Asian Development Bank takes stock as US policy shifts
Chinese Finance Minister Xiao Jie hopes ADB will strengthen strategic ties with Beijing’s “One Belt, One Road” initiative
Accelerating growth in Southeast and South Asia can help make up for slowing momentum in China but it requires smart investments in infrastructure and technology, the president of the Asian Development Bank said on Saturday as the regional lender started a meeting of its board of governors.
ADB President Takehiko Nakao and other leaders of the regional lender said investments should concentrate on high-quality projects and technology should be made available to all as countries stretch to make up for shortfalls in needed spending, they said.
Nakao said he was optimistic about the outlook for Asia, which contributes about half of world economic growth. Overall growth is forecast at 5.7 per cent in 2017 and economies in India, Bangladesh, Indonesia, Myanmar, the Philippines and Vietnam are gaining momentum.
Chinese Finance Minister Xiao Jie told the ADB’s annual gathering in Yokohama on Saturday that he hoped the Asian Development Bank would strengthen strategic ties with his country’s “One Belt, One Road” initiative to support development in Asia.
“China hopes the ADB ... strengthens strategic ties between its programmes and the ‘One Belt, One Road’ initiative to maximise synergy and promote Asia’s further development,” he said.
The unstated backdrop to the meeting is Japan’s continued strong role in the ADB at a time when the administration of US President Donald Trump has adopted an “America first” stance and China is pushing ahead with its own infrastructure initiatives.
Opening the meeting in the port city of Yokohama, Finance Minister Taro Aso said Japan, the biggest donor to the ADB, would contribute US$40 million to a fund promote the use of hi-tech.
Aso said that as the Manila-based ADB marked its 50th year it should adopt a “strong strategy” to ensure it remained a “highly relevant institution at a time when needs for investment in infrastructure such as power generation, sanitation, roads and ports are growing in both quantity and quality”.
The ADB estimates more than US$26 trillion is needed for ports, power, water and other infrastructure in the region by 2030, or more than US$1.7 trillion a year. The current level of spending is below US$900 billion.
Aso said the regional lender should generally prioritise poorer countries in allocating its financing while helping “upper-middle income” countries with expertise in such areas as environmental protection.
Aso welcomed moves to reform purchasing procedures to “put more emphasis on quality.”
“I encourage the bank to continue to move in this direction,” he said.
The policy shift under Trump is raising questions over the strength of the US commitment to multilateral organisations like the ADB, raising questions about how to increase financing and make it as effective as possible.
Nakao, the ADB president, said the lender was working to find ways to streamline its operations and deepen collaboration with local governments and the private sector. Co-financing with other banks, including the China-backed Asia Infrastructure Investment Bank, and with the private sector has become an increasingly important source of support, involving US$13.9 billion of the total US$31.7 billion in funds allocated last year by the bank.
Additional reporting by Reuters