ADB-PRC Policy Dialogue: Macroeconomic Policies for Transition to Net Zero

As the world’s largest emitter, the PRC has committed to peaking carbon emissions before 2030 and achieving carbon neutrality before 2060. Transition finance, which provides financing to high carbon-emitting industries, provides an important financing option for the PRC to support its decarbonization activities. Asian Development Bank PRC Resident Mission is organizing a seminar on this topic and the objective of the discussion is to obtain deep understanding of macroeconomic policies supporting transition to net zero.

Meeting venue: ADB PRC Resident Mission, 17th Floor, Tower A, China World Tower, 1 Jian Guo Men Wai Avenue, Beijing (Please bring your ID to register and enter the building)

Join via Zoom: https://adb-org.zoom.us/j/94539091441?pwd=Uy9wdXNrbzF2azY0NVZ6SU9XbmVFZz09

Meeting ID: 945 3909 1441
Passcode: ADBC2023

Contact: Wen Qi, wenqi@adb.org 

Agenda:
TimeProgram
9:00 – 9:25Welcoming Remarks and Context Setting

Moderator:
Akiko Terada-Hagiwara, Principal Country Specialist, People’s Republic of China Resident Mission (PRCM), Asian Development Bank (ADB)

Welcoming Remarks:
Aiming Zhou, Deputy Country Director, PRCM, ADB (5 min)

Context Setting:
Cui Ying, Deputy Dean, International Research Institute of Green Finance, Central University of Finance and Economics (15 min)

Q and A (5 min)

9:25 – 10:15Panel Discussion

Moderator:
Tang Min, Counsellor, State Council, PRC

Panelists: (40 min)

Lei Yao, Deputy Director, Financial Research Institute, People’s Bank of China

Zhao Gangzhu, Senior Researcher, Institute of Finance and Sustainability

Sun Tianyin, Deputy Director, Green Finance Research Center of the National Institute of Finance, Tsinghua University

Chen Yaqin, Assistant of General Manager of Green Finance Department, Industrial Bank

Open Floor Discussion (10 min)
10:15 – 10:30Discussion Summary and Next Steps

Moderator:
Akiko Terada-Hagiwara, Principal Country Specialist, PRCM, ADB

Discussion Summary (15 min):

Tang Min, Counsellor, State Council, PRC

Albert Park, Chief Economist and Director General of Economic and Research and Regional Cooperation Department, ADB

Asia’s Climate Challenge: Trade, Investment, and the Global Net-Zero Transition

The Asian Development Bank (ADB), in partnership with the Tsinghua University’s School of Economics and Management, is pleased to invite you to an in-person event to discuss the key points and highlights of the two reports ADB published recently: Asian Economic Integration Report (AEIR) 2023: Trade, Investment, and Climate Change in Asia and the Pacific, and the Asian Development Outlook (ADO) Thematic Report 2023: Asia in the Global Transition to Net Zero, on Tuesday, 16 May 2023 at 4:00 p.m. Beijing Time. This event will take place at A508 of Jianhua Building in Tsinghua University in Beijing.

One of ADB’s flagship reports, AEIR 2023 features a theme chapter, Trade, Investment, and Climate Change in Asia and the Pacific, which examines how trade and investment have played a key role in the region’s development, but at a cost to the environment. The chapter discusses how trade and investment contribute to climate change and explores ways in which governments can mitigate the impact.

Asia in the Global Transition to Net Zero explores what a global transition to net zero could mean for Asia and the Pacific under a range of climate policy scenarios and provides recommendations. The report is part of the ADO 2023 published on 4 April, which provides analyses and insights about developing Asia’s growth and inflation outlooks for 2023 and 2024.

Register here

Agenda:
TimeProgram
Modetator: Akiko Terada-Hagiwara, Head of Economics and Strategy Unit, ADB Resident Mission in the PRC
16:00 – 16:05Opening Remarks
Zhou Aiming, Deputy Country Director, ADB Resident Mission in the PRC
16:05 – 16:10Welcome Remarks
He Ping, Deputy Dean, School of Economics and Management, Tsinghua University
16:10 – 16:35Presentation on Asia in the Global Transition to Net Zero: ADO 2023 Thematic Report
David Anthony Raitzer, Economist, Economic Research and Regional Cooperation Department, ADB
16:35 – 17:00Presentation on highlights of Asian Economic Integration Report 2023
Jong Woo Kang, Principal Economist, Economic Research and Regional Cooperation Department, ADB
17:00 – 17:40Panel discussion

Moderator: Albert Park, Chief Economist and Director General of Economic and Research and Regional Cooperation Department, ADB

Panelists:
Gao Yuning, Associate Professor, School of Public Policy & Management, Tsinghua University

Shi Xinzheng, Associate Professor, School of Economics and Management, Tsinghua University

Teng Fei, Professor and Deputy Director of the Institute of Energy, Environment and Economy, Tsinghua University.
17:40 – 18:00Open Floor Discussion

The PRC’s Road to Recovery and Resilience

Jin Ding/China Daily

With the lifting of COVID-19 restrictions, the PRC’s economy looks set for a recovery in 2023 — even as global economic growth is projected to slow down amid tightened monetary policies in several advanced economies in response to high inflation.

Economic conditions in many less developed economies are also challenging. Fiscal balance sheets are stretched due to spending on anti-COVID-19 measures, steep rises in public debt, and headwinds from difficult external conditions. Against this backdrop, a stronger Chinese economy is not only beneficial to the country, but also supports global economic recovery.

Reviving consumer demand is key to recovery and growth in the PRC. Pent-up demand from the past three years — when households cut spending during lockdowns — must be unleashed to stimulate new demand for goods and services. A complete revival of consumption might take time as households readjust to post-COVID-19 opening, and there’s always the risk of further surges in infections. But a revival must be pursued nonetheless, as consumption is key to sustainable long-term economic growth in the PRC.

Higher consumption will benefit the services sector amid a structural economic shift that will see this sector replace infrastructure investment and manufacturing as the fulcrum of the PRC’s economic growth in the coming decades. This shift will drive growth across a host of business sectors including wholesale and retail trade, transportation, travel and logistics, as well as in education, eldercare, health, information technology and hospitality.

This is not to say that continued public and private investments in infrastructure and manufacturing are not needed; they are, particularly to support growth in the immediate and the short term. The government’s efforts to loosen housing market policies, and the intent to streamline regulations for private businesses and reform State-owned enterprises, are also critical to recovery prospects.

But only a vibrant services sector can drive longer-term growth. It’s also important from a perspective of combating climate change, as service businesses are generally less energy-intensive than construction and industry. Consequently, a greater policy emphasis on developing services can help the PRC make progress on sustainable growth while achieving its decarbonization and climate change targets.

Three specific policy interventions can instigate sustainable longer-term growth in the PRC that will benefit the Chinese people while helping spur global prosperity.

The first step is to introduce policies that strengthen the demand side of the economy, especially household consumption. In line with the PRC’s vision of “common prosperity,” we suggest a focus on redistribution through progressive taxation and social transfers. This will not only boost household demand, particularly among lower-income groups with higher propensities to consume, but also reduce income inequality.

Households will also consume more if they have better access to better quality public services for health emergencies, social protection for the aging population and the unemployed, and education for their children. All these public goods will ease the perceived need to shore up money for a rainy day.

The second entry point is to provide public policy support for the services sector on the same level as industry, including through tax incentives, access to credit, and competition.

While State-owned enterprise reforms have expanded the role of the private sector in manufacturing, many services are still provided by these enterprises, which are sometimes protected from private competition. Supporting the service sector’s development will also mean opening more sectors to foreign direct investment to diversify the scope and quality of services provided.

Finally, the PRC needs to prepare for rapid demographic aging that will increasingly curb economic growth. For the first time in 60 years, the PRC’s population fell in 2022 as the birth rate dropped to a record low. Though economic uncertainties might have contributed to this, the underlying causes include rising per capita incomes, high housing prices in cities, and insufficient support for families facing high child-rearing costs.

An aging population can inhibit growth and demand higher social expenditure and pension payments, which limit fiscal space for other important public expenditure. Policy measures are also needed to mitigate the impact of demographic aging on the labor force.

These measures could include increasing the retirement age, improving occupational healthcare so people can work longer, raising the female workforce participation rate through accessible childcare and flexible work hours, and increasing labor mobility by further relaxing the hukou (household registration) system.

The end of the lockdowns is an opportunity to consolidate consumption and services as the prime movers of the Chinese economy. By seizing this moment, the PRC’s economic recovery can deliver long-term prosperity and resilience at home and abroad.

Authors
 Safdar Parvez

Safdar Parvez

Country Director, PRC Resident Mission, ADB

Dominik Peschel

Dominik Peschel

Senior Economist, Former Head, Economics Unit, ADB

This Op-Ed is reproduced from China Daily.

Impact of High Trade Costs and Uncertain Time to Trade on Exports from Five Central Asian Countries

Reforms to Boost Long-Term Growth in the PRC

Impact of Gender Inequality on Long-Term Economic Growth in Mongolia

The Long-Term Growth Prospects of the PRC

Addressing Inequality in the PRC

Policy Measures to Foster Growth in the PRC

COVID-19 and Economic Recovery Potential in the CAREC Region

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