“Every crisis is an opportunity. With the right handling, we could simultaneously solve the current financial crisis and prevent the emerging climate change crisis.”
— Justin Yifu Lin in his World Bank blog, 2009
China’s growth on the world financial stage has been extremely rapid, but there is one man whose station in life has perhaps paralleled the Middle Kingdom’s spectacular rise. Justin Yifu Lin, Chief Economist at the World Bank since June 2008, has lived a brilliant academic’s life, spiced up by exciting twists and turns. Known for strong and vocal beliefs, Lin is one of the staunch economists who does not favor the appreciation of the Yuan, saying that it does nothing to heal recessionary damages.
It has been the opinion of the International Monetary Fund (IMF), the U.S. as well as Europe that if China allows its currency to strengthen, it would not only heighten domestic consumption but would also reduce China’s dependency on exports. In their view, such an engineered rebalancing would do wonders for global economic synergies. Lin, though, is convinced that this tactic will not work. In a lecture at the University of Hong Kong, Lin commented, “Currency appreciation in China won’t help this imbalance and can deter the global recovery.” It is Lin’s belief that U.S. consumer demand would retract as prices of imported Chinese goods would soar.
Lin’s approach to economics has shaped the World Bank’s economic research since he took over its reins. His research program observes industrialization in developing countries and contemplates the reasons for lack of growth in underdeveloped and poor countries. Well-renowned for his studies on economic and agricultural reforms, fiscal decentralization and the modernization of rural areas, Lin is the author of 18 books including “The China Miracle: Development Strategy and Economic Reform,” which has been translated into seven languages.
Born in Taiwan, Lin Zhengyi was always a precocious student but instead took up a career in the military. Yet, his thirst to pursue a path in education was too strong. In 1979, while stationed as a lieutenant in the Taiwanese army, Lin made an extremely bold decision. Leaving behind his pregnant wife and three-year-old son, Lin deserted the army, swimming 2,000 meters from Taiwan to mainland China at a time when the Middle Kingdom was reinventing its economic structure. Soon thereafter, he was enrolled in the prestigious Peking University and later went on to complete his PhD from the University of Chicago.
Since returning to China after his education, Lin’s contributions have consistently added color to the Chinese government’s economic development policies. Based on rigorous research and keen insight, Lin has prompted China to follow a strategy that mixes low production costs, high output and advanced technology. This attracted not only abundant capital but also formed the basis for a high level of industrialization. Among other strategies, he recommended that the government develop its small and medium enterprises, overhaul its administrative workings, and support the country’s agricultural and rural communities.
Lin’s approach has always been based on global perspectives and it was not long before his outstanding accomplishments were recognized by the World Bank. World Bank President Robert Zoellick commented to Forbes, “As our first chief economist from a developing country, and an expert on economic development and particularly agriculture, Justin Lin brings a unique set of skills and experience to the World Bank Group.”
Today, the 58-year old Lin, who was a professor for many years at Peking University, is a legend in China’s financial circles. Twice, in 1993 and 2001, he won the Sun Yefang Prize, the highest honor for economics in China. His China Centre for Economic Research at the University, of which he is the Founding Director, is a highly respected economic think tank.
With China continuously steaming ahead, Lin has fresh problems to worry about. Chinese CEOs are beginning to support the idea of raising the Yuan’s value, saying that it would definitely add to customers’ purchasing power. The U.S. has also suggested reducing imports from China altogether to assist in narrowing the country’s trade deficit. To Lin, these measures appear skewed. “If the U.S. has to switch the source of imports to other countries, people will have to pay for that,” Lin pointed out at a conference at the New York Stock Exchange. Instead, he encourages China to take the initiative to step up wages and mitigate imbalances in income in order to further dynamic growth as well as address global economic concerns. Rather than induce short-term currency changes, Lin suggests enacting long-term structural reforms, like lowering the high savings rate in China to get domestic consumption chugging faster.
Certainly, being an advisor to the Chinese government is not at all easy. But Lin seems to enjoy it. He once told his students, “The ambition of a soldier is to die on the battlefield; my ambition is to die at my desk.” And whether he continues to be hunted by Taiwan with an arrest warrant for defecting from the army or sought after by China for his economic policies, the bottom line remains that Justin Yifu Lin is a much wanted man.
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© Thomas White International, Ltd. 2018