Nobel Prize winner sees transformation in China's growth model

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01:57

Nobel Prize winner in economics Christopher Pissarides acknowledged China's hard work to adjust its economic structure and ensure sustainable growth.

He made the remarks at the sidelines of China Development Forum (CDF) in Beijing this weekend.

"I'm beginning to see a transformation in China's growth model, and I think it's in the right direction," said the Nobel laureate.

"The era of low wage manufacturing is ending throughout the world. Chinese leaders have foreseen that, so they are investing more in R&D, and pushing into the direction of high-tech manufacturing," Pissarides said.

"Those efforts are inevitably going to bring a transformation," he added.

Regarding lower growth target set out by the Chinese government, Pissarides is neither surprised nor worried, as he said, given how fast China has been growing for the past four decades, inevitably there's going to be a slowdown.

However, Pissarides pointed out that China still needs to grow faster since the country is still way behind in per capita income among advanced OECD countries.

"But again, the OECD countries are averagely experiencing a 2 percent growth, and China is growing at 6 to 6.5 percent, so China can still catch up," Pissarides said.

What's the economic transformation direction?

In Pissarides' opinion, the key to China's economic transformation lies in technology development and application.

"Invest more in research, and apply the new technologies, especially robotics and AI to different industries," Pissarides said.

"Based on the speech and conversations I heard in CDF, I believe the Chinese leaders are saying the right things about encouraging which kind of research, we just need to wait and see what will happen," Pissarides said.

"The leaders are also talking about enhancing collaborations between state and private enterprises, encourage private companies to go into research and give them more market access, that's encouraging," Pissarides said.

Challenging the traditional tech leaders

With China gradually moving up the technology ladder, the competition with other countries was intensified in the fields such as telecoms, which also caused problems between China and the countries that are originally in the lead of the industry such as the U.S., Germany, Japan and South Korea, according to Pissarides' observation.

"It's fairly obvious from the things those countries are saying that they are worried about the additional competition from China," Pissarides said.

With each country trying to protect their traditional leading position in technological fields and shutting their markets, the world is risking losing the win-win situation it could have, according to Pissarides.

The WTO is failing currently to provide a good guide to the new situation where new technologies are rapidly developing and new players are marching into the picture, that's why there's so much demand and push for reform in WTO now, according to Pissarides.

"I hope the reform will be successful because multilateralism is very important to WTO and the world," he said.

"We need a better framework, more transparent one that companies from countries know that they're facing a level playing field in the sense that if they do things right, they will succeed, and there won't be any political obstacles on their way," Pissarides said.