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Speeches & Transcripts

World Bank President Robert B. Zoellick's Press Conference in China

December 18, 2007


Robert B. Zoellick

Transcript

Transcript

 

World Bank President Robert B. Zoellick's Press Conference in China

 

December 18, 2007

 

DAVID DOLLAR:   Good afternoon, ladies and gentlemen.  It is my pleasure to introduce Mr. Robert Zoellick who is completing his first trip to China as President of the World Bank.  Thank you all for coming.

 

MR. ZOELLICK:   I appreciate the opportunity to survey all this new technology you have.  I have now been in China for about four days.  As most of you know, I started out in Guangdong where I had the opportunity to meet the Party Secretary Wang Yang but also to see some of our projects there particularly dealing with water sanitation and an innovation that our colleagues in IFC and the private sector made in terms of financing energy efficiency and environmental technology.   Then I went on to Chongqing where I saw my former colleague Party Secretary Bo Xilai. I am very pleased to have that opportunity because I learned about the focus that the government has assigned on Chongqing and Chengdu to try to develop an approach to urbanization and rural-urban connection.

 

I also visited a project that we helped support dealing with restoring China's culture and history that was a guild complex.  I was delighted that the Bank in a very small way was able to try to help some devoted people in China restoring an extraordinary structure.  And then we went on to Sichuan Province. I visited Deng Xiaoping's home.  I was very proud to be able to give a photograph of Robert McNamara then President of the World Bank who in 1980 initiated World Bank's relationship with China.  I also visited a health care project and a microcredit operation that we helped launch and supported a pig farm which as all of you know was very timely since pork prices are rising. Over the past two and a half days, I have had meetings in Beijing. The government officials have been extraordinarily gracious. I met a full range. I also had a meeting yesterday with a number of NGO groups. I had a fascinating seminar at Tsinghua University with a number of professors from Beijing who are in cutting edge thinking of economics and development.

 

There have really been three primary purposes of this visit.  The first is to try to learn more about the development priorities of China so that the Bank can be a better partner.  In particular I want to learn more how China has employed the Bank effectively through pilot projects. In most cases, what the World Bank brings to China is not financing but the expertise and experience from around the world which we use to design project at cutting edge issues which are then analyzed and results can help guide policy for China throughout the country. Given the focus on building a harmonious society and scientific development, our work is shifting to some of the issues on social development agenda. Our work in the financial institution areas is shifting to some of the under-served areas, whether it be rural credit, micro finance and new types of lending such as energy and environmental efficiency. To further explain this model, the World Bank is releasing today a report of case studies of innovation in China. This is useful to show the history of our relationship with China.  It is useful to show how we use these pilots to learn and develop better practices.  And third we hope it'll be useful to share the experience with other developing countries.

 

The second area that I was focusing on was environmental issues and energy efficiency. Because time is short, I won't give a full explanation of that.  I will just be happy to respond to your questions.  But you can see from the visit, it focuses on topics like water pollution.  We have done a path breaking study on the cost of air pollution in China. Subjects such as deforestation.  Indeed it fits well with my recent visit to Bali dealing with the global climate change agenda. Indeed since 2005, 70% of our projects in China deal with the environment. 

 

The third area was to discuss with my Chinese colleagues about cooperation between China and the World Bank in dealing with third countries.   In this area, I started by thanking my Chinese host for their contribution to IDA-15, the fund that we just announced the efforts to raise money for the 80 poorest countries in the world.  For these poorest countries, IDA gives grants and concessionary loans.  It wasn't long ago that China was an IDA borrower. But now China has joined Egypt, South Korea and Turkey as former IDA borrowers that now contribute to IDA.  Some of you are familiar with the speech I gave talking about China as a stakeholder in the international community. This is an example of China being a stakeholder in the field of development.  But China also has many other things to other developing countries.  So I talked with our partner Governor Li Ruogu of the EXIM Bank, Governor Chen Yuan of the Development Bank, MOFCOM that deals with development assistance, and Ministry of Foreign Affairs about cooperation in third countries. I think we had very fruitful discussions not only about Africa but also Pacific Islands and areas in Asia where we can cooperate. 

 

In sum, since this is my first visit to China as World Bank President, my primary purpose was to listen and to learn so that we can plant the seeds of deeper cooperation in the areas that I mentioned.

 

There was a last aspect which is of course we have a very dedicated team here from the World Bank and IFC. I was delighted to learn more about their work and their commitment.  And of course it gave me an opportunity to thank them because they are at the heart of the success we had. I knew David was a first-grade economist when I was the trade minister.  But he has done a super job here as the country director.  So I am happy to take your questions.

 

DAVID DOLLAR: Please identify yourself.  We start with the lady in the black sweater.  Please identify who you are and your outlet.

 

QUESTION 1: Thank you.  From Xinhua News Agency.  My question focuses on your welcome to China to donate to IDA.  I wonder if this changes China's role.  With this donation, does it mean that the World Bank will reduce its assistance or help to China in the future? Also, you call China a global partner to the World Bank.  Will the World Bank or IMF take some specific steps to expand developing countries' role in their organizations and make them play more role in the antipoverty work? 

 

MR. ZOELLICK: Your question raises a very important point. Because our emphasis is not to reduce cooperation anywhere but to expand it both within China but also with China in third countries. Given China's financial position, it really does not need the financial capacity of the World Bank.  But the important point in my discussions is that the loans and investments come with the expertise and experience that help solve problems that China has identified.  So part of the goal of this visit is to learn what are the cutting edge problems that China would like us to help work on.  Coming from Chongqing, I hope we can do more on the particular challenge of urban-rural areas starting with cities in the interior provinces.  Their lessons learned can be applied more broadly in China and more broadly in the world.

 

We had discussions about work we might support in terms of health care reform, in pension reform and education including vocational education, of course changes in the financial sector trying to meet areas of particular need, and energy and environment. There are others.  But the focus is that we want to be a good and full partner of China.   What I have told people outside China is that being a good partner of China on issues within China. It will help us develop a stronger partnership with China in third countries.   

 

I think your second question asked about the nature of the partnership in third countries.  And you asked about Chinese influence in our institutions. We talked about joint training efforts, standards and support for natural resource development, and sharing some of China’s experience in development that might be useful to other countries.  With EXIM Bank, we talked about moving forward with some joint project in Africa and cooperation in Pacific Islands including perhaps with Australia where Prime Minster Rudd my friend also expressed an interest.   So we have a rich agenda.

 

Within the Bank, China is already very influential.  Madam Zou, the Executive Director has been with us on this visit. She always provides good consultancy and advice. Most decisions in the Bank are made based on the consensus. So the voting shares are less significant. And in part because of China is a developing country and its growing size, its voice is influential. But I've also talked with Chinese officials about my interest in bringing in more Chinese professionals to the Bank staff. This includes the IFC, our private sector arm, people in early stages of their career that might share a few years with us, but also more senior people. So I hope this visit will help create a foundation for deeper and more extensive partnership with China in all those fields.

 

QUESTION 2: (inaudible) The World Bank issued yesterday back in Washington a report saying that in terms of Purchasing Power Parity term, which is rather technical, the Chinese GDP is 40% smaller than earlier estimated. What are the practical consequences of this? I am thinking mostly about the rebalancing of the Chinese economy which is both your target and the Chinese government official target.

 

MR. ZOELLICK: Let me make some initial comments. But since Mr. Dollar is a better economist, after I am finished, he may want to supplement. First, it's very important to understand what this work was all about. Economy's size in the international economy is measured by exchange rate, but there are complementary statistics called Purchasing Power Parity to which you referred, which tried to measure relative size based on similar purchasing amounts that may not be reflected in exchange rates, because the purchasing amounts deal more with some of the domestic purchases outside the international economy.  So the purchasing power estimates for China have been based on some very rough surveys done in the mid-1980s. In the project to which you referred, it actually involves the World Bank, the Asian Development Bank and China itself doing surveys on prices. These price surveys were in urban areas, 12 as I recalled.  So while they are much improved on the statistical base from the mid-80s, they are still not complete, because they don't capture rural prices which are probably lower. So you should see this as an evolving process of building the statistical base in China and other developing countries. And I'm not an expert, but I suspect that as the price data for all of China is taken to account, you will probably see further adjustment with this price surveys for absolutely more in a direction of (inaudible). And one has to be extremely carefully in trying to draw a judgment about poverty base on the statistics. Because a more accurate measure is based on a basket, a set of goods that poor people would normally purchase, more heavily weighted towards food. In my working with the Chinese government to refine that work and I believe that there are some work due out next year. But as for your question about conclusions, I think the primary one that I would draw is an example of the work we are trying to do with China in many areas to strengthen the statistical base. This is true with an air pollution study that we did last year which is quite path-breaking in going into detail, learning the health facts, far beyond any other developing countries which I am familiar with. In deed, in my meeting with the NDRC, I also talked about another project about a low carbon growth study that we are doing which would be important related to climate change. So I am not sure whether I would draw any particular policy conclusion. Other than the fact that this gets to be refined that would help the Chinese leaders refine their own development work.

 

DAVID DOLLAR: I do not think it is good use of time to go into further details.  I am happy to take questions by email if anyone wants to get into technical details about PPP. We should move on to other questions.

 

MR. ZOELLICK:   Let's try to keep switching.  So Chinese.  Yes, this woman here.

 

QUESTION 3: Thank you. I am from AFP. I have two questions. First one is that what's your opinion in general about the Bali agreement, the roadmap agreed last Saturday. What do you think the prospects for the pact to be completed at the end of 2009?  My second question…

 

MR. ZOELLICK: One.  We have got to give everybody a chance.  Well, I went to Bali to highlight the particular interest of the need to focus on developing country, needs and interests as part of climate change discussion. And in particular,  at President Susilo Yudhoyono and Finance Minister Sri Mulyani's request, I attended the meeting of Finance and Development ministers to try to underscore the importance of climate change as a development and economic issue as well as environmental. The terms of any follow-on agreement are for the countries involved. But we are trying to position the World Bank Group to be supportive to those negotiations and the action on the ground. So I discussed this in line with other points. But in brief, we talked about ways we can help with concessionary finance. How we can support carbon trading markets which could also be a benefit to China. How we could support technology adoption. So in the case of China we talked about not only clean coal technology, but if carbon sequestration makes advances to get that to China.

 

Since that some of the money involved are much larger than you could expect from public sector, we also talk about how IFC, our private sector arm, could help with policy changes to draw private capital. And I tried to stress how for developing countries, the adaptation challenge is as important, if not more so, than the mitigation challenge. But there has been less work on adaptation. For many developing countries, the adaptation issue is a crisis today, not an uncertainty tomorrow.  And finally, we can try to employ projects that would help guide the negotiators with components they may want to include in agreement. For example, when I was in Bali, I launched the Forest Carbon Partnership Initiative. We have raised $160million out of an initial goal of $300 million to help with the readiness fund, to help prepare developing countries on deforestation issues, but also to launch some projects. And these projects have highlighted that in the Kyoto Agreement, there was not credit for developing countries who would follow deforestation policies to reduce emissions. And since I have been traveling, I don't know for sure, but I believe that the negotiators have agreed that for the next round that they should include the decision. So I also offered that the initiative that (inaudible) had bringing economic and finance ministers need to be continued. And I said the World Bank would be pleased to host such an ongoing meeting of the Bali group in our annual meetings and the spring meetings.

 

Finally in the context of China, I discussed this with Chinese leaders. Because I think it's important not only for China and its development, but also shows again how China could be a stakeholder and dealing with global environmental issues, and how the Bank can support China to take that step.  

 

And now Chinese.  Are you Chinese?  Are you from a Chinese outlet?

 

QUESTION 4: I am a reporter of CCTV.  My question is that over the last two years, the Chinese government has introduced many policies on energy conservation and emission reduction.  How do you Mr. Zoellick see these efforts made by the Chinese government in this area?  How does it help the world climate?  Thank you.

 

MR. ZOELLICK: I think there is a very strong awareness in China that the early focus on growth needs to be complemented with environmental sensitivity. This is part of the scientific development approach. And it covers, for example, the water in the river that I saw that people are trying to improve so some day it can be fit for swim and fish. As I recalled, Chinese government has set a goal of improving energy efficiency by some 20%. So this is a good example of how we can help China to improve energy efficiency, reduce emissions and perhaps gain some of the benefits of carbon trading in a way that leads to more sustainable growth in China, but also supports climate change elsewhere. And even in a small way, the changing work we are doing in the financial sector reflects this. So I might have mentioned that when I was in Guangdong, I met with the chairman of Industrial Bank, who has been our partner in trying to use new risk methods to have loans for energy efficiency and environmental technology.  You see this is a good example, because it's not our goal to do all that business, we are trying to help create the institution that can do that and expand it throughout China. And finally is that your tower behind you? It's truly big. I hope it's environmentally sound.

 

QUESTION 5: Richard McGregor of Financial Times.  Mr. Zoellick, there has been a lot of criticism in the last 18 months of the Chinese, the governance standards if you'd like, attached to Chinese lending practices or financing or in other words Chinese off-shore projects particularly in Africa.  Do you share the reservations expressed by other people including by your predecessor?  What kind of work are you engaging with institutions like EXIM Bank?  Is that designed to lift or improve those standards in the project with EXIM Bank and the like?

 

MR. ZOELLICK:   This subject was one of the key items that I have discussed with my colleagues. And I leave with the sense that we have the prospects of a very cooperative and constructive partnership.  I share my view that given China's growth, it's inevitable that China will play a more active role throughout the international economy including in development. And many of these investments can be beneficial including in infrastructure and in training. And Chinese companies will go abroad. So what I wanted to discuss with my colleagues is ways that we could share our experiences and try to make sure that those activities have the best development impact. So one issue we discussed is debt sustainability. Because many developed countries have forgiven the debt of some of the poorest countries. And so there is legitimate concern about building that debt up again.  But at least from the statistics that I have seen, China has paid attention to debt sustainability and has certainly a strong willingness to discuss this issue, because they want to get paid back too. But as I mentioned in my opening remarks, there is a much deeper set of possibilities. I discussed the pro and cons in the field of natural resource development, areas of transparency, avoiding corruption, but at the same time this can help draw revenue for developing countries. I may give you another example. EXIM Bank first project relies heavily on Chinese labor in the construction. Governor Li mentioned how they are trying to work to bring in more African workers. So we talked about the possibilities of the World Bank helping to develop sub-contractors that could support the Chinese projects. So we had extensive discussion on this.  And governor Li and I both agreed we should try to develop a joint project or projects in Africa during the course of the next year. But it wasn't only with the EXIM Bank. I was trying to learn the focus of the China Development Bank more on the commercial side.  And MOFCOM is responsible for the overseas development assistance. We talked about cooperation in that area and offering to help develop the Chinese statistics in a way consistent with international practice. And as I mentioned, this extends beyond Africa. China has committed some substantial resources for Pacific Islands. And I think I mentioned I suggested some cooperation among the World Bank, China and Australia then. Because my friend Prime Minister Kevin Rudd expressed an interest in that. We also have some prospects to work together in Mekong Delta. So we all have lessons to learn in development. We can share some of our international expertise. China can share some of its own home-grown expertise. We can work with our partners in third countries because they need to have national ownership for projects. In that way, we can expand the inclusive and sustainable globalization and create opportunity and hope in more countries. As I said the IDA contribution is a modest but also significant step of China helping in that dimension. There is also research and analytical piece even in the innovation study releasing. So I'd better stop, but this is a topic that is of great interest to me. I leave with a very positive sense about the possibility. But now we have to execute, not only say the words.

 

DAVID DOLLAR: we have time for one more question.  This lady here with glasses.

 

QUESTION 6: I am with Economic Observer. As an old friend of China and World Bank President now, what do you think of China's economy as a whole? Has your view on China changed compared with the past two years ago when you were still State Secretary and Trade Minister?

 

MR. ZOELLICK: I first visited China in 1980 when I lived in Hong Kong. So my personal experience matches about the same time that the World Bank has been working with China. And as I said to my Chinese colleagues, there have been extraordinary accomplishments. But we also know that china is a developing country. It has many poor people. So it has many challenges ahead. So I tried to use my visits to learn more to figure out how to be of greater assistance in any of the capacities in which I come. So in this case, I've been trying to learn what are the priorities that China's leaders have and how we can support. And I know that at macro level, there are some concerns about the overheating. As the Eleventh Five-year Plan suggests they want to move to a structure balanced with more consumption, less export and investment in line with that. And I think there is a increased attention on social development agenda as a part of the harmonious society and also underserved regions, particularly to the west of China.

I probably sharpen my recognition of this issue of the urban rural areas that Chongqing and Chengdu would represent, including the problem of migrant workers. But I also have a sense from the costal provinces. As the cost of labor increases, they need to improve productivity through education and training. So I hope this will help World Bank Group and me individually to be a better partner as China goes forward. And also this key environmental issue. Because it's disturbing there are many places in China where the air is, you know, hard to see the sun. But one last comment. Because this is one of the reasons I found China a particularly exciting place to work with. There is a rear combination here. People are confident because of what they have accomplished and that's justifiable. But they are very open to ideas and compared to experience. Sometimes that people are unconfident, they are not comfortable to take advice.  Sometimes they are too confident, they won't take advice. But China is at a very interesting stage. I don't only mean the government. This discussion I had at Tsinghua University was fascinating. Not that I am trying to take side between Tsinghua and Beijing University. But next time I go, I want to meet more students. Three or four years ago, I visited some university students. And I asked them about globalization. Because when I was trade representative I used to have seminars with students in many countries, and I used to ask their feelings on globalization. And those students in Chongqing were some of the most positive I met around the world on globalization. They have their anxieties. They were worried about some of the aspects on culture and other aspects on life, but I think they were so positive because they saw globalization is opening up the world and opening up the opportunity. There was a nice reminder of my visit to Deng Xiaoping's home, because that was his whole strategy for China. I am truly sorry I can't stay and answer more. I have to go to Berlin because Chancellor Merkel is having a session on globalization. But I enjoy being here and I look forward to come again. Xie Xie.

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