For economist, signs all point to solutions

British economist Jim O’Neill was cycling in a remote village in southern China in late 2009 when he spotted a large poster on a dilapidated wall that stopped him in his tracks.

He was on a business trip but had decided to spend some leisure time with his wife visiting the karst mountains beside the Yulong River in Yangshuo, the Guangxi Zhuang autonomous region.

“We cycled around some villages, and outside one we saw this massive billboard which said, in English, ‘Success in English, success in life’. I took a photograph of it,” he said, recalling the incident in a recent interview.

“I’m like ‘Wow, what does that mean for me as a British person who thinks about China?’ And more importantly, what does it mean for Britain as an opportunity for improving its economic, financial and diplomatic relationship with China?”

O’Neill, former chief economist at Goldman Sachs, said the poster helped shape the advice he would go on to give former British prime minister David Cameron and his chancellor, George Osborne, who heralded a “golden era” of Sino-British relations.

Recalling his first trip to China in 1990, O’Neill said Beijing looked completely different from how it does today. “The first time I went,” he said, “I joked that the car I went from the airport to downtown was the only car on the road, as you were just surrounded with what seemed like millions of bikes.”

Since then, O’Neill — a member of the House of Lords and chairman of the think tank Chatham House — has traveled to China more than 30 times.

Lifting hundreds of millions of people out of poverty with the help of astonishing economic growth has been China’s biggest achievement in the past 40 years, he said, adding, “China has had the most astonishingly long period of very high economic growth, something the never seen.”

In 1977, China’s GDP was $175 billion, only 2 percent of the global total, putting the country 10th in the world ranking. Last year, GDP stood at $12 trillion — an increase of nearly 68 times — 15 percent of the global total, making China the second-largest economy.

This year marks the 40th anniversary of China’s reform and opening-up, which set the path forward and has led to many changes in the country.

For O’Neill, one of the interesting things has been the central government’s five-year plans. He said that while such plans may not always be implemented in every minor detail, they offer a good sign of what the nation is going to do.

“When I look forward, one of the clearest things I look for is any sign of any major shift on the next fiveyear plan,” he said. “It’s something I’m surprised other foreign analysts don’t pay more attention to. It was, for example, the first sign China was going to be more accepting of a lower nominal growth rate. The previous five-year plan made that clear.”

He attributed China’s economic success partly to its five-year plans, which have kept development aligned with the nation’s trajectory.

“We in the UK would really benefit from our own British style of some kind of five-year plan, as would be the case for many different countries all over the world, whether they’re developed or so-called developing,” he said.

O’Neill is well known for coining the term BRIC — Brazil, Russia, India and China — in 2001 to describe the four rapidly developing nations that symbolized the shifting balance in the global economy. South Africa was added to the group nine years later, making it BRICS.

“When I coined the term, I remember China was still heavily dependent on lowvalue-added exports and not too developed. But I recall that China played a huge role in helping solve the Asian financial crisis indirectly in 1997-98, which is world had why I immediately saw China at the center of the BRIC concept,” he said.

Looking at the current trade dispute between China and the United States, O’Neill said it could potentially be a good opportunity for China as “this will encourage the reformists to use pressure as a sign and a symptom of what they really need to do to execute some of the broad reforms of President Xi Jinping”.

However, he said he does not envision major changes to the country’s financial market in the next decade.

“I don’t see a sort of ‘big bang’ where we suddenly wake up one day and all trading in the Chinese market is completely free,” he said. “But as we see signs of gradual opening-up, allowing more Chinese people to participate in foreign markets and more foreigners to participate in Chinese markets, that will happen. But no so-called big bang.”

He also expects to see solutions to the challenges of environmental pollution and urban expansion.

“When I reflect on the history of the world economy, there are signs of many countries having the same sort of environmental challenges that China has today, including in London,” O’Neill said. “So I think we’ll see the Chinese government becoming more determined to solve that problem.”