Nobel prize winners upbeat on China's innovation and growth

Edmund Phelps, the winner of the 2006 Nobel Memorial Prize in Economic Sciences.[Photo/IC]

Meanwhile, Phelps believed that three factors would contribute to China's continued economic growth: technology transfers from the industrialized countries to help boost productivity; entrepreneurship and innovation to bring down production costs; and massive urbanization to provide sustained growth.

"Most of what was going for China before is still present and is still pushing productivity ahead," he said.

The three U.S. economists also endorsed the Chinese government policy of encouraging entrepreneurship and innovation, stressing the key role of innovation in economic growth.

"The Chinese have always been very entrepreneurial people," said Phelps. "Innovation is alive and is developing in China, that will go on and nothing will happen to derail it."

Phelps said the growing number of startups in China is somewhat attributable to the government's encouraging policies, which have prompted banks to provide greater financial support for new entrepreneurs.

He suggested that the education system in China should also focus more on fostering a passion for innovation.