China's contribution to the IDA is one small part of that. China has a lot of other financing sources. It has grants and concessional loans managed by the EXIM Bank (the Export-Import Bank of China), with which the World Bank has signed a memorandum of understanding to cooperate in third world countries.

This is an interesting moment in our relationship. There is still an important development agenda in China, and the World Bank is ready to help with that agenda. At the same time, we see China as a key player in the whole world economy. We'd like to work more with China on economic and global issues.

What are your impressions looking back at the cooperation between China and the World Bank over the past 20 years? What kind of experiences here can be drawn upon as lessons for other developing countries?

China has been the most successful client of the World Bank. The reason is that, in general, the central and local governments of China are interested in learning about the experiences of other countries, and the World Bank is good at bringing in the experiences of those countries. China is very good at taking them and adapting them to local circumstances.

The World Bank brings a similar blueprint. Some developing countries don't have that much capacity to adapt it. They just accept it. But with China, my experience is that governments at all levels never just accept the idea from the outside, but they don't reject it. There are also some developing countries that just reject every idea from the outside. They'll never learn. There are some countries that just accept ideas exactly as they come in, and they don't get as much benefit as they could.

China has very powerful lessons about how to build development strategies, how to be open to ideas, and how to make those ideas work for your country.

You've mentioned that China is emerging as a very important economy in the world. What kind of contributions do you believe the country has made to the world economy?

Last year was the first year in which China's contribution to global growth was bigger than anyone else's contribution. That's probably going to continue in the next few years. China is going to be the main source of growth in the world economy. That's good for the Chinese people, but also good for the whole world economy.

Economics is different from many other areas. It's what we call the win-win game. If China grows faster, that doesn't mean other countries grow less fast, but just the opposite. China grows fast and that stimulates growth in other countries. China is very good at producing many manufacturing products, but it is a relatively resource scarce country. China's growth is raising prices for a lot of commodities. That's good for the developing countries exporting minerals and different kinds of food products. In the service sector, China has made some progress, but not as much as in manufacturing. China also imports a lot of services. China's growth is stimulating a lot of more advanced economies where the service sector is very important. Everyone in the world would be unhappy if China's growth slows down.

Your former position was director of the World Bank's development research department, where you oversaw the bank's research on the investment climate and growth. What has been your impression of China's investment climate during your stay in the country? Which aspects must be improved?

Compared to other developing countries, at this stage of development, China has a very good investment climate. I've heard some journalist friends of mine refer to China as having a first-world infrastructure and third-world wages. That's a slight exaggeration, but it captures the fact that wages in China are low compared to Europe and Japan, because it is a developing country. Actually the infrastructure in China-the power grid, telecommunications, ports and highways-are all really excellent. If you go to other developing countries, you almost never find really excellent infrastructure.

A good investment climate goes beyond that. There are a lot of Chinese cities whose governments have very good attitudes. They want to encourage investment. They're relatively fast and efficient. They've created a good environment first for foreign investors and now for the domestic private sector. Many coastal cities have strong private sectors.

I would add two points. I don't think China's investment climate is yet quite as good as those in developed countries. It's important for China to keep improving it. You're not going to compete with developing countries for much longer. You're going to compete with the top countries in the world. There are lessons about making the bureaucracy more efficient, strengthening the financial system and continuing the build-up of the education system so that the labor force is more skilled.

The other point is that along the coastal areas of China, in general, the investment climate is really excellent. But in interior cities, the investment climate is not as strong. Wages are about twice as high in coastal cities as in interior cities. That means interior cities have the advantage. As wages rise in coastal areas, they can attract labor-intensive manufacturing. To do that, they have to create the strong investment climate that we saw in coastal cities 10 years ago.

You got your bachelor's degree in Chinese history and language. You've become interested in China since then?

It happened that I graduated from high school in 1972, which is the year [U.S. President Richard] Nixon came to China. In the United States, we often think that's the beginning of China's opening up. I was influenced by that. So I went to college to study Chinese language and history.

In 1986, I came to the mainland for the first time. At that time, I was a professor at the University of California, Los Angeles. I came here and gave lectures at the Chinese Academy of Social Sciences, teaching market economy. I think my students learned it very well.