Speech

As prepared for delivery

Zao Shang Hao (“Dzow Shahng How”)(Good morning)! Thank you, Governor Pan and Mayor Gong, for your kind remarks; warm welcome to former Governor Zhou—always a great pleasure to see you; and a very good morning to all.

It is my honor to join you as we open this impressive new Center—a place where global expertise and local knowledge can come together in a harmonious and mutually beneficial union.

I just had the opportunity to tour the facilities: impressive! And what a gorgeous view of the Huangpu River! This is a perfect setting to inspire those who will work here—including our colleagues at the China‒IMF Capacity Development Center.

A Center like this comes together on the back of strong commitment and hard work by a lot of people. First and foremost, I want to express my deepest gratitude to Secretary Chen, Mayor Gong, Governor Pan and their teams for their unwavering support for this project and for our partnership. And I also would like to recognize the staff of the IMF who have contributed to bringing us to this point.

As we all know, the opening of this Center comes at a moment of global economic transformation—a time of uncertainty and risk but also excitement and opportunity. We see fundamental transformations in geopolitics, technology, demographics, and climate—these are the challenges to which we must all rise as we craft a better future.

At the IMF, helping our 191 member countries tackle the challenges and harness the opportunities cuts to the essence of what we do. And to do it well, it is vital that we are plugged into the economic and policy debates on the ground, across our membership, and engaging with our local partners. Together, we aim to produce top-quality macroeconomic research to inform and guide good policymaking.

This Center will help strengthen our engagement with the Asia and Pacific region and help promote the cross-fertilization of ideas. It will enhance broader appreciation of Asian perspectives, including inside the IMF, and serve as a bridge between our economists at headquarters and economic scholars in Asia. Most importantly, it will serve as a hub to promote policy-relevant research. 

Research here will focus on topics that are relevant to middle income and emerging market economies. The goal will be to help these countries navigate a world of transformations and find new ways to build resilience, preserve stability, and promote growth. The Asia-Pacific region’s impressive track record over the decades provides an ideal setting.

At the risk of over-simplifying, three factors have powered Asia’s stellar growth performance: first, an expanding labor force, a factor that is now receding; second, governments stepping out of economic activity to make room for the private sector; and third, a reorientation of workers and production from lower-productivity sectors such as agriculture to higher-productivity sectors such as manufacturing and services. Across the Asia-Pacific, the share of workers employed in agriculture has fallen from almost 60 percent in 1990 to well below 30 percent today.

Taken together, the result has been a record decline in poverty and a better life for billions of hard-working people.

Now, as Asian populations begin to age and countries seek new pathways for growth, the way forward is through a private sector-led push for higher productivity, both within individual sectors and across the economy, through continued resource reallocation.

This naturally leads to some key research questions for the Center to focus on. Research is critical to designing policies that deliver job-rich and inclusive growth, meaningfully lift medium-term prospects, and remain alert to potential spillovers. There are many interesting areas, but let me focus on three:

• Question one: how can the business environment be improved to unleash the full potential of the private sector? This means cutting red tape and easing regulatory barriers to allow factors of production to move more flexibly. Yet, everywhere we look, we see regulations that are inherited from the past, many having long outlived their utility. In an uncertain world, sweeping away these cobwebs is a prime example of self-help—where reform priorities and sequencing can be informed by further research.
• Question two: how can we make the best use of new technologies, which are being adopted in the financial sector and beyond? Policies will need to strike a balance: allowing innovation to flourish, while safeguarding financial stability. Among the many new technologies, artificial intelligence is top of mind for many of us, where we see opportunities but worry about labor market dislocations. Our work shows that AI can boost growth by 0.1‒0.8 percentage points per year, with the upper end of that range underscoring the enormity of what is possible. All countries must pursue policies to ensure that the gains from AI are broad-based—and again, more research can help set the priorities.
• Question three: how can countries maintain trade as an engine of growth amid a shifting global trade landscape? Reforms that deepen regional integration—whether in Europe to complete the single market and advance the capital markets union, or here in Asia where reducing non-tariff barriers could lift GDP by 1.8 percent in the long run—will be essential. While this potential is real, further research is needed to identify the exact nature of the impediments to trade and the policies to address them.

Similarly, research can help shine light on how specific reforms interact with each other. Asia, for example, is experiencing a “triple transformation” of shifting demographics, a new trade landscape, and the advent of artificial intelligence. How policies should adapt to address the confluence of these transformations to secure prosperity for all is another key research question.

As our economists take forward this research agenda—including here, together with local scholars, in this Center—they will be advancing the IMF’s critical function as a “transmission line” for global best practice.

And transmission runs both ways: we share what we learn from the experiences of our members.

Dear colleagues, as you can see, I have the highest hopes for this Center—as a place to help us better understand the economic issues and, ultimately, provide the best possible analysis and advice to our members, in emerging Asia and beyond. 

So let us dedicate this Center to the pursuit of wisdom—as a place for intellectual exploration with a view to helping address the great economic problems of our time.

Thank you.