Ideas would be much more important for China than money, former Chinese leader Deng Xiaoping told Robert McNamara, the then president of the World Bank, in 1980.
The World Bank report, “China 2030: Building a Modern, Harmonious, and Creative High-Income Society,” which was released on Monday, bears full testimony to Deng’s prescience.
More than three decades of remarkable growth have transformed China, from a largely insignificant player in the global market, into the world’s second largest economy with foreign exchange reserves of more than $3 trillion.
Yet, in today’s China, development ideas are badly needed as the world’s most populous country has now reached a critical stage in its development path. It is with this common understanding that China and the World Bank have decided to further deepen their 32-year-old partnership.
For China, the case for underlying structural reforms is compelling. The growing inequality and increasing environmental and resource stresses have made it difficult for the country to rely so heavily on exports and investment for growth.
And as the World Bank report correctly points out, managing the transition from a middle-income to a high-income country will be challenging.
Hence, it makes sense for Chinese policymakers to seek development advice from the World Bank as it has a great deal of knowledge on how to overcome the middle-income trap from the experience of other countries, and it has played a historical role in the opening-up of China.
For the World Bank, by re-examining the most successful example of its development work in line with the major changes in the world and national economies, the new report represents a brave move to challenge itself.
Deng, the chief architect of China’s reform and opening-up, once said that modernization in China was inevitable, but with the cooperation of the World Bank, China could grow faster.
China’s exceptional economic performance ― an average growth rate of 9.9 percent and over 600 million people lifted out of poverty over the past three decades ― has proved both Deng’s foresightedness and the value of the World Bank’s policy suggestions since early 1980s.
But past success cannot guarantee success in the future.
And the stakes are huge not only for China but also the world. A successful China will continue to improve the lives for hundreds of millions of its citizens, and moreover, it will set a rare example for other countries, developing and developed, on how to advance economic transformation to sustain long-term growth.
The World Bank report is welcome and, echoing Deng’s words two decades ago in southern China, it is expected to serve as the starting point for China’s deepened reforms.
