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World Bank: China Faces New Challenges - 2002-05-30

The World Bank president says China faces enormous challenges over the next few decades, as it moves toward a free market. Among the greatest difficulties are rural poverty, the widening gap between rich and poor, and corruption.

World Bank President James Wolfensohn applauds China for lifting more than 250 million people out of poverty in the past 20 years. But he says many millions of rural Chinese still survive on less than a dollar a day, without any opportunity to improve their livelihoods.

Mr. Wolfensohn spoke to reporters in Beijing Thursday about the problems he discussed with Chinese leaders during his eight-day trip here. "The prevailing issues of poverty; of the difference between the rich and the poor; of the rural and the urban; of women and men; the problems of differences in education; the issues of governance. These are all questions which are being faced, along with the questions of corruption," Mr. Wolfensohn said.

Mr. Wolfensohn says acute poverty in China's inland regions appears even starker in contrast with the economic boom along its coast. He says the World Bank's future projects in China will focus more on alleviating income disparities and improving education for the poorest of the poor.

Mr. Wolfensohn encouraged China to create the right conditions for the private sector to flourish, so the country can sustain its high level of economic growth. He warns that China must guard against what he calls crony capitalism.

Mr. Wolfensohn says that as state-owned enterprises convert into private companies, politicians, business leaders and financial institutions still maintain close links which could lead to corruption. He describes what is needed to ward off the danger of cronyism. "First, that political leadership is extremely strong in seeking to avoid it. Secondly, you have maximum transparency in the process of privatization, and maximum transparency subsequently in the reporting on those corporations. And thirdly, that you have a free press and civil society, which can be a watchdog," Mr. Wolfensohn said.

Mr. Wolfensohn says that regardless of China's political system, the public must be able to express its views. He says that with a rigorous system of checks and balances, as well as upgraded legal and judicial systems, China can enjoy continuing prosperity.