"Internet finance, in a way, could help China to boost GDP growth, but it does not have unlimited power," said Economist Justin Yifu Lin at a heated debate during the Boao Forum for Asia 2014.

This year, Internet finance has grabbed the limelight; it became a hot topic during Boao's TV debate "Reshaping Finance and Trade in China" on Tuesday. According to CNTV, some financial gurus hold a positive view on this nascent sector and believe it could be a strong force to drive economic growth, but former chief economist of the World Bank Justin Yifu Lin expressed a counter-view, asserting that Internet finance is not a magic bullet to boost GDP growth, and that China must persevere in technology innovation and investment in industrial upgrading, all of which will require financial services. While Internet finance mainly supports consumption and medium and small sized enterprises, it is not used to support technology innovation and large-scale industrial upgrading.

Lin believes we need a range of financial services to serve different sectors; Internet finance is of course a new technology, but it cannot solve all the problems of China’ s economy.

On RMB depreciation, Lin said that cycles of appreciation and depreciation are inevitable on currency trading markets, otherwise everyone would always be a permanent winner. Now China is extending the range of the RMB, allowing its value to increase or decrease, and that is a good thing.

The article is edited and translated from 《林毅夫：互联网金融不是GDP增长的万能药》, source: People's Daily Online, author: Xia Xiaolun, Zhou Suya