Speech by Ahmed M. Saeed, ADB Vice-President, Operations 2, at China Development Forum on 11 November 2020
Mr. He Lifeng, Chairman of the National Development and Reform Commission,
Mr. Wang Anshun, Vice President of the Development Research Center of the State Council,
Your Excellencies, distinguished colleagues, ladies and gentlemen. It is an honor to be with you today.
Hilary Mantel, the only woman to have twice won the Booker Prize, once wrote: “There are no endings. If you think so you are deceived as to their nature. They are all beginnings. [And] here is one.”
Her sentiment could aptly be applied to the 14th Five Year Plan. In this year, 2020, China has targeted the end of an extraordinary journey: the eradication of extreme poverty for the first time in over 5,000 years of national history. And while the Government is focused on completing this work, with over 800 million already lifted out of poverty, we would commend it for recognizing, in its preparation of the 14th Five Year Plan, that this moment also demands a new beginning.
The approach to development that helped us achieve so much can only proceed so far before its once hidden social and environmental costs overwhelm our societies. And, because of China’s success and also because of its economic reach, policy choices made here will resonate broadly, influencing decisions made by other developing countries across the world. The 14th Five Year Plan will be examined closely by all who have an interest in the future of development progress.
After decades of successful economic transformation, it is therefore noteworthy that China is shifting the focus of future growth away from quantity and towards increased quality, making efforts to define a new model of economic progress, one that helps remedy rather than exacerbate social and environmental challenges.
I would like to take the opportunity today to share the ADB’s views on two areas that will be critical as China embarks on this transition: the need to strengthen local institutions and to make progress on green development.
First, the need for institutional reform at the local level and in economically lagging areas. As China transitions toward high-quality development, local governments will be increasingly called upon to finance a greater share of public investment, to provide a larger social safety net, and to support climate change initiatives.
And yet their responsibilities vis a vis other parts of government are not yet delineated as clearly as they could be and their finances are stretched, with a narrow revenue base and no authority to levy taxes or to issue debt independently. Local governments will need greater fiscal autonomy, coupled with improved transparency and governance, if they are to play the role required of them going forward.
ADB has a long history of partnership with local governments, and has made a number of investments in helping them build institutional capacity. In regions of Gansu Province with endemic rural poverty, for example, we are working to help SMEs and small hold farmers through smart agriculture and the digitization of agriculture value chains. And in five different locations across the country, we have launched demonstration projects at the county level in order to develop a model for the provision elderly health care in rural areas. Such efforts will need to be complemented by programs like the Rural Vitalization Strategy, which helps generate employment and income opportunities in underdeveloped regions.
Rural incomes are on average only approximately 1/3rd of those in urban centers, so local governments will also be critical to the fight for greater social inclusion. Strengthened income redistribution policies including a more progressive taxation system would also help ensure more inclusive growth.
Empowered, responsible and capable local governments could have a significant impact on the quality and sustainability of China’s development trajectory, and in reducing environmental, social and economic disparities between regions. We would encourage the Government to maintain this as a key policy priority.
A second area I would like to highlight is green development.
It is no small thing for the world’s largest carbon emitting country to target achieving carbon neutrality by 2060, and to reaching peak carbon emissions before 2030. These are important and significant targets – for China as well as the world. There is simply no viable path to global carbon neutrality without China.
Action will be required on many fronts if these goals are to be achieved. Cities must implement sustainable transport solutions, build smart buildings, and expand renewables. Climate-smart agriculture will be needed in rural areas, as will investment in more resilient food supply chains and disaster risk management. Biodiversity conservation must also be part of the policy framework for green finance so that we are able to preserve ecosystems that provide sustenance to so many individuals across China.
Successfully developing and implementing such measures cannot be done without a complex and intricate choreography involving a wide variety of economic, political and social actors. This is an area where development partners can leverage our unique combination of convening authority, knowledge, capital and legitimacy in order to help develop and build support for holistic, integrated solutions. For example, ADB’s efforts, alongside provincial and municipal governments and others, to establish innovative eco-compensation arrangements in the Yanghze River Economic Belt have resulted in increased financing for ecological protection and water resource management in China’s largest biodiversity hub.
China’s ambitious climate change agenda will also require bringing innovation and technology to the forefront of the country’s reform plans. According to the International Energy Agency, approximately 75% of the emissions reductions needed to meet net-zero targets depend on technologies that are not yet commercially viable.1 The IEA has called for a “major acceleration” of innovation in areas such as green hydrogen and carbon capture, where China is already a leader.
In closing, let me note that we look forward to the further evolution of what has been a very productive partnership with the authorities and other development partners in the PRC.
Thank you very much for your attention.