breakfast roundtable with the asia pacific members of the canadian international council...
TRANSCRIPT
Breakfast Roundtable with the Asia Pacific Members of The Canadian International Council
Transforming ADB’s Partnership with the People’s Republic of China
16 September 2015Asian Development BankEast Asia DepartmentDirector General Ayumi Konishi
Today’s Topics
• ADB-PRC Relationship
• ADB’s PRC Operations to Date
• PRC’s Growth and Challenges
• ADB’s Future Operations in PRC
People’s Republic of China History of Relationship with ADB
• 1986 – Became ADB Member
• 2000 – Opening of PRC Resident Mission
• Cumulative public sector lending till end 2014 is $29.36 billion (2nd largest borrower)
• 2005 – Became ADF donor. Also established PRC Fund for Poverty Reduction and Regional Cooperation
ADB Sovereign Operations in PRC（ cumulative ）
ADB’s Sovereign Lending to PRC （ share of ADF and OCR operations in total)
0%
200%
400%
600%
800%
1000%
1200%
Financial Significance of ADB lending for PRC
Share Holding and Voting Power（ as of 31 December 2014 ）
Member Countries
Subscribed Capital
(% of Total)
Voting Power (% of Total)
Japan 15.677 12.840United States 15.567 12.752People's Republic of China
6.473 5.477
India 6.359 5.386Australia 5.812 4.948Canada 5.254 4.502
Net Resource Transfer to PRC($’000)
Year Disburse-ments
(A)
Repayments (B)
Interest and Other Charges
(C )
Net Resource Transfer
(D=A-B-C)2011 1,697,721 384,394 175,491 1,137,8352012 1,433,399 439,580 208,179 785,6392013 1,262,747 504,339 206,440 551,9672014 1,654,188 559,284 208,292 886,612
ADB Operational Revenue from PRC(as of 31 December 2014)
33%
18%15%
7%
5%
22%
Revenues from OCR Loan, Guarantee and Equity In-vestments
PRC
Indonesia
India
Pakistan
Philippines
Others
２ Major Shifts in Operation
• Since 2000: Focus has moved to the Western Region aiming at poverty reduction and reducing inequality
• Since (around) 2005: Shift from major infrastructure projects to pilot/demonstration projects
Sector and Regional Distribution of ADB Lending(Sovereign, 2011-2014)
Sector Regional
45.4%
23.4%
17.4%
13.8%
Western
Central
East
Nation-wide
33.6%
22.8%
22.2%
13.1%
5.6% 2.6%
Transport and ICT
Agriculture, Natural Resources and Rural Development
Multisector
Energy
Water Supply and Other Municipal Infrastructure and Services
Education
Current Portfolio • Western provinces receive the largest
share of ADB assistance• “Green Portfolio” addressing climate
change and environmental concerns• Attention to TVET and aging issues to
support the integrated urbanization strategy
• Pilot and demonstration projects• Private sector operations complementing
sovereign operations
ADB Financing Share of the Total Project Costs
Private Sector OperationsNon-sovereign operations (lending, investment and guarantees) without the central government guarantee
Country Partnership Strategy
Our Belief
Our Clients
Environmental Infrastructure, water, sold waste management, energy efficiency and clean energy in small/medium cities in the West）
Support to sustainable development using private enterprises technologies and business models
Public-Private Partnership
Private sector’s (including Japan’s) projects in Asia
Financial Institutions
What Drives Us? What Do We Do?
Selection of the technology based on the global best practices
Financial structuring through rigorous due diligence
High environmental standards (e.g., For waste for energy, adopted EU standards. For waste water management, demand the standards for the reuse of treated water)
Require a high level of corporate governance (at OECD level)
Co-financing with private financial institutions including Japanese institutions
14
Loan/Equity approvals are $539 million in 2012, $715 million in 2013 and $1,058 million in 2014
Geopolitical aspects including rapidly increasing oil imports and aggressive development of marine resources are often highlighted in discussing PRC’s energy issues in Japan with little attention to the policies on the use of new and renewable energy sources, particularly the natural sources of energy.
However ADB considers China’s energy choice is a global concern given PRC is the world’s largest CO2 emitter and it is a matter of energy sources fo 1.4 billion people. ADB has however supported a wind-power pojects sponsored by Sumitomo Corp. and Kyushu Electric Company by issuing RMB Bonds.This project contributes to reducing 140,000 tons of CO2 emission.
Case Study
Inner-Mongolia Wind Power Generation ）
China’s Economic Growth and Challenges
The number of poor in the PRC declined from 835 million (1981) to 84.1million (2011) based on the PPP $1.25 per day poverty line
Source: World Development Indicators Database
Inequality is large but gradually improving
Source: NBS, World Bank
Inequality among provinces is reducing
On the relative “wealthiness” of PRCCountry Last Loan Per Capita GNI as
share of US Per Capita Income (Atlas)
Per Capita GNI as share of US Per Capita Income (PPP)
PRC Ongoing (2013) 12% 22%
Korea 1988 (ADB) excl. 1997 emergency loan
20% 31%
Singapore 1980 (ADB) 37% 56%
Japan 1966 (WB) 26% 45% (GDP PC PPP)
Hong Kong 1980 (ADB) 43% 55%
China’s Air Pollution impacts on Korea and Japan
Dust Particles as of noon of 1 February 2013Source: Asahi Shimbun, 1 February 2013
China’s Total Export exceeded US in 2012
Source: ADB staff calculations from WTO data
• Trade significant engine of growth for PRC, especially after WTO• In 2013, PRC became the biggest trading country in the world
Import is also approaching the US level（ Total imports in 2012 exceeded $2 trillion)
Source: ADB staff calculations from WTO data
… as a result, trade surplus is reducing
Source: ADB staff calculations from NBS Yearbooks
Chinese Market is important for its Trade partners
ADB’s Recommendations on the 13th Five Year Plan （１）
• Industrial Transformation• Balanced Rural-Urban
Development• Human Resource Transformation• Environmental Protection
ADB’s Recommendations on the 13th Five Year Plan（２）
• Climate Change• Water Resources• Local Government Debt• China’s Further
Internationalization
CPS Processing Plan
PRC: 5th Plenum Discussion October 2015of the 13th FYP
ADB: Management Committee Meeting November 2015
PRC: Concurrence on CPS December 2015ADB Board circulation December 2015ADB Board discussion January 2016
Future Focus
• PRC would like ADB and the World Bank to increase lending to:–Catalyze reforms–Promote innovation–Address environment and climate
change
• From “Finance++” to “Knowledge++”• Country Knowledge Plan
Major Future Initiatives
• Beijing, Tianjin, Hebei Air-Quality Improvement Initiative
• Yangtze River Belt
Integrated Development• “One Belt, One Road”
(ADB’s Role as “honest broker”)
Lending Breakthrough
• Adoption of policy-based, and result-based lending
• Innovative Private Sector Operations
• Public Private Partnerships
Future lending volume will be determined in consideration of…
• The need for ADB involvement in PRC’s development
• ADB’s value added in the specific sectors• Regional and global benefits of the
proposed interventions• The Government’s request• Size of the lending programs of other
institutions• ADB’s resource availability
Private SectorApproaches for Future Operations
• Develop private sector operations following public sector’s country and sector strategies to achieve synergy and complementarity
• Priority Area: (i) Crimate Change Mitigation Technologies (renewable energy and energy efficiency) and approaches for adaptation; (ii) safe water supply, waste water treatment, food supply, provision of social services
• Cofinancing with local and international banks and resource mobilization
ADB-PRC Knowledge Partnership
• Major Knowledge Work/Products– Implementation of MOU on Climate Change– Implementation of MOU on Environmental
Protection– Recommendations for 13th Five Year Plan
2016-2020– Series of knowledge work relating to public
finance reform (including Public Finance 2020 study)
Country Knowledge PlanApproaches• Ensure “One ADB” approach• Systematize knowledge creation, management
and use • Leverage global knowledge and provide platform
for South-South knowledge exchange
Themes• Modernize state systems: filling the gaps• Focus knowledge on climate change,
environmental and social sustainability
PRC Contributions to ADB
Asian Development Fund
2005 ADF IX $30 mil.
2009 ADF X $35 mil.
2013 ADF XI $45 mil.
PRC Regional Cooperation and Poverty Reduction Fund
2005 $20 million
2012 $20 million
PRC became ADB donor in 2005...
Full Scale Partnership• “Mutually beneficial” partnership• Addressing challenges money alone cannot solve• Focus on “regional and global public goods”• “Knowledge ++”• Use of ADB as the “platform” for PRC’s
regional contributions• Establish a successful model to engage
in upper middle income countries
