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Lin Yifu(林毅夫),Justin

Justin Yifu Lin (林毅夫) Ph.D.
DoB: October 15, 1952
Education:
Ph.D., Economics, The University of Chicago, June 1986.
M.A., Political Economy, Peking University, June 1982.
M.B.A., National Chengchi University, June 1978.

Research Grants:
Rockefeller Foundation, "Agricultural Research Priorities in China," 1991-1994.
Rockefeller Foundation, "The Impacts of Modern Agricultural Technology on China's RuralEconomy," 1988-1991.
DAG Grant, Hong Kong University of Science and Technology, 1995-1996.
DAG Grant, Hong Kong University of Science and Technology, 1996-1997.

Lin Yifu is seen as a legend in many circles. As an adventurous 27-year-old Taiwanese, he swam across the Taiwan Strait in 1979, coming ashore in the Chinese mainland at a time when the country was about to open to the outside world. It is this courage and determination that has seen Lin rise to prominence as one of China’s top economic analysts.

After completing his Master’s degree at Peking University in 1982, Lin went to the United States to further his study in agricultural economy at the University of Chicago, where he obtained his doctorate.

Lin devoted him to work at the State Council Development Research Center after he came back to China from the United States. In 1994, he founded the China Center for Economic Research of Peking University with several returned Chinese international economists.

“If I stayed in Taiwan, I could serve only 20 million people, but coming to the mainland, I can serve both 1 billion people here and 20 million people in Taiwan,” Lin said in explanation of his swim so many years ago.

Now director of the China Center for Economic Research at the prestigious Peking University and member of the National Committee of the Chinese People’s Political Consultative Conference (CPPCC), he has warned that deflation might return to China in the next two or three years because of overcapacity, unless the country succeeds in cooling down the excessive investment in some economic sectors.

Lin was speaking at the Second Session of the 10th CPPCC National Committee held at the beginning of March in Beijing.

The fast economic growth rate of 9.1 percent China posted last year was propelled mainly by rapid increase in investment, which focused merely on a few sectors, including real estate, automobile, cement and iron and steel, said Lin, referring to the country’s excessive investment in these areas based on consumer demand.

“The fast growth certainly cannot be sustained for long,” he predicted.

Excessive investment, he explained, will lead to surplus production capacity after market demands for motor vehicle and housing decrease, and a significant amount of bank loans to these sectors will then be turned into non-performing loans, with the subsequent possibility of deflation.

He went on to say that China is still being shadowed by deflation as the commodity retailing prices index was negative last year despite 1.2 percent growth in its consumer price index, which was attributed chiefly to price hikes in agricultural and fuel products.

Various manufacturing sectors are, nevertheless, still being troubled by excessive production capacity, and relative deficient market demand, Lin said.

As to the ongoing heated debates on the appreciation of China’s yuan currency, Lin believes that there is not much possibility for it to appreciate in the near future.

Despite the latest round of “buildups” about the yuan’s appreciation being squashed by Chinese Premier Wen Jiabao’s reiteration that China would “maintain the basic stability of the yuan exchange rate,” speculations continue to abound.

Lin reasoned that, viewed from the experience of Japan and the Republic of Korea, a nation’s currency would appreciate as long as the economy maintains a growth for 20 to 30 years. So far the Chinese economy maintains a fast growth and a surplus both in current and capital accounts.

He went on to say that in the long run, China’s cheap labor force, a market with a large potential and the flux of foreign capital would make the appreciation of the yuan possible. But currently China hasn’t stepped out of the shadow of inflation, and only by maintaining the stability of the yuan can China keep on the economic growth path through expanding exports.

Furthermore, he added, the yuan is under the pressure of speculation, and a quick adjustment would ignite more expectations of speculators. In that case, the yuan would have to over-appreciate, which is detrimental to China’s macro-economic stability.

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