The man who swam to China floats to the top of global banking

Justin Yifu Lin, the World Bank's new chief economist, believes his country can be a role model in the fight against poverty, says Heather Stewart

With the credit crunch almost a year old and still far from over, fighting poverty risks sliding down the list of priorities for rich countries struggling against inflation and recession. Justin Yifu Lin, the World Bank's new chief economist, has the unenviable job of persuading governments and the public to remember their responsibilities to the developing world, even when times are hard.

Affable and self-deprecating, Lin is the first holder of the post from a developing country. Until recently, he was a professor at the Beijing University's China Centre for Economic Research, which he founded, and has been a key player in advising the government on China's breakneck economic development, including serving as a deputy on the policy-making People's Congress.

Economists are rarely known as fine specimens of physical fitness, but Lin arrived in China after a dramatic 2,000-metre swim for freedom. He was born and brought up in Taiwan, but during his national service, in 1979, when he was serving on Kinmen island, just off the Chinese mainland, he dived into the sea and defected to the communist state, which was just beginning to open up to the outside world.

Once adopted by his new homeland, Lin gained a master's degree in economics from Beijing University, then left to study in the US before returning to take up a series of academic posts. He has written 16 books, including China Miracle, which has been translated into seven languages.

China has been one of the extraordinary economic success stories of recent decades, transforming a backwater into a mighty trading power, but Lin is wary of prescribing specific recipes for other developing countries: 'I do not have a set of solutions I can bring to the World Bank, or through the World Bank to any other countries. I like to listen.'

But he does suggest that others might benefit from copying Beijing's single-minded pursuit of economic progress: 'If you look into the experience of China in the last 30 years, there are several things to learn. The first one certainly is commitment to reform, and a very pragmatic approach: what is the constraint, what are the opportunities?'

He quotes Deng Xiaoping, China's reformist leader and author of its radical shift towards a market economy. 'Deng Xiaoping said, "To reform is just like crossing the river by searching for stepping stones." But first you need to be clear you want to cross the river.'

In times of economic turmoil, with widespread job losses, Lin accepts that public support for globalisation can be difficult to sustain, but says governments must help instead of changing direction. 'The government and civil society have an obligation to help people, by providing job training or assistance to find a new job; but you need not stop this kind of globalisation process.'

What if Britain had called a halt to the rapid economic and social changes brought about by the Industrial Revolution? 'Imagine that process had been stopped. Britain would be poorer than many countries in Africa today.'

The bank's economic research has been criticised in a damning report by Princeton professor Angus Deaton, commissioned by the World Bank itself, which accused it of being insufficiently rigorous and balanced and paying too little attention to academic debates in the outside world.

Lin wants that to change, and is urging his staff to set up joint teams with experts in countries where the World Bank operates. 'That has two purposes: to better understand the opportunities and constraints in these countries, and as an important step for capacity-building in developing countries, so they have ownership of their own policies. They need to have the local capacities to come up with the solutions. That will be a win-win situation.'

Lin's predecessors include Nobel prize-winner Joseph Stiglitz, who was subsequently fiercely critical of the World Bank's role; but despite his background in communist China, he seems unlikely to unsettle the 'Washington consensus' of free-market liberalism long held dear by the IMF and the bank. He learnt his craft at Chicago University in the 1980s, home of right-wing theorists Friedrich Hayek and Milton Friedman, and renowned as a hotbed of laissez-faire economics.

Lin is coy about whether he shared the prevailing orthodoxy at his alma mater. 'What I learnt is an approach - to observe the world - and that was quite useful when I got back to China. Certainly there are new phenomena there which require new explanations.'

Just a few weeks into the job, he has already picked up an easy facility with the jargon of the Washington-based lender, chatting about how it must become a 'knowledge bank' for development, and economists must take account of 'country-specific issues'.

But on some questions he is more willing to take a strong stand. Farming reform has been one of the major pillars of China's economic renaissance, after the disastrous collectivisation of the Cultural Revolution. Agriculture has been a central topic of Lin's research for decades. He argues that food production should be an area of strength for many poor countries, but their farm sectors have often been stifled by subsidies in wealthier countries.

'In the long term, it's important to improve agriculture by investment in technology and to increase productivity. But the big question is how to remove the subsidies in the developed countries,' he says. 'These have turned agriculture into an export. That depresses prices and destroys the incentive for farmers in developing countries to invest in agriculture.'

With food prices at historically high levels, he hopes America and the EU can be persuaded to dismantle these subsidies, perhaps as part of the Doha trade round being discussed in Geneva this week. 'But it's a long process which must be managed well.'

Lin arrives at the World Bank when its role is more uncertain than for many years. Campaigners are concerned that its growing focus on global warming is detracting from its core job of fighting poverty and funding economic development. Governments, including the UK's, have channelled billions of pounds into its various anti-climate change measures, but an independent report published by the bank itself last week questioned the effectiveness of much of its environmental spending.

But Lin insists poverty cannot be tackled without fighting climate change. 'Farm incomes are very sensitive to climate. Poor farmers are going to be the first people to be hurt, and they have the least means of protecting themselves. Dealing with climate change is an integral part of this poverty reduction strategy.

'We know that there are new technologies available. If we make them affordable to the poor, they can leapfrog. They don't have to go through development... pollution... clean-up.'

He also brushes off criticisms of China's increasing involvement in Africa. Beijing has signed contracts to buy natural resources with a series of questionable regimes, but Lin says its most important link with Africa is in providing an example of economic success. 'China provides a role model to show that it's possible to change from a very desperate situation into a very promising, dynamic country - and that kind of role model is very important.'