Edmund Phelps*

It is always an honor and a pleasure to speak at the China Development Forum. I am very sorry not to able to be there in person this year. On a personal note, I have been extremely touched by the warmth and support of my dear Chinese friends during the Pandemic.

Just in the past few years, China can point to the amazing accomplishment of lifting 80 million people from poverty, the striking success in getting control of the Covid virus, the major technological successes, and now the striking prospect of resuming 6 per cent growth per year of the GDP. In contrast, the West over that same span cannot point to any such achievements.

We see in China an economy that has shown extraordinary performance for more than forty years. In striking contrast, the West’s economies – led by the American economy and American influence – have shown stagnation over almost the totality of the past fifty years.

Owing to their size and their differences, though, there may be possibilities for China to give something to America and America to give something to China.

That thought came to my mind on noticing the rising complaints in the West about the extraordinarily high current account surplus in China (which most economists in the West view as costly.) This surplus appears to be not only the result of a market outcome – the unusually high propensity of the Chinese to save or a weakness of investment demand attributable to the Covid virus – but also the result of the central bank’s setting high interest rates.

Download the full report：China’s Many Impacts on the Stagnant West