LONDON (Xinhua) – The most important thing in the world in the next 20 years is the rise of Chinese consumers, renowned British economist Jim O’Neill said in a recent interview with Xinhua.
O’Neill is chair of the London-based think tank Chatham House. He is a former chief economist at Goldman Sachs and former Commercial Secretary to the British Treasury.
“China is doing almost exactly what I assumed years ago,” O’Neill said, who in 2001 coined the acronym BRIC that represents Brazil, Russia, India, and China, a bloc of emerging economies that stood to have a significant impact on the world economy in the future.
Despite the complex international landscape, O’Neill said he has confidence in China’s future economic development, believing the potential will come from the rise of Chinese consumer and services economy.
“Now China has reached a certain level of success and wealth, its future depends on its own ability to consume,” said O’Neill.
“The next decade, China will probably grow by five per cent, which many people think is so disappointing,” he said, but the sheer size of Chinese economy means five percent is equivalent to “Germany growing at 15 to 20 per cent.”
“So long as the domestic consumer and services economy becomes a bigger share, China should be very happy with that,” O’Neill said.
In his opinion, Chinese economy has become more resilient in the past decade. The 2008 financial crisis made China realise it had been too exposed to low-value-added exports to the United States (US) and had to cut the dependence, O’Neill said, praising the country’s handling of the post-crisis years since.
He encouraged China to continue opening up as external competition will help strengthen Chinese businesses and opening up the domestic market for foreign participants will help China develop a better financial system.
O’Neill noted China has ended the one-child policy in recent years as part of the solution to address the problem of an ageing population. But he cautioned China will need to wait at least another decade before the policy change can make an impact on the size of working population because people can only start to work when aged above 16 to 18.
“So it’s more important to focus on the productivity than necessarily doing what you can to grow more people,” O’Neill said.
Impressed by China’s innovation in recent years, O’Neill said, “I remember 20 years ago I would hear people say China is good at copying everybody, but there is no scope of individual flow for creativity. Now I see that differently, you do have creative ideas in China.”
O’Neill reminded that education is an underlying drive for growth. While there are good education and school in Shanghai and Beijing, China needs to improve the standards of education and health in smaller cities and rural areas.