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Viewing China from Both Sides

World Bank President Paul Wolfowitz arrived in Lanzhou, capital of northwest China's Gansu Province, Wednesday for his first visit to the country since taking over as head of the global institution.

The president flew directly to one of China's poorest and most remote regions to see first hand the challenges confronting the country he calls "a major global force."

Wolfowitz arrived in China after a two day trip to Japan which included meetings with government officials, parliamentarians, students as well as business leaders.

On the first leg of his visit to China, the World Bank president is visiting poor people in rural villages in Gansu Province -- whose incomes are in the bottom one percent in China.

"China, as we all know, has been the fastest growing economy in Asia for the past 20 years and has lifted more than 400 million people above US$1 a day poverty levels in that time," Wolfowitz said prior to his arrival in the country.

"And when we talk of China these days, we tend to think only of Shanghai and skyscrapers, of trade surpluses and rapid economic growth and above all, of amazing poverty reduction.

"These images are all true, but they don't tell the whole story."

Lanzhou will also give Wolfowitz a firsthand experience of another major challenge facing the country -- the environment -- as the capital is one of the most polluted cities in the world.

The trip will also give the World Bank president the chance to view efforts to combat environmental degradation. Wolfowitz will visit a World Bank and government funded program, aimed at turning part of the dry arid desert into lush green usable land. 

The program is one of a series of projects in the Loess Plateau region implemented in the late 1980s and early 1990s -- a program that has been hailed as one of the largest and most successful conservation programs in the world. Over the last two decades, Bank funding helped turn dry arid land in the Loess Plateau to arable land, lifting more than one million people out of poverty.

Wolfowitz will also visit other projects supported by the Bank and other donors to reduce poverty in the region and meet some of the rural families whose lives have been improved. He'll also meet women who've benefited from a Bank managed project to empower women in the western province -- by giving grants for the women to set up small scale enterprises.

The bank president will also talk with provincial and local government officials.

"I am looking forward to seeing firsthand how China has tackled poverty on such a massive scale. I think the world has a lot to learn from their experiences and I think the bank can work with China to share those lessons," Wolfowitz said.

From the poor western province, Wolfowitz will proceed to Hebei Province to participate in the Ministerial Meeting of the G-20, which is hosted by China this year and attended by representatives from a bloc of 20 developing nations, established in 1999.

The meeting, attended by finance ministers and central bank governors, will discuss, among other issues, reform of the Bretton Woods institutions as well as global imbalances.

The World Bank leader will then visit a nearby province of Hebei where he will see a World Bank funded project which provides poor farmers with microcredit to raise cattle, and also one of the largest private gas distribution companies in China with investment from the International Finance Corporation, the World Bank Group's private sector arm.

Beijing will be the final stop on the trip, where Wolfowitz will meet senior Chinese leaders and officials to discuss how the World Bank can best support China's development goals.

Prior to his arrival in China, Wolfowitz said the country -- now in its third decade of a transition from a planned economy to a market economy -- has "redefined the competitiveness of virtually every other country."

"Today people who make cars in Germany or saris in India are equally challenged by China's rise. People who export iron ore from Australia or Europeans who buy cheaper clothing benefit from the effects of China's rapid growth and increased competitiveness.

"Our job, as a global institution, is increasingly going to be to help countries adapt to this new environment and turn it to their advantage," he said.

"The country faces some important challenges, especially in the areas of environment, natural resources, and climate change, on the one hand, and with remaining poverty and growing inequality, on the other."

"These issues all affect the sustainability for growth. China needs more and better infrastructure to provide a framework for industry and to keep the cities operating efficiently. It needs to deal with an ageing population.

"It needs to continue moving -- probably even more rapidly -- towards a more effective legal system and a better investment climate."

Wolfowitz said the history of successful development left "no doubt that weak public institutions could be a major bottleneck to growth and investment."

While in China, Wolfowitz will also meet women's groups, civil society organizations and students.

Statement by World Bank President Paul Wolfowitz on Arrival in Lanzhou, China
I am delighted to be in China, and particularly glad to be here in Lanzhou, and to have a chance to see for myself some of the projects and processes the Chinese have employed to reduce poverty so dramatically in such a short time. In the span of a few decades, East Asia has experienced the greatest increase in wealth for the largest number of people in the shortest time in the history of mankind. It is an incredible fact, and of course, without this growth in China, it wouldn't have happened.

Since 1980, China accounted for 75 percent of poverty reduction in developing world.

Over the years, China has been a large borrower from the World Bank, and is increasingly transitioning from borrower to donor. As its role changes, so its relationship with the Bank will change.

I intend to use this visit to achieve two main objectives:

First, I want to learn more about China's economic growth and poverty reduction.  We know that when China started its reform process, its GDP per capita was among the lowest in the world -- on the level of India, Pakistan, Kenya, Zambia, or Nigeria -- but with growth of around 6 percent a year, it now has income levels surpassing both of those countries. Since the beginning of economic reform, China has lifted more than 400 million people out of poverty. How did China do it? I want the World Bank to be able to do more to help other countries learn too, so that elsewhere in the world, we can see more progress made to improve the lives of the poor. 

Second, I want to understand more about what the Bank can do to assist China in addressing the still large challenges of poverty in the country. The Chinese leadership has identified a number of areas of imbalance in the country, including the gap between urban and rural incomes and the damage done to the environment in recent years. China is the world's second largest emitter of greenhouse gases and contains 20 of the 30 most air-polluted cities in the world. There are also pressing issues relating to water and energy usage that I hope to understand better from this visit. These are areas where we have considerable experience, and where we can help. China recognizes that stability depends on correcting these imbalances and a number of others, and we certainly would like to do what we can to support that effort.

(China.org.cn October 13, 2005)

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