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Kinling Lo

Chinese economists called for institutional reforms after three US-based scholars won the Nobel Prize in economics with their research into how institutions shape the economic success of nations.
Turkish-American Daron Acemoglu and British-Americans Simon Johnson and James Robinson were named as this year’s winners on Monday in Stockholm having published extensively on the relationships between political and economic institutions and wealth.
They argued that states with “inclusive institutions” – which uphold the rule of law and property rights – as opposed to “extractive ones”, would lead to “inclusive” economic institutions and economic success.
“I think the conclusion of their work tells us that institutions are the most critical [to a country’s economic development]. This also has big implications for China’s way forward,” said prominent Chinese economist Xiang Songzuo, who added that the scholars’ conclusions were applicable to the China model.
“Only by moving towards further marketising our economy, emphasising on the protection of intellectual property, private companies, fair market competition and upholding the spirit of entrepreneurship, can our economy attain sustainable growth, and our people can have higher incomes.”
China’s slowing economy has remained under pressure from a simmering property crisis, low consumer confidence and intensifying trade and tech competition with the United States, raising concerns with economists at home and abroad.
According to the research of institutional economists, the key would be protection of private entrepreneurs’ ‘two rights’
Nie Huihua, Renmin University
And while Beijing has introduced new stimulus policies in the past weeks, many are still calling for deep-rooted institutional problems to be addressed.
Nie Huihua, a professor at Renmin University in Beijing, said the research had “important insights” for China’s reforms and sustainable development.
Nie referred to Beijing’s draft of a widely watched law concerning the promotion of the private sector, which was released on Thursday.
The 77-article law would mark a “systemic approach” to address the sector’s problems and challenges, while helping create a stable, fair, transparent and predictable business environment, according to the National Development and Reform Commission and the Ministry of Justice.
“According to the research of the institutional economists, the key would be protection of private entrepreneurs’ ‘two rights’ – personal and property rights and safety. Only when these are protected that the private economy can develop in a healthy and sustainable manner,” Nie said on his official WeChat social media account on Tuesday.
Acemoglu, 57, and Johnson, 61, work at the Massachusetts Institute of Technology and Robinson, 64, conducts his research at the University of Chicago.
My perspective is generally that these authoritarian regimes, for a variety of reasons, are going to have a harder time in achieving long-term, sustainable innovation outcomes
Daron Acemoglu
In their 2012 book Why Nations Fail, Acemoglu and Robinson argued that because of the lack of “inclusive institutions”, China’s combination of economic growth and political control cannot be sustainable.
And on Monday, Acemoglu said that China has posed a “bit of a challenge” to that argument, as Beijing has been “pouring investment” into the innovative fields of artificial intelligence and electric vehicles.
“But my perspective is generally that these authoritarian regimes, for a variety of reasons, are going to have a harder time in achieving long-term, sustainable innovation outcomes,” he said.
In November, Acemoglu and Johnson also published an article titled “America’s real China problem” under Project Syndicate, saying “Chinese policies came at the expense of American workers” which helped grow China’s economy, and allowing it to “invest in an even more complex set of repressive technologies”.
The authors concluded that “China’s trajectory does not bode well for the future”, while warning the US to discourage placing critical manufacturing supply-chain links in countries like China.
They also urged the US to hasten the transition to a carbon-neutral economy and invest in pro-worker technologies.


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The winners of this year’s Nobel Prize in economics published extensively on the relationships between political and economic institutions and wealth


The winners of this year’s Nobel Prize in economics published extensively on the relationships between political and economic institutions and wealth.


Nobel Prize-winning research pushes Chinese economists to call for institutional reforms

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}The winners of this year’s Nobel Prize in economics published extensively on the relationships between political and economic institutions and wealth

The winners of this year’s Nobel Prize in economics published extensively on the relationships between political and economic institutions and wealth