EDITOR’S note: This article is adapted from the speech by Takehiko Nakao, President of

The Asian Development Bank, at the

ADB-PRC Symposium commemorating 30 years of partnership at the Asia-Pacific Finance and Development Institute, 10 November 2016, Shanghai.

China joined the Asian Development Bank (ADB) in 1986. This was in the early years of the country’s economic transformation initiated by the late Chinese leader Deng Xiaoping in 1978. ADB’s first loan to China was for the China Investment Bank in 1987. We are proud that ADB has contributed to China’s rapid socioeconomic development since then.

China’s joining ADB was a milestone for ADB’s evolution. China’s membership, together with the start of lending operations to India in 1986, enhanced ADB’s stature in the regional and global context.

The Nanpu and Yangpu bridges here in Shanghai are living monuments to our successful partnership over the last 30 years. Their construction made possible the spectacular development of the Pudong district. Nanpu Bridge was China’s longest cable-stayed bridge at completion in 1992. Then came the even-bigger Yangpu Bridge, which set the world record at the time.

Talking about China’s reform efforts in the early years, I recall when I was an official at the Tax Bureau of Japan’s Ministry of Finance in the late 1980s. One day, Chinese officials visited me to negotiate preferential Japanese tax treatment of Japanese companies investing in special economic zones in China. In hindsight, that was the moment China seriously started using foreign direct investment as an important source of development.

From 1978 to 2015, China achieved an average annual growth rate of almost 10 percent. China has transformed itself from an economy with basic agriculture and industrial production to a global pivot of growth and a manufacturing powerhouse.

I have visited 29 developing Asia and the Pacific countries since I became ADB President three and a half years ago. Looking at the development experience of these countries, I believe the following eight areas are key to achieving economic growth and social transformation.

They are investment in infrastructure; investment in education and health; sound macroeconomic management; open investment and trade regimes; good governance and the strong delivery of public services; social inclusiveness so that every segment of society has incentives to educate their children and work hard; a vision for the future; and security, political stability, and friendship with other countries. China is clearly a model for these eight conditions.

ADB has provided substantial assistance during the course of China’s rapid development in these 30 years.

The first point I want to mention is our strong support of China’s infrastructure investment. ADB approved a total of US$34 billion in loans between 1986 and 2015. This comprised US$31 billion for sovereign operations and US$3 billion for private sector operations. Half of our total assistance was for the transport sector, 15 percent for water and other urban infrastructure, another 15 percent for the energy sector, and 13 percent for agriculture, natural resources and rural development.

In addition to loans for investment projects, ADB has been supporting China through knowledge work, with total approved technical assistance (TA) grants amounting to US$430 million since 1986. These TAs cover the preparation of infrastructure projects, sector reforms, public finance, environmental protection, and capacity development.

I believe that combining ADB’s project financing with knowledge will continue to be a truly effective way to assist China’s development going forward, particularly in a climate-friendly and inclusive way.

Structural transformation

At this point, I would like to turn to China’s transformation and the role of ADB. China is undergoing structural transformation, from a heavy dependence on capital investment, exports, and the manufacturing sector to a more consumption- and service-led economy. China needs to move up in the global value chain, with advances in productivity and labor force skills.

China should address social and demographic challenges, such as an aging population, shrinking labor force, and persistent inequality. It is necessary to increase public expenditure for health, education, and social security. This calls for further efforts in fiscal reform, including reform of the taxation system and the central and local fiscal relationship.

ADB is ready to help China’s further transformation and address economic, social, and demographic challenges. For instance, we have approved our first results-based loan to help Guizhou Province reform its technical and vocational education system. ADB can increase assistance in elderly care, pharmaceutical industry reform, and health sector finance.

China should also tackle environmental challenges.

ADB is committed to strengthening its assistance to the country’s vision of ecological civilization based on a memorandum of understanding (MOU) signed with the Ministry of Environmental Protection (MEP) in 2014. Let me add that this December, ADB is expected to become an institutional member of the China Council for International Cooperation in Environment and Development.

Greener economy

Climate change is another important area of our partnership. China’s Nationally Determined Contributions (NDC), as announced in Paris at the COP21 meeting last December and later approved by the People’s Congress, aims at peaking out CO2 emissions around 2030.

With ADB’s corporate target to double its climate financing from US$3 billion a year to US$6 billion by 2020, we will help China “green” its economy.

Last year ADB approved its first policy-based loan to China of US$300 million, which improves air quality in the Beijing-Tianjin-Hebei greater capital area and reduces CO2 emissions.

This year, in line with China’s 13th Five-Year Plan, ADB adopted its new Country Partnership Strategy (CPS) for 2016–2020. The new CPS presents the intention of China and ADB to further deepen and widen our partnership in four different aspects.

First, ADB aims to increase its lending to China, particularly in the five priority areas of environmental protection and climate change; promotion of regional cooperation and integration; continuing efforts for inclusive development to address poverty and inequality; promotion of innovation and knowledge-led development; and supporting reforms and strengthening institutions.

Second, the new CPS presents a clear vision to deepen our partnership in the area of knowledge. This will also contribute to China’s idea of enhancing its South–South cooperation. Our knowledge work in China and tacit knowledge created through our operations in China are useful to other developing countries in the region. In this context, I appreciate China’s financial support to ADB’s Regional Knowledge Sharing Initiative.

Third, ADB and China will work together in promoting regional cooperation. Connectivity in transport, energy, and communications and trade facilitation across China, Central Asia, South Asia, and Southeast Asia are our common goal. ADB will collaborate closely with China and other development partners including the newly established Asia Infrastructure Investment Bank (AIIB) and the New Development Bank.

Fourth, China is becoming a larger financial contributor to ADB operations as well as a beneficiary. I appreciate that China has more than doubled its contributions to the Asian Development Fund, ADB’s concessional window, from US$45 million to US$100 million.

China also established the PRC Poverty Reduction and Regional Cooperation Fund at ADB in 2005. It is the first China-financed trust fund in any multilateral development bank. To date, China has contributed US$40 million to this fund, and discussion is ongoing for its further replenishment.

In China, 30 years means maturity. The theme of this year’s anniversary celebration is “Partnership for the Better World.” ADB is indeed eager to develop this matured partnership further.

To end my speech, please allow me to recall a beautiful poem written by Wei Yingwu in the Tang Dynasty (618-907). Wei’s poem presents a deep feeling of quiet scenery in late autumn to a distant friend. Let’s continue and deepen the ADB–PRC partnership through mutual respect and friendship for years to come.

懷君屬秋夜

散步詠涼天

山空松子落

幽人應未眠

I was remembering you in a night in autumn

Under a cool sky as I took a walk and composed a poem

As it is silent in the mountain, I can clearly hear pine cones fall

As you live very quietly, you may also be staying up late, listening to the sound of pine cones