 to 19. The line-up of the speakers was impressive： 2006 and 2012 Nobel Prize winners in Economics， Frances former Minister of Economics， former Vice President of World Bank， other world famous economists， and some renowned Chinese entrepreneurs. The discussion broke down Chinas economic mode and proposed innovation for the coming decade.

Why cant China simply imitate the West？

Edmund S. Phelps， winner of 2006 Nobel Prize in Economics and Dean of New Huadu Business School， believes that innovation standards are not universal. China faces complex situations resulting from a variety of causes， and this prevents China from simply imitating the West.

“Popularity doesnt equal effectiveness，” declared Justin Yifu Lin， former vice president of World Bank. “Some characteristics of the institutional environment in the West do not fit developing countries.” Lin also provided an example： In 2010， World Bank advised a small African country to carry out 520 reform programs， but an official from the country revealed that less than 520 persons were employed by its Treasury. “Different countries have different domestic and international interests，”he continued.

“China should not set the goal of catching the West，” opined Robert Z. Aliber， Professor Emeritus of International Economics and Finance from the University of Chicago. “Its target should be improving living standards， otherwise， quality of life will worsen and China will fall into the same trap that Japan did. They targeted catching USA in the 1950s， but ultimately their economy slowed after 1990.”

Why did China miss the industrial revolution？

Alvin E. Roth， co-winner of 2012 Nobel Prize in Economics and George Gund Professor of Economics and Business Administration Emeritus at Harvard University， analyzed differences in market design and central plan through stock markets， enrollment systems and kidney trade cases. In his opinion， a design based on the market will inject more vitality into Chinas economy and is also the foundation of correct economic policy.

“Non-destructive innovation can foster growth and can be promoted by public policy，” noted R. Glenne Hubbard， Dean of the Graduate School of Business at Columbia University and member of the Panel of Economic Advisors of the Federal Reserve Bank of New York， comparing economic policies of the U.S.， Europe and Asian countries. He also posed a very interesting question： “Why did the industrial revolution first happen in Britain rather than China？” Englands 1688 “Glorious Revolution” resulted in the government better protecting private property and avoiding arbitrary tax increases. This reform made entrepreneurs more willing to invest money to develop technology and techniques. However， other more developed countries didnt follow similar policies at that time， according to Hubbard.

Yew-Kwang NG， Albert Winsemius Chair Professor of Nanyang Technology University， believes that although it has entered the market economy， China still depends too much on administrative management due to the long-established practices in the planned economy. “I think it is important to further economic reform and related institutional reform，”he remarked.

The consensus reached at the summit was that national innovation is the only way to revive the economies of various countries. “To improve productivity， we need to enhance performance of comprehensive factors，” suggested Cheng Siwei， Vice Chairman of the Standing Committee of the 9th and 10th National Peoples Congresses of China and “father of Chinas venture capital，” in the closing speech.“In the short term， we should constantly encourage innovation.” He opined that in the coming decade， China needs to attain tangible growth by better respecting market rules， developing the real economy more steadily and progressing the virtual economy appropriately.

“China should not set the goal of catching the West， its target should be improving living standards， otherwise， quality of life will worsen and China will fall into the same trap that Japan did. They targeted catching USA in the 1950s， but ultimately their economy slowed after 1990.”