In June Justin Lin Yifu, a Beijing professor, will take up the post of chief economist at the World Bank. Nothing could be a clearer sign of the times. This is the number two job in one of the two major international economic institutions, the other being the International Monetary Fund.
Earlier incumbents have included the Nobel prize winner Joseph Stiglitz, the former US treasury secretary Lawrence Summers and the UK's Nicholas Stern. Previously the top jobs in these two outfits have always been shared between Americans and Europeans.
Lin's appointment thus marks a major break with political tradition. Hitherto there has been hardly any appointment of a Chinese to a senior position in the major international organizations. China's burgeoning importance, however, is set to change this state of affairs, with Lin's appointment likely to set the tone for the future.
In the past the World Bank, like the IMF, has been the tame captive of US and European governments, never straying from the prescribed Western free-market orthodoxy. The very public disagreement at the time of the Asian financial crisis between Stiglitz and his counterpart at the IMF, Stanley Fischer – with the World Bank man strongly critical of the IMF's disastrous policy toward the crisis, and supportive of Malaysia's temporary imposition of capital controls – was highly unusual. But the appointment of a Chinese chief economist takes us into an entirely new realm.
The East Asian countries have never subscribed to the neoliberal economic agenda, eschewing sweeping privatization, a minimalist role for the state and wholesale market liberalization.
At the center of Chinese policy remains a highly interventionist state and state-owned firms. Lin himself has written that the government is the most important institution, determining whether development is successful, and argues that privatization is neither necessary nor sufficient for making Chinese state-owned enterprises more efficient. Imagine such sentiments being expressed by the Bush or Clinton administration, or Gordon Brown for that matter.
