PRC Well Positioned to Tackle Inequalities - ADB President
The People's Republic of China (PRC) is well positioned to sustain economic growth over the next decade by further reducing poverty, improving governance, promoting stronger social development and countering the negative environmental impacts of growth, Asian Development Bank (ASX: ATB) President Haruhiko Kuroda said today.

"While China has made truly amazing progress, some tough questions lie ahead," said Mr. Kuroda in his keynote speech at the China Development Forum.

Poor interior regions in PRC have not benefited as much from economic growth and reforms as the east coast. "While some deterioration in income distribution is inevitable as China moves from a centrally planned to a market economy, the speed of the growing inequality is worrying," he said.

Income distribution worsened in the past two decades. Disparities also persist in education, health, social security and gender dimensions.

President Kuroda pointed to the following solutions:

- With about 60% of the population engaged in the agriculture sector, improving the performance of agriculture is the direct way to reduce urban-rural inequalities. Improving rural infrastructure, diversifying crop production, and adopting integrated, environmentally friendly approaches to farming are needed. Rebuilding the rural financial system would also relieve the lack of financial services that constrains farmers' investment options.

- Creating sufficient job opportunities for the 150 million surplus rural laborers is critically important. This requires greater small- and medium-sized enterprises and private sector development, as well as vocational training for rural migrants.

- Priority should be given to the poorest rural areas. The establishment of a rural minimum living standard support system, the provision of free nine-year compulsory education in rural areas, and the establishment of a basic rural health care system to cover farmers can be achieved in the current fiscal circumstances.

Mr. Kuroda noted that those solutions are achievable given the fiscal revenue increase of about RMB 500 billion per year in the past two years. "Such an outlay is quite feasible, and would go a long way to making growth more inclusive and equitable," he said.

In addition to tackling inequalities, Mr. Kuroda said continued reform in the legal and regulatory system is needed to support the market economy and to conform to World Trade Organization rules. Considerable work needs to be done to improve the country's auditing and accounting system.

Mr. Kuroda also said inappropriate pricing of energy, use of outdated technologies, limited natural resources, and weaknesses in environmental management have left a legacy of land degradation, poor and declining water quality, air pollution, and acid rain.

"The Government's track record of reforms and excellent management of its globalization process give me confidence that such challenges can and will be met," he added.

ADB's operations in the PRC focus on promoting pro-poor economic growth by ensuring that the poor can participate in and benefit from the process of growth. Jointly with the Government, ADB has channeled most of its lending to the central and western regions in which the majority of the poor live.

ADB, based in Manila, is dedicated to reducing poverty in the Asia and Pacific region through pro-poor sustainable economic growth, social development, and good governance. Established in 1966, it is owned by 64 members - 46 from the region.

In 2005, it approved loans and grants for projects totaling $6.95 billion, and technical assistance amounting to $198.8 million.

Tsukasa Maekawa
Tel:+632 632 5875; Mobile: +63917 625 1351 

Graham Dwyer
Tel:+632 632 5253; +632 898 3413; +63 915 741 4363 


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