China's time at ADB helm not yet come

Curtis Chin considers talk that the next ADB president could be Chinese

PUBLISHED : Tuesday, 05 March, 2013, 12:00am
UPDATED : Tuesday, 05 March, 2013, 3:59am

The resignation of Asian Development Bank president Haruhiko Kuroda to be Japan's next central bank governor has raised the question of succession at the Manila-based institution. And once again, China seems to be playing the villain: there are persistent rumours of a Chinese challenge to Japan's leadership at the bank.

Since the ADB's founding in 1966, Japan has retained a lock on the presidency of the multilateral development bank dedicated to fighting poverty.

For 3½ years under presidents Barack Obama and George W. Bush, I served as the US ambassador to the Asian Development Bank. And on more than one occasion, my counterpart from China asked me, "Do you think the ADB will ever have a Chinese president?" My diplomatic reply then was that it was up to the bank's shareholders.

Officially, the bank's next president will be chosen from nominees put forth by member governments. In reality, the president traditionally has come from the ranks of Japan's Ministry of Finance.

China might well decide this is the time to push its own nominee. China, after all, has lifted tens of millions out of poverty, and is now the second-largest economy in the world, having taken that position from Japan in 2010.

No longer a diplomat, I might join others, however, in now replying, "not so fast", and "not quite yet". China should focus first on phasing out its borrowing from the World Bank and the ADB and on significantly increasing its contributions to these organisations' funds to help the world's poorest nations.

Japan and the US are the ADB's co-equal largest shareholders. In contrast, China remains one of the ADB's largest borrowers, though it is the third-largest shareholder at the bank.

In 2011, China was the second-largest recipient, behind India, of ADB-approved loans. Excluding contributions from co-financing partners, this included some US$1.4 billion in loans and US$25 million in equity investments. These amounts could surely be reimbursed by China, given its internal resources and ability to access capital markets.

China could also further demonstrate its commitment to being a responsible stakeholder in a prosperous and peaceful region. This would include improving transparency of the bank's projects through stronger public communications, inspection mechanisms and engagement with civil society.

China could also lead the way in co-operating with ADB compliance review panels, and in strictly enforcing social and environmental safeguards on infrastructure projects, regardless of the funding source.

Japan's approach to the ADB must also evolve. Even if the next president is a Japanese national, he - or she - should come from a wider pool than Japan's finance bureaucracy.

And most importantly, all of the bank's staff should be recruited, chosen and promoted transparently and through a merit-based process.

In the past two years, Europe and the US have retained locks on the top position at the International Monetary Fund and the World Bank, but the process and discussions were more open than ever.

A dynamic, different kind of leader from Japan could likewise be a boost to the ADB and to Japan's hold on the institution's presidency in the face of China's rise. Such an evolution would also benefit the region's poorest and least-developed nations, which the ADB was founded to serve.

Curtis S. Chin served as US ambassador to the Asian Development Bank. He is a senior fellow and executive-in-residence at the Asian Institute of Technology, and a managing director with RiverPeak Group