will remember the controversial debate about how to convert the east german mark into the deutsche mark. in the end, wages in eastern germany were converted one to one into the deutsche mark. the then president of the bundesbank karl - otto pohl had warned – for the same reasons that hans - werner sinn put forward – that this was to the disadvantage of companies in eastern germany. however, he later acknowledged that there was hardly any alternative, as “ political realities were stronger than economic logic ”. the high level of unemployment in eastern germany was cushioned by transfers from the western part. while the exact amount of these transfers is difficult to calculate, hans - werner sinn once estimated that transfers paid up to the present day amount to around €1. 8 trillion – roughly the size of the german gdp in 1991, 4 but this number certainly comprises more than just the transfers via the social security system. a central tenet of “ jumpstart ” is that it would have been much cheaper to compensate employees for accepting lower wages than to compensate the unemployed for their job losses. 5 “ implement distributional objectives through transfers and not by altering factor prices ” was the economic principle that hans - werner sinn saw violated in the formation of the sinn, gerlinde and sinn, hans - werner ( 1993 ). kaltstart – volkswirtschaftliche aspekte der deutschen einheit. 3rd revised edition, deutscher taschenbuch verlag. ibid. sinn, gerlinde and sinn, hans - werner ( 2015 ). die deutsche vereinigung als vorbild fur europa? faz, 2 october 2015. sinn, gerlinde and sinn, hans - werner ( 1993 ). kaltstart – volkswirtschaftliche aspekte der deutschen einheit. 3rd revised edition, deutscher taschenbuch verlag. bis central bankers ’ speeches economic union between the two germanys. and he feared that this would allow wages to remain above the market clearing level for too long. and also the distributional objectives were only partly achieved : not least because unemployment in eastern germany is still higher than in the western part, per capita income in eastern germany is still only 71 % of that in western germany. it is this experience which explains at least partly why many german economists are sceptical about establishing a transfer union in europe, as at the european level these problems are aggravated by the fact that the balance between control and

this model over the past three decades are unquestionable. first, china ’ s output has grown by an average of around 10 % per year since those economic reforms began in 1978, with the economy showing remarkable resilience even during the recent global financial crisis. in terms of levels, china ’ s gdp now accounts for less than 40 % of us gdp in market exchange rate terms, but around two - thirds of it in terms of purchasing power parity. looking ahead, some observers expect china to surpass the united states as the world ’ s largest economy as early as 2020. strong and sustained economic growth has fuelled an eightfold rise in per capita income. and as a result, the poverty rate – the percentage of the population that has an income of less than usd 1. 25 per day – has declined to less than 16 %, down from 85 % when the reforms began. in other words, china has managed to lift more than 600 million people out of poverty in the last three decades. china ’ s export development is equally outstanding. it has increased its world market share from less than 1 % in 1980 to 8 % today, and in 2009 it dethroned germany as the world ’ s largest exporter. however, the apparent successes and resilience of the chinese economic model do not necessarily mean that this model will prove equally sustainable over, say, the next 15 years. indeed, it is interesting to note that some of the major long - term factors that have been driving china ’ s strong economic performance may reach a turning point in the not too distant future. these are ( i ) the continuous growth of demand for chinese exports, ( ii ) favourable demographic developments, and ( iii ) the sustained accumulation of physical capital. as regards the first factor, it seems unlikely that china ’ s export growth can continue to persistently exceed 15 % per year, given projected domestic demand trends in advanced economies. also, historical experience with export - led economies suggests that there are limits to the process of gaining market share. the turning point on the demographic side looks to be further off, but is even more critical. china ’ s dependency ratio – the ratio of people of non - working age to people of working age – is expected to start rising again by 2015 at the latest. this means that the number of people who cannot save and can only consume – the youngest and oldest sections of the population – will increase. this, coupled with the progressive drying - up of labour