Trade in Asia has been growing at a consistently fast clip since 2017 but could be disrupted if disputes escalate, Asian Development Bank President Takehiko Nakao said Thursday as the regional lender began its annual meeting.
Asked at a news conference about friction between the U.S. and China over their trade imbalance, Nakao said that so far mounting friction has not measurably hurt robust imports and exports in the region.
“Of course we are concerned about ongoing disputes among some countries and if trade is interrupted it would have a large damage to Asian countries as well as to other countries in the world,” Nakao said as the ADB began its annual meeting in Manila, where it is based.
The meeting coincided with the start of two days of talks in Beijing between senior U.S. and Chinese leaders aimed at tempering differences over the two countries’ huge, chronic trade imbalance and staving off damaging tariffs each has threatened to impose on the other country’s exports.
Many Asian economies are heavily dependent on trade and have been growing thanks to stable policies and open trade and investment regimes, Nakao said.
Asked about China’s “Belt and Road Initiative,” Nakao said developing countries need to take a careful look at projects backed by the program and avoid taking on unsustainable debt.
The ADB is cooperating with the China-led Asia Infrastructure Investment Bank and the “BRI,” whose aims parallel its own in promoting development, though the relatively new efforts are designed to link China’s economy with others in the developing world, especially in Southeast Asia and Central Asia.
But Nakao said infrastructure projects must be economically sound.
“If countries borrow too much for certain infrastructure without a serious look at the economic viability and feasibility, it would cause more trouble in repayment,” he said.
“Because of the new presence of such institutions as BRI or AIIB we should look at the debt sustainability issues once again very carefully.”
More than a half-century since its founding, the ADB faces criticisms of its own.
Anti-riot police prevented dozens of protesters from getting near the venue. Holding up placards and banners with slogans like “Bad ADB” and “Stop funding dirty energy,” the demonstrators accused the bank of being anti-poor.
A chief complaint is that governments and lenders like the ADB are too keen to shift provision of services such as water utilities and transport to the private sector.
“We think 51 years of Asian development governance is more than enough,” said protest leader Aaron Pedrosa. He said the bank had a track record of privatization that facilitated the retreat of the government from providing vital services that could help people escape poverty.
The ADB reported Thursday that it spent billions on helping mitigate the impact of climate change, while projects it financed helped to connect 2.7 million households to electricity. It provided new and improved water supplies to more than 200,000 households and improved schools for 1.6 million students. Overall, it said it provided $20.1 billion in financing in 2017, up almost $7 billion from the year before.