Opening Remarks by
President Tadao Chino
Asian Development Bank

at the

PRC Day Seminar "Opportunities and Challenges after WTO Accession"

9 May 2002
Shanghai, PRC

Honorable Minister Xiang Huaicheng, Vice Minister Jin Liqun, distinguished Ministers, ladies and gentlemen,

I take great pleasure in opening this important seminar. I would like to thank our host - the People's Republic of China - for arranging this event as part of the Asian Development Bank's Thirty-Fifth Annual Meeting.

In recent years, PRC-related seminars have become increasingly popular at ADB's Annual Meeting seminar programs. This popularity stems from the strong interest in the PRC's transition to a market-based economy and secrets of excellent macroeconomic performance. Today, we will devote an entire day to seminars concerning the PRC. It will give us an excellent opportunity to understand first-hand what progress the PRC has made, and how. The seminar will also provide us with a forum to discuss the many challenges facing the PRC, and indeed the whole of the development community, in the pursuit of our shared goal of poverty reduction.

Today's program is comprehensive and covers many important issues such as: fiscal policies, banking sector reforms, state-owned enterprises, social security reforms, environmental protection, urbanization, regional cooperation, long-term sustainable development, and, of course, poverty reduction. I am sure you will hear many excellent presentations by policy makers, practitioners and experts. Without trying to preempt them, I would like to contribute just a few points to the discussions.

Socioeconomic progress in PRC has been remarkable. The incidence of poverty has been halved since 1990. Per capita income has quadrupled over the past two decades. Life expectancy and adult literacy have risen significantly, and infant and maternal mortality have been reduced considerably. Economic growth has been strong and steady, driven in part by growing integration with the world economy and the adoption of market reforms. This is a remarkable set of accomplishments. When the economic history of the second half of the twentieth century is written, the PRC's transformation will surely merit its own chapter.

With its accession to the World Trade Organization, and with continued structural reforms, the PRC will undoubtedly play an increasing role in the world economy. WTO membership will bring the PRC's development to a new level.

Certainly, WTO membership brings the PRC great opportunities. But significant development challenges remain: eradicating poverty, accelerating rural development, developing a social security system, protecting the environment, restructuring state-owned enterprises, strengthening the financial sector, further developing the private sector, increasing reliance on the rule of law, and strengthening education. Meeting these challenges means continuing efforts to develop the governance and policy framework within which a market economy can flourish.

A policy environment conducive to private sector development is essential, given that the private sector will generate the vast majority of new jobs in the PRC. Growth of the private sector in PRC requires that the necessary policies, legal frameworks, and regulations are in place to support a market economy.

The Government recognizes that an approach of "grow now, clean up the environment later" does not result in sustainable development. The Government knows that growth cannot be at the expense of clean air and water. The PRC needs to continue to tackle these environmental challenges as it proceeds along its path of development.

The Government also needs to grapple with the challenges of urbanization. Many cities across the PRC are growing rapidly, and so are the problems of urban poverty, pollution, traffic congestion, housing, and municipal finance.

I have no doubt that the Government and the people of the PRC will meet these challenges with determination. I can assure you that ADB will always be there to work together. We are the PRC's development partner - a friend, and a catalyst for growth and development. Since the PRC became a member of ADB in 1986, ADB has supported its transition to a market-based economy. Our loans, technical assistance, and policy advice have covered many sectors and topics; ranging from loans for infrastructure and environment projects to policy support for legal and institutional reforms; from promoting human development to improving the capacity of Government agencies.

Throughout most of the 1990s our lending to the PRC averaged about $1 billion a year. By the end of 2001, total lending to the PRC had exceeded $11 billion. In addition to loans, ADB has provided almost $200 million in technical assistance grants. During the next three years our lending is expected to total about $3.5 billion.

Promoting development in the interior provinces is essential if the PRC is to win its fight against poverty. Because ADB's overarching objective is poverty reduction, approximately 70 percent of our future lending will be to support projects in these provinces.

With the strong support of the PRC, ADB is also actively promoting regional cooperation. Our Greater Mekong Subregional cooperation program is promoting links between the PRC and the other countries through which the Mekong River flows. Likewise, ADB is promoting cooperation between the PRC, the Central Asian Republics and Mongolia. The Asian financial crisis of 1997 and the events of September 11 have both underscored the importance of regional cooperation. To build regional socioeconomic stability and create opportunities for countries and regions to prosper together will be a major priority in ADB assistance to the Asian and Pacific region.

Ladies and gentlemen, the PRC has made remarkable progress since it embarked on reforms in the late 1970s. Its development offers us both rich experiences and valuable lessons. Today's seminar will provide useful insights and knowledge for us all.

I wish you success in these deliberations.

Thank you.