Celebration of the 30th Anniversary of China-World Bank Partnership
Robert B. Zoellick
President, World Bank Group
September 13, 2010
As prepared for delivery
Vice Premier Li, Minister Xie, Minister Manuel, Secretary-General Pitsuwan, Professor Becker, distinguished guests, ladies and gentlemen.
I am deeply honored to join you today to celebrate the 30th anniversary of the China-World Bank Group partnership. As a long-time student and friend of China, I am most appreciative that I can take part in this event. And it is a special privilege to represent the many intrepid, insightful, and committed World Bank Group officials who preceded me on our work with China.
The seeds of our partnership with China were even sown a little earlier than 30 years ago.
Some might say the seeds were planted in 1978, when Vice Premier Deng Xiaoping – having just become Party leader – urged top officials to chart a new course for China’s development.
Deng was determined to modernize China and open it to the world. He famously described China’s transformation as crossing a river by feeling the stones. And Deng recognized the value of outside support.
When World Bank President Robert McNamara visited China in 1980, your country was already taking important steps on the new path. The World Bank, for its part, sought to share lessons drawn from other parts of the world, customizing them to China’s own circumstances and at its own pace. At their first meeting, Deng and McNamara discussed China's development prospects and whether the World Bank's engagement would help to achieve China's goals in a shorter time.
Thirty years later, we can take pride in the achievements of our enduring partnership. This anniversary also gives us an opportunity to reflect on our work together and how to move forward.
In preparing for this event, we interviewed many of the Chinese and World Bank staff who helped to shape China’s development.
I have great respect for their work – and accomplishments. And I want to thank them for their contributions to China and the world economy.
A common theme emerged from their recollections: that China was remarkable in how it used the global knowledge and expertise of the World Bank to move reforms forward.
Knowledge in World Bank-China partnership
During the first years of our partnership, the Bank was able to share experiences with China. This included appraising and implementing priority projects; introducing new technologies such as hydroelectricity and facilities to handle bulk grain; and developing the institutions and policy instruments needed for good economic management.
Knowledge was at the core of the very first project in China financed by the World Bank, in June 1981.
The “University Development Project” set out to modernize universities and boost the number of trained scientists and engineers. It provided the equivalent of $200 million to upgrade 28 universities and awarded fellowships to more than 800 Chinese engineering and science scholars to study abroad. Thirty years later, those scholars – now in their 50s or 60s – can tell stories of returning with skills in computer science, physics, and engineering, and employing them to expand opportunities in China.
I believe it was this kind of transformational knowledge that Deng had in mind when he said in the late 1970s: “When our thousands of Chinese students abroad return home, you will see how China will transform itself”.
As success with reform, growth, and overcoming poverty gathered pace over the decades, the learning became even more mutual. The World Bank learned from the ways China fine-tuned and scaled up successful projects.
Through projects like “Basic Education in Poor Provinces”, “Northern Irrigation”, and “Infectious and Endemic Disease Control”, China acquired the expertise to improve living conditions in low-income areas and create millions of jobs.
Between 1981 and 2004, China succeeded in lifting more than half a billion people out of extreme poverty. This is certainly the greatest leap to overcome poverty in history. China’s efforts alone have ensured that the world’s Millennium Development Goal on poverty reduction will be met. We and the world have much to learn from this.
The World Bank also learned how China combined joint studies with training and investments to enhance policy reforms. A good example of this approach was a joint Bank-China environmental sector study – completed in 1992 – which laid the groundwork for China’s first Environment Strategy in 1994. This work, in turn, spawned a highly successful Bank-China partnership that is helping China address daunting environmental challenges.
China and the Bank have also worked together on phasing out ozone depleting substances, the restoration of forests across the country, the introduction of laws to encourage the use of renewable energy, and the adoption of fuel-quality standards equal to those of the European Union.
The achievements are remarkable. But so are the demands for large-scale and innovative solutions to China’s environmental challenges.
China’s development success and record in overcoming poverty are today the subject of global attention. Many developing countries look to China as a source of knowledge and experience.
Indeed, today the World Bank’s Chief Economist, Justin Yifu Lin, is from China.
I am pleased that the Bank Group has been playing an active role in facilitating south-south learning among China, Africa, East Asia, and the Pacific Islands. Indeed, many of you will attend this week’s Third High Level China-Africa experience-sharing workshop.
It will bring together senior African and Chinese policymakers to share views and lessons on a wide range of topics: from special economic zones to climate change. I’d like to thank the many people who have worked hard to make these exchanges happen.
Jointly Addressing New Challenges
China played a key role in breaking the fall in the international economy over the past two years by implementing a timely and effective stimulus package.
Since the end of last year, it has also taken measures to contain credit growth and cool its property market.
As the most acute phase of the global economic crisis recedes, the Bank-China partnership will need to address new challenges.
We will continue to work together to end the poverty that still affects millions of people in this country and to support the rebalancing of China’s economy to achieve a Harmonious Society.
Then there are questions on the near horizon. What of the future?
Wise leaders and officials are starting to ask how China can best avoid “The Middle Income Trap”: experience shows that transitioning from middle income to high income status can be harder than from low income to middle income.
To avoid this trap, China is already looking at ways to generate new sources of growth, especially through urbanization, human capital formation, and innovation policy.
China’s experience in moving from a low-middle income economy to a high income society may also provide insights for other middle-income economies.
China’s role at the Bank has also evolved over the years. In late 2007, China’s economic successes enabled it to become a contributor to the International Development Association (IDA) – the World Bank’s fund for the poorest. This stunning transition from one-time IDA recipient to IDA donor was followed by yet another important milestone in April of this year when China became the World Bank’s third biggest shareholder. This new role comes with many opportunities, responsibilities, and expectations.
In concluding, I would like to return to the 1980 meeting between Deng and McNamara.
Coincidentally, I first visited China in that same year. I’ve seen the extraordinary changes with my own eyes. And I have deep respect for what the people of China have accomplished.
Shortly after I first arrived at the Bank, I journeyed to Paifang, Deng’s home village, to visit the museum and to offer a modest gift: a photo of Deng and McNamara during that 1980 visit.
Those two experienced leaders had encountered life’s trials and challenges over many decades. Deng was 76 and McNamara was 64.
Yet they were individuals of great fortitude. They agreed that they both still had 10 or 12 years of work ahead and that much needed to be done to ensure that their visions were met.
McNamara’s vision was for the World Bank to become one of China’s most important development partners. Deng’s vision was for China to modernize and play an economically important as well as stabilizing role in the world.
Ladies and gentlemen, 30 years later, I think it’s fair to say that both of their visions have been realized.
Now we need to look ahead, to perceive new visions together.
The Bank Group looks forward to deepening our partnership with China as it takes on an even larger role on the world stage. We will help China as it completes its crossing of the river.
Within my lifetime, I believe I will see China transition to a harmonious society with a high income economy and play an increasingly important global role. That is the vision that should guide the next stages of our work together.