October 18, 2005

Wolfowitz urges China to give citizens more say

By Alan Wheatley, China Economics Editor

BEIJING (Reuters) - World Bank President Paul Wolfowitz
prodded China on Tuesday to give more power to the people for
the sake of sustaining strong economic growth.

Wolfowitz, a staunch conservative who served as deputy U.S.
secretary of defense before joining the bank, said China had
made progress in giving a voice to ordinary citizens but needed
to do much more.

"Such issues as the rule of law and the role of civil
society are important non-economic factors in development -- as
important or perhaps more important than the traditional inputs
of labor and capital," Wolfowitz said.

"China is at a point now where these issues loom large on
the agenda," he told a news conference after nearly a week in

Striking a similar theme, U.S. Securities and Exchange
Commission Chairman Christopher Cox said separately that the
development of healthy capital markets would contribute
directly to the advance of freedom in China.

As such, American engagement in China was a force for good,
said Cox, author of a 1999 congressional report that accused
China of stealing design information on U.S. nuclear warheads.

"It's difficult to separate broad human rights such as the
ability to speak and read and to enjoy the freedom of
information from what is necessary for the proper functioning
of a capital market," Cox told reporters on the sidelines of a
conference in Beijing.

Wolfowitz chose his words carefully, saying that he did not
want to spoil the impressive candour of the World Bank's
private dialogue with Chinese officials.

But he held up as a model a village he had visited in
Gansu, a poor western province, where peasants voted not only
on the village leadership but also on which development
projects to pursue.

China should push as hard as possible in this direction,
Wolfowitz said. "That kind of participation in decision-making
at the local level greatly helps the development process."

The ruling Communist Party has experimented with grassroots
democracy in a few villages but has ruled out Western-style
democracy for fear of being voted out of office.

With ordinary Chinese increasingly aware of their rights,
the party has sought to boost transparency and the
accountability of officials to head off social unrest. The
authorities reported that 74,000 protests broke out last year,
up from 58,000 in 2003, over everything from missing pensions
to environmental damage.


In a speech earlier on rural finances, Wolfowitz cited
research by the official Center for Chinese Agricultural Policy
suggesting money is spent more wisely if villagers have a say
in where it goes.

The World Bank's own experience in China was that, if not
carefully monitored, central government money earmarked for
rural development can get diverted by local officials for other

"As we have found worldwide with our experience with aid to
developing countries in general, money alone is not enough. It
is the quality of governance that ultimately determines the
quality of spending and the impact of aid on development," he

China's rapid growth has lifted 400 million people out of
poverty in the last 25 years. But Wolfowitz noted that 150
million Chinese still lived in abject poverty; in parts of
Gansu some people had only recently stopped living in caves, he

Only India has more very poor people than China. That fact
alone made it imperative for the World Bank to continue lending
to China even though the country now has the technological
prowess to send men into space, Wolfowitz said.

(Additional reporting by Kirby Chien)