Justin Yifu Lin: By 2035, China will still have an 8% growth potential each year.

On March 24, during the Boao Forum for Asia Annual Conference 2026, a special forum themed “China’s Economic Outlook: Focusing on High-Quality Development” was held. The conference conducted in-depth discussions on key topics such as setting economic expectations and targets for the first year of the 14th Five-Year Plan, high-quality development, nurturing new productive forces, high-level openness, and global cooperation. Attendees unanimously agreed that the Chinese economy is steadily transitioning from a scale and speed model to one focused on quality and efficiency, with an economic growth target of 4.5% to 5% balancing potential and reality, being both pragmatic and visionary.

“Pragmatic” Economic Growth Targets

As the first year of the 14th Five-Year Plan, the government work report clearly established the core target for 2026’s economic and social development—setting the economic growth target at 4.5% to 5%, while striving for better results in actual work.

Former Chief Economist of the World Bank and Dean of the Institute of New Structural Economics at Peking University, Justin Yifu Lin, pointed out at the forum that this target is a “pragmatic judgment considering the potential for China’s economic development and the actual situation of international and domestic economic conditions.”

Lin further analyzed that in terms of growth potential, China still possesses an annual growth potential of 8% until 2035. This judgment is based on threefold advantages: In the Fourth Industrial Revolution, China has significant comparative advantages in emerging and future industries such as artificial intelligence, controllable nuclear fusion, and quantum computing, with nearly 6 million talents providing core motivation for technological innovation each year; in terms of purchasing power, China is already the largest economy and market in the world, possessing the richest application scenarios and the most complete industrial categories, with global-leading hardware capabilities; at the same time, China excels at combining effective markets with capable government, retaining over 80% of its share in the industries from the first three industrial revolutions, and further transforming traditional industries through digitization and greening. Considering these factors, Lin believes that maintaining an 8% growth potential before 2035 is not an overly optimistic judgment.

However, Lin also acknowledged that after the global financial crisis in 2008, international economic growth has significantly slowed, and as the largest exporter, China faced weakened external demand, compounded by de-globalization and geopolitical conflicts, while also dealing with internal structural adjustments, “meaning that potential cannot be fully realized.” Therefore, the 4.5% to 5% target is both pragmatic and leaves room for flexibility. “As long as the international environment does not experience significant unforeseen events, it is entirely possible for China’s economic growth to reach 4.5% or even 5%; if things go slightly better, there may even be growth above 5%.”

This adjustment of the growth target also reflects that China’s economic development will transition from merely pursuing speed to seeking sustainable and high-quality growth amid fluctuations. Huang Yiping, Dean of the National School of Development at Peking University, concluded: “Moderately lowering the growth target does not mean giving up growth but rather accumulating momentum for achieving faster economic growth in the future through reform and innovation, especially through revolutionary breakthroughs in general-purpose technologies, such as innovations in artificial intelligence.”

Pathways to High-Quality Development

What constitutes high-quality development? Lin provided a clear explanation at the forum. He pointed out that the Chinese government has a clear definition, which is to “fully, accurately, and comprehensively implement the new development concept.” In 2015, the new development concept encompassing “innovation, coordination, green, openness, and sharing” was formally proposed. Eleven years later, standing at the threshold of the 14th Five-Year Plan, these ten words have been imbued with new practical significance.

So, what is new about emphasizing high-quality development again during the 14th Five-Year Plan? Jiang Xiaojun, former Deputy Secretary-General of the State Council, Director of the National Data Expert Advisory Committee, and Honorary President of the China Society of Industrial Economics, provided her observations. She noted that during the 14th Five-Year Plan, innovation will focus more on new productive forces, but the emphasis is no longer solely on chasing new industries; rather, it is about transforming traditional industries with new technologies, “enhancing output and competitiveness through innovation in existing stock.” In terms of openness, China and developed countries are shifting from complementary division of labor to horizontal division of labor; competition is unavoidable, but China emphasizes win-win cooperation in openness, which will become a very distinctive characteristic of the era. Coordination will emphasize the balance between investment and consumption, placing greater emphasis on the consumer side while ensuring both are prioritized; sharing will continue to focus on common prosperity; and green will consistently uphold the positioning of being a major country in green production and green industries.

Lin further emphasized that the new development concept should not be executed in isolation but should be unified under the basic logic of “innovation based on comparative advantages determined by local factor endowments.” Only by developing according to comparative advantages can enterprises have market competitiveness, government finances increase, and the capacity to invest in reducing urban-rural disparities, improving secondary distribution, and promoting green development. “Therefore, to truly achieve high-quality development, it is most important to pragmatically innovate based on the endowment conditions of each locality, allowing for simultaneous achievement of these five aspects.”

Zheng Yongnian, Dean of the School of Public Policy at The Chinese University of Hong Kong (Shenzhen), former Dean of the Qianhai Institute for International Studies, and Chairman of the Guangdong-Hong Kong-Macao Greater Bay Area Research Institute, proposed a “three-horse carriage” for building a modern industrial system and developing new productive forces: a group of universities and institutions that value fundamental research, a group of enterprises capable of transforming basic technologies into applied technologies, and a financial system serving the real economy and technological innovation. In his view, this represents the core of the 14th Five-Year Plan—a modern industrial system based on technological advancement, which is also the key leap for China from being a “catch-up economy” to entering the “first tier.”

On this basis, Zheng proposed a new concept—“open-source modernization.” “Previously, after some Western countries developed, they removed the ladder they climbed to prevent other countries from developing. What China needs to do is, after developing itself, extend that ladder to allow, encourage, and help other countries achieve development and realize common modernization.”

Michele Geraci, former Deputy Minister of Economic Development of Italy and Professor of Finance at New York University (Shanghai), responded to this concept from an international perspective. He pointed out that there is a misunderstanding in the West regarding China’s 14th Five-Year Plan. He emphasized that China does not wish to become an isolated country but rather aims to continue promoting trade and openness while coordinating domestic and international markets, which is the core of China’s economic development strategy. China will not close its doors but will deepen economic and trade exchanges with the outside world based on equality and mutual benefit. Meanwhile, Geraci noted that China indeed hopes to achieve independent development and self-strengthening in key areas such as energy, educational technology, and health care, but this does not signal a move towards closure; rather, it provides clear directions for foreign investors in cooperation. “To understand the 14th Five-Year Plan, one must grasp the open logic behind these concepts, rather than misinterpret it as division.” He stated that China’s pursuit of self-reliance and self-strengthening reflects a higher level of participation in global division of labor.

Beijing Business Daily reporters Yue Pinyu and Zhou Yili

(Edited by Wenjing)

Keywords: Justin Yifu Lin