Lawrence Lau on why China must ‘work smarter’ and how it can invent from scratch

Lawrence J. Lau is a Hong Kong economist specialising in economic development and East Asian economies. He was a professor of economics at Stanford University before serving as vice-chancellor and president of the Chinese University of Hong Kong until 2010. Lau has held the Ralph and Claire Landau Professor of Economics chair at the university since 2007. This interview first appeared in SCMP Plus. For other interviews in the Open Questions series, click here.

What is your take on China’s drive to build a high-quality production force? How much has China shifted to this new model, and what more should Beijing do?

In 1978, when China’s economic reform and opening first began, we can say that China was mostly working harder, generating more output from more inputs, not smarter.

But China is entering a stage where it really is trying to work smarter, which means that its total factor productivity increases. That’s the gist of the emphasis on the new quality productive forces. Basically, growth doesn’t come from just quantity any more – it also comes from quality.

China is believed to be good at taking other people’s technology and turning it into large-scale production. That is its edge. But can China invent from scratch?

That is a very good question because this is what people say when they distinguish between, say, going from 0 to 1, and from 1 to n.

China does have the advantages of economies of scale and “learning by doing” through repetitive production. It’s absolutely correct that from 1 to n China is extremely good. Think, for example, of Alipay, WeChat, high-speed trains, aircraft carriers, nuclear weapons, TikTok and DeepSeek. And the question that you raised really has to do with from 0 to 1.

South China Morning Post