MANILA (Reuters) - The Asian Development Bank will look to confront a range of economic challenges at its four-day annual meeting this week, including the future relevance of the organization amid China’s increasing presence in infrastructure finance.
Free trade, globalization, population aging, worsening environmental problems, gender equality, the trend toward automation, are key topics of discussions at the May 3-6 meeting in the Philippines, one of Asia’s fastest growing economies.
ADB vice president Stephen Groff said the Manila-based lender is crafting a new long-term corporate strategy to 2030 to achieve a “prosperous, inclusive, resilient, and sustainable” Asia and the Pacific.
“Asia is a region of the world whose economic success over the last quarter century is very much built on free trade, and clearly we are hearing more negative voices from some corners of the globe on free trade and globalization,” Groff told Reuters in an interview.
The ADB raised its 2018 economic growth estimate for developing Asia to 6.0 percent from 5.8 percent, citing solid export demand, but said U.S. protectionist measures and any retaliation against them could undermine trade.
Concern is growing about a trade row between China and the United States in which the two nations have threatened each other with tariffs. A delegation of senior Trump administration officials is set to visit Beijing this week for trade talks.
Founded in 1966 with a mandate to lift hundreds of millions of Asians out of poverty, the Japanese-led ADB has 67 member countries ranging from struggling Bangladesh and Pakistan to booming China and India, with its largest donors Japan and the United States.
But China’s bid to increasingly assert itself as the regional powerhouse with its high-profile “One Belt, One Road” initiative, has raised questions about the future role and relevance of ADB.
Many OBOR projects are supported by China’s state-owned banks and its fledgling regional lender, the Asian Infrastructure Investment Bank (AIIB), could become a potential rival of ADB.
AIIB, which has 84 member countries, was set up by China as its answer to the Western-dominated World Bank to help meet the massive need for infrastructure spending in Asia through 2030.
Dane Chamorro, head of South East Asia at risk consultancy Control Risks, said it is premature to describe the relationship between ADB and AIIB as competition.
“What is often missed is that the from what I’ve seen, most of AIIB investments have been done on a multilateral basis... that is deliberate, that is a confidence building measure,” said Chamorro.
Given Asia’s vast infrastructure finance needs, ADB’s Groff sees scope for ADB and the AIIB to cooperate with each other.
The ADB estimates developing Asia needs to invest $1.7 trillion per year in infrastructure until 2030 to maintain its growth momentum, tackle poverty, and respond to climate change.
The ADB and AIIB have so far co-financed four infrastructure projects in Pakistan, Bangladesh, Georgia and India, with total loans amounting to more than $700 million.
Reporting by Karen Lema; Editing by Sam Holmes