Full text: WB country director's speech at China Poverty Reduction Int'l Forum

Bert Hofman, the World Bank Country Director for China, Mongolia and Korea gave a keynote speech at 2016 China Poverty Reduction International Forum & Launching Ceremony of Global Poverty Reduction and Inclusive Growth Portal on May 8, 2016 in Beijing. Here is the full text of his speech.

Your Excellencies GuoWeimin, Fang Zhenghui, Hong Tianyun

Distinguished guests, partners and friends,

It is a great pleasure for me to join this Forum and the launch of the Global Poverty Reduction & Inclusive Growth Portal today. I am inspired to see representatives from so many different organizations and agencies pay high attention to the theme of poverty reduction, which, together with shared prosperity are the two goals of the World Bank Group. We must all work together to find innovative ways to reach these goals, and I commend the organizers for the opportunity to share experiences with the help of new information and communication technologies.

It is well known that China has made a remarkable contribution to poverty reduction by lifting more than 700 million people out of poverty in the past three decades—which amounts to more than 70 percent of global poverty reduction over that period. Not surprisingly, many people around the world are keen to learn how China achieved such a remarkable result. In my personal view, 4 elements have been critical for China’s rapid poverty reduction.

First, China gradually reformed its economic system to allow more economic decisions to be made by market forces, which drove productivity increases, innovation and rapid economic growth. Institutional reforms such as the household responsibility system, township and village enterprises, and, in the 1990s, state enterprise reforms were crucial in maintaining high growth rates.

Second, China opened up to the outside world to trade, foreign investment and ideas, which it adapted for its own particular circumstances as reforms progressed. For instance, China’s special economic zones were instrumental in introducing new approaches to economic management and attracting foreign investment in the early days of reform, and China’s entry in the WTO made the country highly competitive on world markets in the recent two decades.

Third, China introduced reforms by experimentation in policy and institutional design, and it learned from those experiments—scaling up what worked, and abandoning what didn’t.

And fourth, China supplemented its broad-based growth oriented policies with targeted initiatives for poor areas that were particularly disadvantaged and poverty-struck.

Of course, this summary hardly does justice to the numerous policies and initiatives that led to the remarkable poverty reduction, and the Portal we are launching today is an excellent tool to deepen our understanding of China’s success as well as that of other countries.

Continued learning is also critical for China: the government has set a new, ambitious goal of lifting all the remaining 55 million extremely poor out of poverty by 2020. This may well be prove to be as hard and challenging as the World Bank’s target of eliminating extreme poverty by 2030 in the rest of the World. The nature of China’s poverty is changing: the poor are now more dispersed, and poverty depends less on where one lives and more on one’s personal characteristics. In my view, for China, this would require a strategy with three parts:

First, continued moderately rapid growth. Growth will remain an important driver of poverty reduction, as it is needed to create the jobs that can lift people out of poverty. Growth will increasingly have to come from productivity increases and efficiency gains, rather than from increased mobilization of investment and labor. Over time, technological progress will gain in importance as well, when China approaches the technological frontier. But less growth than before is needed: First: China’s labor force is already shrinking and will do so in the decades to come; and second, China’s growth is increasingly coming from services, which is more labor intensive, and thus more jobs per unit of growth is created.

Second, better sharing of the benefits of growth. China has made dramatic improvements in people’s livelihood across the board, but income inequality has also increased rapidly, though it has stabilized in recent years. This is not exceptional—in fact, many rapidly growing countries have seen an increase in income inequality. In some ways, part of this increase has been desirable—to provide the incentives for people to lift themselves and their families out of poverty through hard work.

At some level, though, income inequality can become a barrier for poverty alleviation, if it excludes people from opportunities. Ensuring that all people benefit from China’s success will be an important element of a reduction to eliminate remaining poverty. Two policy areas are critical for this: first, ensuring that all Chinese citizens, irrespective where they live, have access to the standard of public services that builds up the human capital they need to succeed; and second, to ensure that everyone can move to where they can use their human capital most productively. The recent reforms of the household registration system are encouraging in that respect.

Third, creating a world class safety net to support those that are not or not yet capable of benefiting from growth. China’s social welfare system, or Dibao, already provides 70 million people with support. Ensuring that such support is well targeted, is dynamic so as to provide temporary support when needed, and is structured such that it provides incentives for people that can to leave this support behind are elements of such a world class system.

There is no doubt that China’s experiences and strategies in poverty reduction offer a strong reference and inspiration for other countries. The World Bank recognizes the global interest in sharing the Chinese experiences in eradicating poverty. I am pleased that the World Bank has been able to support China’s growing role in South-South cooperation in poverty reduction via new ICTs.

Today’s launch of the Portal is a direct result of a World Bank Institutional Development Fund project in support of IPRCC. The Portal focuses on South-South cooperation in poverty reduction, providing poverty data, handbooks, updates on key anti-poverty events and researches, and is also offering a search function.

As more and more people look to the internet as their source of information, I hope to see this Portal successfully facilitating faster and wider cross-country information sharing.I hope, like many other such initiatives, that the IPRCC-hosted Portal can continually grow, and effectively serve as a key knowledge exchange e-platform on issues related to poverty reduction.

Technological progress is a driving force behind economic growth, citizen engagement and job creation. Information and communication technologies, in particular, are reshaping many aspects of the world’s economies, governments and societies. In this context, access to the internet has become a vital development tool.

We see growing evidence that internet-based information sharing can promote more efficient cooperation, economic growth, and social inclusion, with less unequal information access than traditional ways. For example, more equal access to education has been provided to poor girls and boys in many cases by connecting broadband to remote schools and subsidizing connectivity for the poor.

Similarly, e-commerce offers a more efficient marketing platform for agricultural products allowing remote farmers to earn more income. Today, we have Alibaba and ADA here which have been at the forefront of using e-commerce as a tool to lift people out of poverty.

The 2016 World Development Report on “Digital Dividends” by the World Bank, paints a clear picture of the remaining digital gap and of the barriers that are keeping countries from reaping the dividends associated with the digital revolution. The report highlights that, for digital technologies to benefit everyone everywhere, affordable access to high-speed internet is key.

Of a global population of 7.4 billion people, more than 4 billion people still don’t have access to the internet, with 90 percent of them in developing countries. And only 1.1 billion people have access to high-speed internet.

In China, about 668 million people have access to the internet. While impressive, this is less than 50 percent of China’s total population, meaning that about half of China’s population still do not have internet access.

Under Sustainable Development Goal No. 9, the world set an ambitious target to “significantly increase access to information and communications technology, and strive to provide universal and affordable access to the Internet in least developed countries by 2020”.

It is clear that governments, private sector, and the international community have a lot to do to reach this target and bridge the digital divide.But progress is possible. More efforts could be directed to effective ICT policy reform, fair taxation for the telecom industry, universal service funds for broadband rollout, and broader partnership.

Today’s forum gives us an important opportunity to take stock of what we have learned from reducing poverty through digital development attempts, share our knowledge and experiences in what works, what not and why.

The World Bank joins dozens of development organizations including ADB, DFID, and various UN agencies in recognizing the importance of supporting new ICTs. Specifically, the design of this newly initiated Portal has received support from China Internet Information Center and ADB. Let’s continue to join together to bring down barriers against information sharing through a wider engagement of key players. The World Bank applauds China for its efforts to reduce poverty reduction at home and its contributions to tackling poverty abroad. In closing, I would like to thank IPRCC and China Internet Information Center for hosting this event. I wish a successful Forum and an effective Portal.

Thank you.