China's economic reforms provide valuable lessons for developing countries: World Bank chief

Source:Xinhua Published: 2018/11/1 9:35:49

China's reform and opening-up over the past 40 years has transformed the country into the world's second largest economy and provided valuable lessons for other developing countries to achieve economic success and alleviate poverty, World Bank Group (WBG) President Jim Yong Kim has said.

OPENING-UP SUCCESS

"Four decades of reforms have brought China to where it is now -- the second largest economy in the world, and one of the few countries that will soon have made the journey from a low-income to a high-income country," Kim told Xinhua in a recent exclusive interview before his upcoming visit to China, scheduled for Nov. 1-7.

"We have been part of this success and have been a partner of China for 38 years" since then-World Bank President Robert McNamara visited China in 1980, said Kim, who will address an international forum in Beijing to reflect on China's reforms that have lifted more than 800 million people out of poverty.

Meanwhile, China's share in the world economy rose from 1.5 percent in 1978 to about 15 percent now, and its per capita income increased 25-fold from 300 U.S. dollars in 1978 to 7,300 dollars by 2017, according to Kim.

"Understanding the path China traveled, historical decisions made, and their effects on the course of China's economy can inform decision makers hoping to achieve similar outcomes in their countries and for their populations," he said.

Kim, former president of Dartmouth College, outlined two specific lessons that other developing countries could learn from China's economic success.

First, China's reform and opening-up program was the basis for the rapid growth that allowed people to lift themselves out of poverty, with hundreds of millions of rural citizens building better lives in the city.

Second, a focused and sustained effort targeted at poverty reduction was present throughout the reform period.

"From the start, for instance, poverty alleviation received strong political support from the highest levels of government and a separate organization dedicated to fight poverty was created," he said.

MARATHON, NOT SPRINT

The Chinese government has placed high importance on improving the country's business environment as it plans to further deepen reform and opening-up during a new era of high-quality development.

Recent years have seen the government relentlessly cutting red tape in light of market bottlenecks and bringing the country up to advanced global standards in terms of business-friendliness.

"I will be participating in an event meant to highlight China's commitment to improve the business climate for small and medium enterprises," Kim said of an international symposium on doing business and reform in Beijing, which will present the reforms that China carried out in the past year to improve ITS business environment.

"However, improving the business environment is a marathon, not a sprint. Reforms in many areas need to be sustained for several years to bring a tangible result and to help countries move towards the global best practice," he argued.

The World Bank is ready to support China through knowledge sharing, policy advice and technical assistance, drawing on the best reform examples from around the world, Kim noted, adding that "we are also committed to showcasing China's successful reforms to other countries and help them learn from China's remarkable experience."

"We are now working with China on international development issues, through the World Bank's International Development Association, through South-South learning initiatives, through China's international development initiatives such as China-Africa cooperation," he said.

BRI PROJECTS

While developing countries and emerging markets have a "massive infrastructure deficit," the focus of the China-proposed Belt and Road Initiative (BRI) needs to be on "broader connectivity and integration" and beyond building roads, rail and bridges, said the World Bank chief.

"Countries along the Belt and Road must improve border and customs procedures, trade facilitation, and investment climates to maximize development benefits from investments in infrastructure," he said.

In Kim's view, the size and scale of the BRI involves cross-border, complex and large infrastructure investments and the success of these investments is "highly dependent on the overall viability of the projects as well as on the institutional capacity of countries."

"We need to be vigilant and mitigate potential risks -- including debt sustainability -- to ensure they don't undermine BRI's potential benefits," he said, adding the WBG is prepared to provide interested member countries with support to maximize the development benefits of BRI projects.

The WBG is "well positioned" to support BRI projects with its experience in similar trade and connectivity projects, its unique institutional setup covering private and public sectors, and its range of financial and non-financial services such as guarantees and settlement of investment disputes, he argued.

"The WBG can, for instance, advise on the economic viability of infrastructure investments, complementary policy and regulatory reforms, and the application of environmental, social and fiduciary standards," he said.

According to Kim, the WBG is undertaking a comprehensive study on the economic impact of the BRI to help better inform policy makers in countries along Belt and Road. It's also cooperating with Chinese institutions on setting standards for the BRI in areas such as combatting corruption.

The BRI, proposed in 2013, aims to achieve policy, infrastructure, trade, financial and people-to-people connectivity along and beyond the ancient Silk Road trade routes, thus building a platform for international cooperation to create new drivers of growth.

MULTILATERAL APPROACH

Amid the rise of trade tensions around the world, the World Bank, the International Monetary Fund and the World Trade Organization have joined together to advocate open trade and greater integration to reinvigorate the multilateral trading system.

"There is a simple reason the World Bank promotes open trade: Trade is an engine of growth that creates jobs, reduces poverty and increases economic opportunity," Kim said, adding over 1 billion people have moved out of poverty because of economic growth underpinned by open trade since 1990.

Recognizing the importance of global commerce for growth and poverty reduction, the World Bank will focus the next World Development Report on global value chains and their potential for helping developing countries integrate into global markets and create jobs, he said.

"The current focus on trade tensions prevents us from looking at the unique untapped benefits further trade reform can bring to the global economy ... we need to strengthen and reinvest in the global trading system," Kim argued, suggesting greater openness in the areas of services and electronic commerce would promote competition, lift productivity, and raise living standards.

During the week-long trip to China, Kim will visit Shanghai to address the first China International Import Expo (CIIE), which will be held from Nov. 5 to 10.

The Expo is a significant move by the Chinese government to further open the Chinese market to the world.

More than 3,000 companies, including over 200 enterprises that are leading in their industries from over 130 different countries and regions, have confirmed their participation in the expo.

"We appreciate China's recent decision to lower import tariffs on 40 percent of product categories ... we understand the CIIE as also showcasing China's greater openness to importers. These are all moves in the right direction," Kim said.

"We support what China is doing to expand imports and address global trade imbalances," he added.

Kim, along with the leaders of five other major international economic and financial institutions, will also participate in a roundtable meeting held by Chinese Premier Li Keqiang on Nov. 6.

They will discuss topics such as global economic trends, safeguarding the multilateral trade system, China's economy and reform and opening-up, according to Chinese Foreign Ministry spokesperson Lu Kang.

It will be the third roundtable meeting for Li and leaders of the six institutions. The previous two meetings were held in 2016 and 2017.

"Central to that discussion," said Kim, "will be to underline the need for continued close collaboration on challenges that require multilateral approaches despite growing headwinds."

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