REA
ASIAN DEVELOPMENT BANK: UK GUARANTEE OF
Note No B4
HONG KONG'S OBLIGATIONS
NOTES FOR SUPPLEMENTARIES AND WINDING UP
Position of the People's Republic of China (PRC) membership of the Bank and the effect on Taiwan's existing membership
1. The ADB's Board of Directors has agreed to PRC becoming a member of the Bank, and to the purchase by PRC of 114,000 shares of the Capital Stock. This decision is expected to be formally ratified by the Board of Governors before the Bank's Annual Meeting in April.
2.
Taiwan will remain a full member of the Bank, but will henceforth be known in the Bank as "Taipei, China" rather than "Republic of China".
Background (RESTRICTED)
The PRC sought ADB membership nearly four years ago, but insisted that there could not be "two Chinas" in the Bank and that Taiwan, known as the Republic of China, should be expelled. However Taiwan has been a member of good standing since the Bank was established in 1966, and there are no technical reasons (such as arrears or defaults) to justify expulsion. Moreover the United States Congress passed resolutions stating that if Taiwan was expelled from the Bank, the US should reduce or even cease its financial support for the Bank. Many member countries, including the UK, supported the PRC's membership claim because they have diplomatic relations. with the PRC rather than with Taiwan, but wanted to avoid a situation which
In those would have adverse financial repercussions for the Bank.
circumstances there have been long negotiations between the Bank, the PRC and Taiwan to reach a compromise. The PRC has now accepted that Taiwan. should remain as a member, but not as the Republic of China, nor to fly a
flag at the Bank's Annual Meetings.
DECTOICTEN
/2. At a meeting