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Reflections On The China World Bank Partnership 2014-19 © Bert Hofman © LIESMARS, Wuhan University. Used with the permission of © LIESMARS, Wuhan University. Further permission required for reuse. Report design: Spaeth Hill AT THE FRONT LINE REFLECTIONS ON THE BANK’S WORK WITH CHINA OVER FORTY YEARS 1980 — 2020 4 FOREWORD 6 Axel Van Trotsenburg 7 PART ONE PART Zou Jiayi 8 INTRODUCTION 10 OF Martin Raiser 11 PART 1: CHINA-WORLD BANK PARTNERSHIP THROUGH THE DECADES 14 How It All Began: The 1980s 15 How It All Began: China Resuming Membership in the World Bank by Caio Koch-Weser 17 From Plan to Market: Collaborative Economic Work at the Start of the Partnership by Edwin Lim 28 Deepening Reforms: The 1990s 35 Sustaining the Partnership at the Turn of its First Decade: 1987–1994 by Javed Burki 37 Working in the World Bank’s Mission in China in the mid-1990s by Pieter Bottelier 43 The World Bank and China’s Reforms: 1994–1997 by Nicholas Hope 49 Addressing social and Environmental Consequences of Rapid Growth: The 2000s 57 China’s Poverty Alleviation Strategy and Support from the World Bank 1997–2004 by Yukon Huang 59 Addressing China’s Daunting Environmental Challenges by David Dollar 65 China and the World: The 2010s 72 China and the World Bank Group 2010 to 2014: From Development Cooperation to a Comprehensive Global Partnership by Klaus Rohland 74 Reflections on the China–World Bank Partnership 2014–19 by Bert Hofman 79 5 PART 2: THROUGH THE DECADES BANK PARTNERSHIP CHINA—WORLD CHINESE REFLECTIONS 86 Transformation Toward a Higher Level of Cooperation by Yang Shaolin 88 Integrated Rural Development: Lessons from World Bank Operations for China’s Rural Revitalization Strategy Today and for Developing Countries in General by Zhang Wencai 92 OF Supporting China’s contribution to Greenhouse Gas Emission Reductions under the 2015 Paris Agreement by Chen Shixin 98 China–World Bank Knowledge Partnership: Experience and the Way Forward by Yang Yingming and Ye Yu 103 CONCLUDING REMARKS 108 Wang Zhongjing: Closing Reflections on 40 Years of Partnership 109 Chang Junhong: After 40 Years of Partnership— A Brief Look Ahead 110 Victoria Kwakwa: Learning from 40 Years of Partnership: Key Take-Aways 111 BIOGRAPHICAL ANNEX 116 CONTENTS ANNEX LENDING PROJECTS 124 ANNEX KNOWLEDGE PROJECTS 148 FORE— WORD 1 AXEL VAN TROTSENBURG China’s economic and social development transformation over the past forty years has been a remark- able achievement, with huge global significance. Since joining the World Bank in 1980, China developed from an IDA recipient to an Upper Middle-Income IBRD borrower, an important contributing partner to IDA, and a critical contributor to global public goods. The scale and pace of China’s transformation have shaped the unique partnership between the China and the World Bank, including continuous ad- aptation. The partnership has also become a valued source of inspiration and lessons for many other World Bank clients. This collection of essays brings together reflections from partners and friends who contributed, partici- pated, and witnessed four decades of partnership between China and the World Bank Group. It shows how opportunities have been maximized and obstacles turned into steppingstones. The Bank is proud to be part of China’s development success. As Deng Xiaoping famously said to President Robert McNamara in 1980, “We are determined to modernize and develop our economy. We can do it without the World Bank, but we can do it quicker and better with you.” Deng’s words have been a continuous source of mo- tivation to all of us in the World Bank Group. In my experience, several aspects of the partnership between China and the World Bank stand out. One of these is knowledge and mutual learning, which have long been at the core of the relationship. The Bank produced the first detailed analysis of the Chinese economy in the early 1980s and since then knowledge work has been at the center of our engagement. But we have also learned from China. We learned about the value of policy experiments, of second-best pragmatic solutions, and of the impor- tance of delivery and the ability to execute. As China has grown wealthier, it has become an important contributor to the WBG and became the sixth largest donor to IDA19. Looking ahead, China’s global economic and financial heft make it a critical partner in addressing the world’s most pressing challenges. From climate change to pandemic resilience, debt distress, regional integration and sustainable develop- ment, our partnership with China will remain key to finding solutions. As a Chinese saying goes, Sishi Buhuo—at the age of forty, one is no longer perplexed. After forty years, we should be even more clear-eyed about the future of our partnership. What should the Bank do in China? What should China do at the Bank? And what can China and the Bank do together in promoting global development? In a constantly changing environment, the 40th anniversary of partnership offers an opportunity to take a fresh look at these important questions to steer our partnership forward. May the personal histories contained in these pages serve as an inspiration. 1 · Axel van Trotsenburg is the World Bank’s Managing Director for Operations. Prior to that he served in various senior positions in the World Bank, includ- ing as Vice President for East Asia and the Pacific between 2014-2017, during which he oversaw a substantial increase in lending to China targeting greater climate action and key domestic reform challenges. FORE— WORD ZOU JIAYI2 This year marks the fortieth anniversary of China reassuming its membership and representation in the World Bank and also my own thirty-second year of career associated with the China–World Bank partnership. The 40th anniversary celebration, on which the collection of contributions in this book is based, was very much a family event. It was a great reunion of many old friends, and although it was held virtually, our friendship is concrete and down to earth thanks to four decades of successful joint work. Over the decades, we worked together on a common dream of a world free of poverty and of shared prosperity. Today we can be very proud of ourselves, for setting a good example of practice in multilateralism and of a win-win development partnership. I want to highlight three areas of this partnership. Together, we have pioneered a partnership for reform. Mr. Deng Xiaoping, the man who initiated China’s reform and opening up, also kicked off China’s cooperation with the World Bank. In the early eighties of the last century, World Bank visited China and carried out two macroeconomic studies. China and the World Bank co-sponsored two famous conferences, the Moganshan Conference and the Bashan Boat Conference, which played a big role in consensus building on China’s market-oriented reform.3 Over the past four decades, the World Bank has provided more than 500 analytical reports on China’s reform and development. In recent years, our two sides have also completed a series of flagship reports, including China 2030, Urban China, and Innovative China. These research products have not only pro- vided substantially valuable policy advice for China, but also presented insights and proposals to address complicated development issues for the world. Together, we have achieved a partnership for poverty reduction and economic transformation. By the end of fiscal year 2020, IBRD and IDA have committed over US$64.4 billion in loans, supporting 434 projects in almost all the provinces of China. These projects transferred not only financial resources, but also intellectual resources, and contributed to and witnessed China’s progression from a low-income developing country to an emerging economy, from an IDA recipient to an IDA donor. Through these projects, managerial and institutional innovations have been introduced in China, such as international competitive bidding, project supervision, and a pollution charge system.