Speech by Masatsugu Asakawa, President, Asian Development Bank, at the China Development Forum 2024, 24 March 2024

Introduction

Good morning. I am honored to participate in this distinguished Forum. 

ADB and the People’s Republic of China (PRC) are longstanding development partners. We are proud of our role in the country’s development journey.

I. Economic outlook for PRC

I am pleased to see the ongoing recovery of the PRC economy. In 2023, the PRC economy grew at 5.2% from the previous year, in line with ADB’s projection. PRC’s solid growth has been a primary contributor to growth in Asia and the Pacific, accounting for more than half of the region’s total growth. 

Looking ahead for the PRC, we see a stable growth trajectory in 2024, within the target range announced by the government. Strong fiscal and monetary policy support will be needed from the central government, including measures to address the property market challenges and steps to mitigate the debt burden of local governments.

II. Ensuring high quality development

As you know, the PRC is now the world’s second largest economy. With this progress comes an ambition to promote high-quality development. 


I welcome the PRC’s commitment to this. High-quality development is strongly aligned with ADB’s vision of a prosperous, inclusive, resilient, and sustainable Asia and Pacific. 

Colleagues and friends, I see three areas that are critical for the high-quality development that the People’s Republic of China is pursuing: building resilience, domestic resource mobilization, and support for aging populations.
 

If these areas are not addressed, we will not achieve sustainable growth and won’t be supporting the people we serve.

III. Building resilience

Let me begin with building resilience. 

As the climate crisis deepens, the substantial development progress that the PRC, and the rest of the world has achieved over decades, is now at risk. 

Heat, drought, extreme storms, flooding, water scarcity, and landslides, are pushing communities, and the infrastructure around them, to the breaking point. Billions of dollars of investments in development may not withstand the ravages of climate change unless we commit to promote low-carbon development and invest in natural capital. 

ADB is working closely with the PRC to develop approaches to climate mitigation and resilience that can be shared and replicated across the region. For example, ADB has been actively supporting your efforts in managing the Yangtze and Yellow River basins, by combining engineering and nature-based solutions. These innovative nature-based designs for green development enhance water availability, while reducing flood risks, and protecting ecosystems. 

I want to mention in particular the Regional Flyway Initiative. Every year millions of birds make incredible migratory journeys across Asia, from New Zealand, all the way to Alaska. But the wetlands they need for food and shelter are at risk. Nearly 200 million people also benefit from these wetlands. This ground-breaking, visionary initiative, aims to protect and manage the most important wetland areas in Asia and the Pacific, including important sites here in PRC. In addition to conservation, protecting the “Flyways” will achieve significant benefits for climate resilience, green development, and livelihoods. 

Biodiverse ecosystems are a great way to build resilience.

IV. Sustaining development through Domestic Resource Mobilization

While these green initiatives are important to promote high-quality development, how are we going to secure the substantial financial resources needed to sustain them? 

Here I want to stress the role of a pro-active fiscal policy. To ensure adequate fiscal resources, we need to recalibrate policy to focus on building climate resilience and improving the quality of people’s lives. 

Fiscal incentives can help accelerate the green transition. Our fiscal choices must mobilize more resources to stabilize the property sector and create additional revenue for local governments. 

These choices require widening the tax base in a fair manner to pursue equity and revenue, like a nationwide property tax, increasing local government revenue to support essential services and programs. Or a progressive income tax structure, freeing up untapped potential of tax revenue, to increase fiscal support for high-quality development. 

Let me also mention the help that macro policy dialogue and coordination can provide. An example is the Asia Pacific Tax Hub, or APTH, launched at our 54th ADB Annual Meeting in May 2021. The APTH supports our member countries in enhancing domestic resource mobilization and international tax cooperation. By exchanging ideas and experiences, member countries have improved their strategies to address Base Erosion and Profit Shifting (BEPS), protecting tax bases and improving total collection. They have also used the powerful tool of EOI, or Exchange of Information in Tax Matters, to reduce tax evasion and non-compliance. 

In summary, pro-active fiscal policy and domestic resource mobilization are clearly essential for high-quality development.

V. Ensuring support for aging populations

The tax system cannot be seen in isolation of the overall reform agenda and socioeconomic challenges. Let me address one last area where we need to focus: the issue of aging, tying in the gender dimension and the digital agenda. 

Between 1998 and 2022 the proportion of the elderly in the PRC has risen from 7% to 14%. You may know the saying, “the country may grow old before it grows rich.” 

ADB’s research shows that as households save for old age and spending on healthcare, we are seeing lower demand and consumption. 

Therefore, aging requires a fiscal response. Policy actions need to support spending on health care and services for the elderly, and to strengthen public pensions. More fiscal resources must be generated, and this support will also help boost demand. 

The participation of women is important, as this can counter the decline in the workforce due to aging. But women will need fiscal incentives for child and family care in order to participate fully. 

Digital tools can empower the elderly, enhancing their productivity while making their lives more convenient and interconnected. In addition, fostering a more productive and competitive workforce by harnessing digital technology can help aging societies achieve high-quality development. 

So, I hope you will agree, that support for aging populations, women’s participation, and leveraging digital technology are essential parts of high-quality development, not separate.

Closing

I hope I have convinced you that high-quality development requires a comprehensive approach that includes building resilience, domestic resource mobilization, and support for the aging populations. 

I am very encouraged by the progress the PRC has made in its development, and I see the commitment to take this success forward through high-quality development as very commendable. 

I look forward to working with all our partners to make this happen. 

Thank you.

Speaker