Though China has made "truly amazing progress", some tough challenges lie ahead, said President of the Asian Development Bank (ADB) Haruhiko Kuroda here Sunday.

During China Development Forum 2006, Kuroda said over the past 25 years or so, China's economic performance has been spectacular, averaging real GDP growth of 9.6 percent a year, and external trade growth of 14.6 percent.

China recently released a growth figure of 9.9 percent for 2005 after having revised GDP figures substantially for the period of 1993 to 2004, elevating it to the fourth position in the world economy.

"This growth rate for 2005 leaves little double that China has been, and will continue to be, a major driver of growth in Asia," he said.

Despite notable progress in poverty reduction, China still has a very large population of poor people, Kuroda said.

Using the one dollar per day guideline, about 135 million people were classified as poor in 2004 against the international standard.

The speed of poverty reduction has slowed, partly due to slow growth in rural income in recent years, he said. "Moreover, income distribution actually worsened in the past two decades."

He pointed out the poor interior regions have not benefited as much from economic growth and reforms as the east coast.

An ADB business climate survey found that about 39 percent of foreign companies operating in China would not consider expanding their operations into the interior provinces, mainly because of a lack of markets and poor infrastructure.

In addition to income inequalities, he said, education, health, social security and gender disparities have widened among some segments of society. And China also faces a very large challenge in the environment.

He suggested that priority should be given to the poorest rural areas. Given that fiscal revenue increased by about 500 billion yuan per year in the past two years, 20 percent would go a long way to making growth more inclusive and equitable, he said.

He said the ADB will continue to seek creative, effective ways to cooperate with the Chinese government and the people of China.

By the end of 2005, ADB's total lending to China had exceeded 16 billion U.S. dollars. It has also provided more than 220 million dollars in technical assistance grants.

Over the next three years, the lending is expected to total about 4.5 billion dollars.

Source: Xinhua