MR. DONNELLY: Good morning everyone. My name is John Donnelly. I'm the Communications Advisor for World Bank Group President Jim Yong Kim. I'm here with to my far left Bert Hofman who is the Country Director for the China Office. Then we have President Kim and to my immediate left we have Jin-Yong Cai who is Executive Vice President and CEO of IFC which is a private sector arm of the World Bank. Dr Kim will open this with a statement and then we'll take your questions.
DR. KIM: Thank you very much for coming to the World Bank's office in Beijing and I'd like to thank the Chinese people and Chinese leaders especially Premier Li Keqiang once again for the warm welcome and hospitality they've extended to me. Today I'll talk about three subjects, first the Chinese economy, second China's global role in development and third healthcare reform.
China has built the world's second largest economy. It has undertaken significant reforms in providing all of its citizens with an opportunity to enjoy greater prosperity. While China's growth has gradually slowed since 2012 signaling what President Xi has called the new normal, China remains the largest contributor to world growth since the Global Financial Crisis. Over the last couple of years, roughly 30 percent of global growth came from China alone. Growth in China last year was 7.4 percent and we project about a 7 percent growth for 2015 which of course is still the envy of the world.
In light of the stock market fluctuations recently, I'd like to emphasize that we believe China's economy is strong and its fundamentals are sound. The country's leaders are moving forward resolutely on their ambitious program of economic and social reforms aimed at transforming China's growth model toward more efficient, equitable and environmentally sustainable growth.
We've seen progress in several reforms including lower credit growth, better regulation of shadow banking and better management of local government borrowing. These reforms hold the key to China's continued economic success.
On my second point, China is and continues to be a global leader in development, lifting more than 600 million people out of poverty in the last 25 years, more than the rest of the world combined. Today there's no question that China is increasing its role in development around the world.
I can report on two examples from just yesterday. First, China established a $50 million trust fund with the World Bank to finance efforts to fight poverty, and second I met with the leadership team at the Asian Infrastructure Investment Bank's multilateral interim secretariat and we discussed expanding our collaboration. I'd especially like to recognize Secretary General Jin Liqun for his strong leadership in moving swiftly to get the AIIB started.
More funding for infrastructure will ultimately help the poor. We're pleased to be working with China and others to support the AIIB as it becomes operational. We agreed with Secretary General Jin Liqun and the interim secretariat to explore co-financing options in the coming months.
We plan to hold a meeting later this year in Washington, D.C. to talk about specific projects in which we would be co-investors. We regularly enter into such arrangements with multi-lateral development banks because it broadens the pool of financing available for a range of infrastructure projects: bridges, water treatment plants, roads and telecommunications, to name just a few.
The AIIB is an important new partner that shares a common goal for the World Bank Group to end extreme poverty by 2030 and to boost shared prosperity with strong environment, labor and procurement standards, the AIIB will join us and other development banks in addressing huge infrastructure needs that are critical to ending poverty, reducing any quality and boosting shared prosperity.
Finally, I had very good discussions with Premier Li Keqiang and Finance Minister Lou Jiwei about our healthcare reform study with the government and the World Health Organization. China, like all countries in the world, faces major challenges in healthcare but I came away from my meetings yesterday convinced that the leadership is fully committed to healthcare reform.
All of us understand that a better functioning, more efficient healthcare system will lead to a healthier population, will boost economic growth and become an engine for job creation. I am happy now to take your questions.
MR. DONNELLY: Okay, thank you. Please identify yourself and your organization. Is there a mic? Here, right here.
QUESTION: If I could have the microphone, yeah right there. Thank you. I'm from Phoenix Satellite Television. I have a question about AIIB. Over 50 countries signed an AIIB deal a few weeks ago and I want to know your comment on the AIIB's deal and your advice from your experience.
DR. KIM: Thanks very much. I've been very clear from the very first announcement of the AIIB. We welcome the AIIB and we welcome especially China's leadership in establishing this new multilateral institution. We were just in Addis Ababa, Ethiopia talking about the needs for infrastructure investment and it's roughly $1 trillion to $1.5 trillion a year. So all of the multilateral banks put together, and all of the bilateral development assistance won't come close to meeting that need. We need new investors in infrastructure and we think that the AIIB will be an important new partner.
We had a very good discussion yesterday with Secretary General Jin Liqun; we were very impressed by how quickly they'd made progress in getting established.
QUESTION: Thank you Dr Kim Yong, I'm Tom Mitchell, Financial Times. I think we're all curious about the assessment of the market rescue orchestrated over recent weeks. Do you think that the unconventional measures reflect best practices in this type of situation or do you agree with the assessment by some that this is something that could set back the pace of overall reform?
DR. KIM: I think it's important to recognize that this is a relatively young stock exchange, 20 years. In observing situations all over the world, governments have taken many different kinds of measures to reduce excess volatility in their stock markets. I had very long and extensive discussions yesterday, both with Premier Li Keqiang and Finance Minister Lou Jiwei. I'm convinced that their resolve and commitment to the reforms is as strong as ever.
These are reforms, many of them highlighted in a report that was led by my predecessor, Bob Zoellick, with the Chinese Government, called the China 2030 Report. We see that in terms of fiscal reforms, financial sector reforms, even reforms of things like the hukou system, the resolve is absolutely - continues to be there. We are confident that the reform process will continue.
QUESTION: I am from China Tendering magazine. I have actually three questions…
INTERPRETER: But he asked two.
DR. KIM: We'll take one.
QUESTION: Recently the Chinese Government has released its economic data for the first time of this year, the data looks relatively strong with all the targets met. According to expert assessment, there won't be a big issue for the second half of this year either, although the Chinese economy still faces some downward pressure. I would like to ask you your assessment of the long term projection of the Chinese economy and its growth.
My second question is related to the three strategies developed by the government which are all related to infrastructure development and closely related, of course, with AIIB. So this may have an impact on all participating countries, including China by itself. So I would like to ask you your advice on that as well.
DR. KIM: I think we're very clear in our statement. We project a 7 percent rate of growth this year and we think that the long term prospects are very much tied up with the commitment to reforms. China has made an extremely significant commitment to these reforms and as long as they continue with their reforms, we think that the long term prospects for the Chinese economy are very good.
QUESTION: I am from China Finance magazine, I have a question related to the IFC. I notice that IFC recently signed an agreement with an internet company Alibaba to provide microfinance for women and to support microcredit development. I would like to know what else will the World Bank Group do to provide more help and financing to the women especially and how can this kind of approach be sustainable in the future?
DR. KIM: Let me begin and I'll ask Jin-Yong to comment as well. One of the major projects of the World Bank Group is to provide access to financial services for everybody in the world. There are still two billion people in the world who do not have access to financial services and a significant proportion of course are women. We have made efforts here in China, in fact, with some of the banks to specifically target women for financial access. We think that a key to ending extreme poverty and boosting shared prosperity is to provide access to financial services and especially to women.
Jin-Yong Cai: Well, we are very happy to be able to work together with Ant Financial and Alibaba because China as you all know has become a world leader in providing services via the internet and promoting inclusive financing and especially providing financial services to women entrepreneurs is a very important task. We hope to be able to make some progress in China so that we can share the lessons of experiences gained in China with other parts of the world to promote globally, on the global level inclusive financing.
In order to achieve that target, it is important for us to go beyond the old business model to make use of the development of internet. In that regard we feel very excited to be able to work together with Alibaba. We believe this will also help facilitate sustainable growth in China.
QUESTION: Thank you. I am from AFP. You've been very positive, even effusive in your praise of China's economy and reforms and its outlook. Earlier this month, I believe on July 1, the World Bank produced the China Economic Update report. In that report there was a section on China's financial system, which was quite critical and a few days later it was announced that that had been taken down from the report. I'm wondering, does the World Bank, despite having taken it down, still stand by the contents of that section on China's financial system and was the World Bank's actions in taking it down a direct response to the Chinese Government complaints or pressure?
DR. KIM: The release of that particular section was simply an error. It did not go through the regular clearance mechanisms within the World Bank Group and when we found that it had been put up without going through the regular processes, we took it down. There was no pressure or communication with the Chinese Government at all, it was done very quickly afterwards.
Let me repeat, I think that we've been very clear all along. We think that the commitment to reforms and the fundamentals of this economy are very promising and that we will continue to work closely with the Government on a range of issues. But that particular section did not reflect the views of the World Bank Group.
QUESTION: So can we assume that the World Bank does no longer stand by the contents of that section?
DR. KIM: Yes. This was something that was handled by Bert Hofman, our country director. Bert, do you want to make some final comments?
BERT HOFMAN: Well, as said it was not a proper review so that's why we took it back and it's not the official World Bank position. We have worked with the Government on a number of issues in the financial sector for years and the report didn't reflect the type of discourses we had with Government. These are the things we usually review in a review process. I cannot say now whether we agree with all of the statements before and [now] that is done in a review process which we haven't had and we'll have that in the future.
DR. KIM: We will have a statement that will be released later, yes, that does reflect our view.
We'll tackle one more question.
QUESTION: Thank you, I'm from China Daily. The question is recently the signals have shown that Chinese capital outflows is going crazy and maybe it's because of the equity market correction. Do you think that it will slow down the opening of the capital accounts? And do you think that in future the US Fed interest increasing expectation will increase the crisis in the equity markets in China? Thank you.
JIN-YONG CAI: I'll answer this question. Indeed, the whole market reform, particularly financial market reform committed by the Government has been encouraging the capital flows in both ways. So clearly there is much more market force driving the capital flow; that will be in, that will be out. So you are not surprised there are flows in response to the market signals.
As far as the US Federal Reserve action, you have to realize at this stage the capital account is not really opened up 100 percent yet. So there will be some impact, we don't know and we can't at this stage predict what's going to happen because I haven't seen the US Federal Reserve decision just yet.
MR. DONNELLY: Thank you very much. I'm sorry, we have to go now. Thank you for coming and we will make the opening statement available and also a transcript of the press conference later.