World Bank protest highlights China reform tension

BEIJING (AP) -- A Chinese protester denounced World Bank policy prescriptions as poison and briefly disrupted a news conference Tuesday by bank President Robert Zoellick, highlighting tensions over its call for Beijing to reduce the dominance of state companies.

Zoellick had just begun speaking in the bank's Beijing office about a report urging free-market reforms in China when a man in a pinstriped business suit stood up and shouted that state industry should not be privatized. He handed out leaflets criticizing the proposed changes before bank staff ushered him out.

After the man left, Zoellick said the proposals in the report released Monday by the bank and a Chinese Cabinet think tank have provoked debate in China and this was "the point of any good research report."

The report calls for China to adopt a new economic strategy after three decades of rapid growth driven by exports and investment. It includes opening markets further and reducing the dominance of state companies that control industries from energy to banking — changes that Zoellick acknowledged will likely provoke opposition.

"Will some of the vested interests that benefit from the current structure resist? I suspect they will," he said. "But the Chinese leadership's interests are that of all the Chinese people, not just specific groups."

The protester identified himself as Du Jianguo and said he was independent scholar of politics and economics. His leaflet — titled "World Bank, Take Your Poison and Go Back to the United States" — complains the policy changes urged by the bank for China have hurt the public in Latin America and elsewhere.

"The World Bank report won't give any benefit to the Chinese economy and people," Du said at the news conference, after apologizing to Zoellick for the disruption. "We have no reason to accept their poison. After they ruin China, they will ruin the whole world. China's state-owned enterprises should not be privatized."

Du's comments reflect sentiments among nationalists in China who see state-owned industry as a source of strength for the country.

Zoellick was unfazed by the disruption and said he would have Du's pamphlet translated and read it. He said the bank was "pretty comfortable with an open debate" and he had dealt with "demonstrations and worse" as a former U.S. trade negotiator.

"Indeed, one of the key ideas in this report is, to be successful with changes of this nature, one has to involve public participation," he said.

The reform recommendations clash with Beijing's strategy over the past decade of building up government-owned champions in industries from banking to steel to energy.

Officials say such entities, supported by low-cost credit from state banks and shielded from foreign and private competitors, are helping to drive economic and technological development. Independent analysts say, however, that state companies are consuming massive subsidies while private companies create most of China's new jobs and wealth.

Zoellick said Chinese leaders supported the work on the report, co-authored with the Cabinet's Development Research Center. It comes amid a debate over the future direction of reform as a younger generation of leaders prepare to take office this year in a once-a-decade handover of power.

"I believe there is a momentum building behind reform in China," Zoellick said. He said that based on conversations his Chinese colleagues had with officials, "I've gotten the sense there is a hope that with the next generation of leaders, these will move forward."