Generation 40s – 四十世代

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Hong Kong’s housing crisis can’t be solved by democratic consensus

South China Morning Post
Comment›Insight & Opinion

Lau Ping Cheung

Lau Ping Cheung says public objection alone is not a good reason to reject reclamation and other contentious ideas if they have merit, while private developers must also play their part to ease the land shortage

Hong Kong needs land for housing. Given that 76 per cent of the city’s 1,106 sq km territory is still undeveloped, we do not lack land for development per se. What we do lack is a consensus on where the land should come from.

Based on the government’s “Hong Kong 2030 Plus” development strategy, the city needs 4,800 hectares of land to meet its housing and development needs, but can find only 3,600 hectares, leaving a shortfall of 1,200 hectares.

At its first meeting recently, the 30-member task force set up by Chief Executive Carrie Lam Cheng Yuet-ngor to find developable land listed 12 viable options for study. These include developing the land on the fringes of protected country parks; reclamation outside Victoria Harbour, particularly the sea off Lantau Island; speeding up the development of comprehensive development areas; and the relocation of the Kwai Tsing Container Terminals, or building housing above the terminals. Public consultations will follow once the panel has completed its study.

It’s obvious that reclamation outside Victoria Harbour and the development of some peripheral areas of country parks – the two options the chief executive has put weight on – will be highly contentious.
But is a contentious proposal necessarily inappropriate? Requiring a consensus by way of the Western democratic system often disregards sound judgment; “majority rule” may mean “majority ruins”. A good example would be the election of US President Donald Trump, an apparent racist, misogynist, xenophobe and climate change denier who won the presidency in a democratic election. Likewise Brexit, with its jaw-dropping verdict in favour of a UK exit from the European Union.

It’s safe to say that any result by “majority rule” is utterly subjective. For instance, what if we were to hold a public referendum on the abolition of the tax system? My guess is that the majority would vote in favour of it, never mind the consequent collapse of the whole socio-economic system.

Among the 12 options raised by the task force, the parcels of land zoned as comprehensive development areas can potentially yield a substantial amount of land for housing.

In a designated comprehensive development area, individual sites cannot be developed or redeveloped without approval for a master plan for the whole area. When multiple owners are involved in one area, it is extremely difficult, if not impossible, to get plans moving, let alone amass the financing and expertise needed for development.

Some estimate there could be more than 100 comprehensive development areas idling all over Hong Kong, with some 600 hectares of land being frozen, many for years. For example, the 4.76-hectare site adjacent to Man Yiu Street in Central, part of the Central harbourfront development, has been idling for 17 years. If developed, it could provide 1.7 million sq ft of grade A office space. Ironically, the Man Yiu Street comprehensive development area involves just a single owner – the Hong Kong government.

Beyond the task force’s 12 options, the land banks of private owners should not be overlooked. I have argued in the past that it is important to expedite land rezoning and lease modification, to release more privately owned, non-residential land – such as deserted farmland and fish farms – for redevelopment.

In 2010, the land released as a result of such rezoning exercise totalled about 6.7 million sq ft of floor space, which translated into some 13,000 residential units of 500 sq ft each. A year later, such rezoning made available 5.4 million sq ft of floor space, or about 11,000 residential units.

In subsequent years, however, the numbers have dwindled to a few hundred, thanks mainly to government bureaucracy. Why let this private land sit there idle, when it can be released into the market to alleviate our housing shortage?

The land premium assessment process is contributing to the bureaucratic hold-up and must be simplified. Where a land lease modification – say, from agricultural use to residential or commercial use – confers an increase in land value, the government requires that the land owner or developer pay a premium to the Lands Department. The negotiation between the Lands Department and the land owner, however, is strictly private and non-transparent, so that other land owners are clueless about the amount of premium paid. Without a benchmark, such negotiations are often prolonged and uncertain.

With more than 1,000 hectares of land currently in the hands of private developers, as has been widely reported [8], it is imperative that the land premium assessment system is improved. One possible way to expedite negotiations is to fix the land premiums for different districts for a period of time, to be reviewed later to accommodate market changes.

One idea outside the official list of 12 also deserves mention. Many people support the development of brownfield sites, but they seem to have forgotten that most brownfield sites are privately owned and distributed all over the city. Brownfield sites are deserted land used mostly for open storage, container yards, depots, rural industries and recycling yards. Before they can be put to residential use, there needs to be a process of land resumption and clearance, compensation, and relocation arrangements.

The government is not shying away from this option. The Planning Department, in its proposed Hung Shui Kiu new development area project, is looking to earmark 24 hectares of land for port backup, storage and workshops, including multistoried buildings to relocate and accommodate some of the affected brownfield operations. But any resumption and relocation will inevitably be difficult, slow and sometimes confrontational.

And then there is reclamation. What seems to be inevitable to some is a big no-no to others. With just 6 per cent of its land derived from reclamation, Hong Kong’s figure is dwarfed in comparison with neighbouring Macau, where a whopping 60 per cent of land came from reclamation, or with Singapore or the Netherlands, each of which has derived some 20 per cent of their land from reclamation.

Remarkably, about 70 per cent of Hong Kong’s commercial activities take place on reclaimed land, and, taking into account that the Hong Kong International Airport sits on reclaimed land, Hong Kong’s status as a commercial hub and travel destination has land reclamation to thank. Additionally, Hong Kong’s nine new towns, home to 3.5 million people, were largely created on reclaimed land and countryside. These are remarkable statistics. Yet, in their fervent opposition to land reclamation, some people have very conveniently shoved them under the table.

Tackling the land shortage is not solely the responsibility of the government. We also need private owners to release their land, and for the community as a whole to demonstrate sensible judgment and prioritise society’s well-being. And, adopting a pragmatic, scientific approach is just as important as forging a public consensus. After all, a louder and seemingly democratic voice does not necessarily make the majority vote a sensible one, or one with the people’s best interests in mind.

Lau Ping Cheung is a member of the Economic Development Commission and convenor of its working group on professional services


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China’s belt and road can lead the world to a greener future

CommentInsight & Opinion
Andrew Leung says the Paris climate accord is in tune with UN goals, which have much synergy with the vision of the ‘Belt and Road Initiative’, meaning China is well-placed to steer a global response to global warming

Following US President Donald Trump’s decision to quit the Paris Agreement on climate change, three questions of strategic import beg to be answered.

First, how will other large backers of the climate accord, like the EU, China, Japan and India, address the resultant deficit in financial and emission commitments?

Second, with financial assistance expected to be curtailed due to the US withdrawal, how can less-developed nations diversify from carbon-intensive development?

Third, what will be China’s role in all this as the world’s largest ­carbon emitter?

There is little doubt that the Paris Agreement, signed by 195 countries and ratified by 148, has won widespread support from both developed and developing countries. This outcome has been driven not only by looming climate change threats to security and livelihoods, but also by fast-growing green-economy businesses and their job-creation capacities.

It’s no wonder that American mayors, governors, academics and business leaders are rallying behind Michael Bloomberg, former mayor of New York, to submit a plan to the UN pledging to help the US to meet its Paris commitments, regardless of Trump.

Even with Paris pledges intact, some estimates put the planet on track for warming by 2.7 to 3.7 ­degrees Celsius over pre-industrial levels, well over the target limit of 2 degrees. Without federal regulatory and funding support, US emissions – a fifth of the global total – are ­expected to go down by only 15 to 19 per cent by 2025, against the pledged 23 to 28 per cent, over the 2005 baseline. The withdrawal of the United States, the second-largest carbon emitter and still the world’s largest economy in nominal terms, may trigger dire global ecological consequences.

Nevertheless, the US withdrawal may not be the beginning of the end of the planet. It could, for example, spur other signatories to redouble emission pledges. Under the Paris accord, the US cannot exit until ­November 4, 2020, the day after the next presidential election. However, the Trump administration has cancelled the outstanding US$2 billion of the US$3 billion pledged by America to a Green Climate Fund to help vulnerable smaller countries. This leadership vacuum in galvanising global responses to climate change demands imaginative responses from all other signatories.

The European Union and Japan are champions of green technologies and ecological sustainability, with their cities winning many green awards. They seem on track to fulfil their Paris pledges.

Relative late starters China and India are now exceeding their voluntary emission targets. China is ­investing more in renewable energy than any other nation, pledging a further US$360 billion by 2020. ­Experts now predict that China’s carbon emissions will peak, and then begin to decline, much earlier than its 2030 target. However, if only to avoid moral hazard, it is doubtful whether these large economies will want to pick up any American shortfall without a joint global effort.

Most of the Paris signatories are less-developed countries struggling to cope. Many face challenges of poverty, poor social and physical infrastructure, and a lack of capacity to diversify from an economy that is energy-dependent, with high carbon footprints. To rid themselves of the “resource curse”, many nations in Africa, for instance, have tried to diversify into upstream or downstream “linkage industries” – but few have succeeded.

Landlocked signatories from Central Asia with massive oil and gas reserves (Kazakhstan, Uzbekistan and Turkmenistan) or minerals (Kazakhstan, Uzbekistan, Kyrgyzstan and Tajikistan) remain largely unable to capitalise on their resource wealth to broaden and upgrade their economies.

While governance and other ­institutional deficits remain an ­important barrier, expanded transport and infrastructure connectivity, both with regional neighbours and the broader world, will help boost their capacity for economic transformation and ability to cope with climate change.

The question, then, is whether China’s “Belt and Road Initiative”, the largest single transcontinental infrastructure initiative the world has ever known, would be a timely boon or bane for global responses to climate change.

Many Western observers have cast doubt on the Chinese initiative. Some view it as a back door to export China’s excess capacity with very large carbon footprints. Others consider it a ploy to project China’s influence, if not dominance. Still others regard it as a reinforcement of China’s position as a global hub of the world’s supply and value chain.

Few consider its potential as an anchor for global responses to ­climate change.

Infrastructure projects and trade agreements signed under the belt and road already embody green objectives and provisions. After last month’s international Belt and Road Forum in Beijing, attended by more than 20 heads of state, the Chinese government wants to ensure the initiative is in line with its environmental goals.

This is stated in the national document, “Guiding Opinion on Promoting Construction of a Green ‘One Belt One Road’” – released on April 26. Among the principles listed are building an “ecological civilisation”, promoting global ­cooperation in a low-carbon economy, ecological conservation, technological ­exchange, law enforcement, effective management, green production, free finance and green consumerism.

It’s early days yet, but some green projects related to the belt and road are already taking shape. For example, the Asian Infrastructure Investment Bank and the World Bank have co-financed a ­hydropower project in Pakistan to the tune of US$720 million, in support of the China-Pakistan Economic Corridor. Most of the AIIB’s proposed belt and road projects for this year across Bangladesh, Indonesia and Kazakhstan involve ­renewable energy or an element of energy efficiency.

The Paris Agreement is in line with the UN’s sustainable development goals. These have much synergy with the belt and road plan, according to Aniket Shah, sustainable ­finance programme leader at the UN Sustainable ­Development Solutions Network. With closer ­coordination, and partnership with national and commercial funding institutions, further integration with the belt and road strategy will result in a new form of multilateralism, or “Globalisation 2.0”, in response to climate change.

So, while China is unwilling to take over America’s role as the world’s policeman, the country is likely to be more forthcoming in sharing leadership with a coalition of the willing, including active players such as the EU, in galvanising global support for the Paris Agreement. After all, blue skies and clean waters are part of the China Dream. For this, China is likely to use the belt and road for good measure.

Andrew K.P. Leung is an international and independent China strategist

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How China’s belt and road can pave the way to global sustainability

South China Morning Post
CommentInsight & Opinion

Yixiu Wu says Beijing should ensure its belt and road projects address environmental concerns, so as to shape development across three continents and leave behind a green legacy

On May 14 and 15, 28 heads of state and government leaders will convene in Beijing for the first Belt and Road Forum for International Cooperation. At a time when much of the world is recoiling into protectionism, the Belt and Road Initiative represents China’s unprecedented entry onto the global stage. A new chapter of the China story is unfolding.

The success of the initiative, which spans 65 countries, will depend on whether long-term concerns are prioritised. In the face of climate change, a transition away from fossil fuel consumption and towards environmental sustainability is imperative.

The launch of the belt and road follows three decades of rapid economic growth in China, which has been fuelled by infrastructure development and intensive energy consumption. As a result of this legacy, China’s investments in the initiative have attracted scepticism. Observers questioned whether the belt and road is merely a vessel for China to reproduce its old development model, which, despite ushering in unprecedented growth, has led to widespread environmental degradation. Such questions are valid, considering that, between 2005 and 2016, 40 per cent of China’s outbound investment was directed towards energy projects and 18 per cent to infrastructure. Moreover, environmental negligence is one of the most frequently cited complaints about Chinese companies overseas.

The Earth has reached a crisis point. Extreme weather patterns are becoming the norm, forests are shrinking, and water supplies are running dry. There is no room any more for a development model that promotes growth at the expense of the environment.

Moreover, the belt and road countries are home to some of the world’s most vulnerable ecosystems and most precious carbon sink. They also use much of the world’s resources: a study conducted by the Chinese Academy of Social Sciences found that 38 key belt and road nations emit more than 55 per cent of the world’s greenhouse gases and consume 66 per cent of global water resources.

The good news is that, within and outside China, models of sustainable development appear promising. Domestically, China has begun to decouple its economic progress from fossil fuel consumption and is now home to the world’s fastest-growing renewable energy industry. China’s coal consumption has fallen for three years running, a key factor in the flattening of global greenhouse gas emissions. Internationally, the imperative for multilateral sustainability initiatives is indisputable, as exemplified by the Paris agreement on climate change.

Shaping belt and road projects with the environment in mind makes economic sense. A focus on sustainable development will help achieve economic and political stability for China and its belt and road partners. It will improve energy efficiency and limit regional conflicts over natural resources.

The question now is how to ensure that long-term imperatives are not overlooked in favour of short-term profit. Doing so requires rules and processes, backed by high-level political resolve. It also depends on the inclusion of diverse stakeholders to assess the environmental implications of belt and road initiatives. It is crucial that China make publicly available information about the overseas belt and road projects, subjecting them to scrutiny from local and international communities.

The belt and road has the potential to shape sustainable development across three continents. The initiative is ambitious and complex. It calls for collaboration from key international actors, such as the UN, the EU and the multilateral development banks.

If wisdom and resolve prevail, three decades from now, the Belt and Road Initiative will exemplify the benefits that a rising China can bring to the world. It is now more important than ever that the next chapter of the China story be centred on a commitment to sustainable development. This emphasis is key not only to preserving China’s legacy, but also to ensuring global prosperity for decades to come.

Yixiu Wu is a campaigner at Greenpeace East Asia. Her work focuses on China’s global environmental footprint and One Belt, One Road polices

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How China’s belt and road can be a pathway to more equitable globalisation

CommentInsight & Opinion
Patrick Ho says the multi-nation strategy, with its focus on infrastructure and job creation in the real economy, can help an unequal and violence-racked world find a new paradigm of sustainable development

Human ingenuity, technological advancement and open markets have given us a world of increasing abundance. However, despite the impressive economic growth of recent decades, 1.2 billion people still live in extreme poverty. The pie has become bigger, but the top 10 per cent of earners have fared exceedingly well, while the bottom 10 per cent continue to fall further behind.

Those left behind, in desperation and hopelessness, and finding no recourse to address systemic unfairness within society, resort to extreme measures to make their voices heard. Ultimately, everyone is harmed by inequality. In Hong Kong, we witness a similar phenomenon, which sows the seeds of social discord and unrest.

For the past half a century, economic development through globalisation has been skewed towards the virtual economy and service industries, with credit spending and financial derivatives, astronomical national debts, an ever-widening income gap and wealth disparity, and all its inherent social woes. Our world is now desperately searching for a new paradigm of development that can return us to balanced economic development, where an asset-based physical and real economy (such as investing in infrastructure development) plays a central role.

Today, Globalisation 1.0 is a system in crisis. The world is in a dire need of Globalisation 2.0. China’s “One Belt, One Road” initiative is an answer to this need. The strategy aims to promote connectivity by building new roads, railways, sea lanes, flight paths, water ducts, oil and gas pipelines, electricity grids and fibre optic cables, and regards infrastructure development as the basic building block of global connectivity and socio-economic growth.

The plan represents a new model of sustainable development for the world, or Globalisation 2.0, where social inclusiveness, equality, individual and social well-being, and environmental responsibility feature alongside economic growth and prosperity, with equal weight given to each.

In its formative stages, the belt and road plan will rely on major investments in infrastructure building, putting a call out to the entire world to start steering the global economy back to basics – real assets – and gradually away from virtual derivatives.The term “infrastructure” encompasses physical structures as well as institutions and human capabilities. Economic infrastructure includes transport, energy, communications and financial services systems. Social and environmental infrastructure includes water and sanitation, schools, hospitals and health care systems.

Whereas Globalisation 1.0 is only concerned with maximising profits, Globalisation 2.0 emphasises economic prosperity amid equality and environmental responsibility

Infrastructure is a driver of any economy, its backbone even. Its condition has a cascading impact on a nation’s economy, business productivity, GDP, employment, personal income and international competitiveness. Infrastructure does not only favour big enterprises, but also helps medium, small, and even individual enterprises to thrive and prosper. Such social empowerment creates opportunities, especially for individuals to lift themselves out of joblessness and poverty.

Furthermore, infrastructure is fundamental to sustainable development, playing a catalytic role in fostering social development and environmental protection, alongside economic growth.

Our world is experiencing profound and complex challenges, including the rise of radicalisation and violent extremism, against a backdrop of identity-based conflicts, cultural and religious tensions.

Countering these challenges calls for the use of a wide range of approaches to promote tolerance and reconciliation. Many resources and much effort has been devoted to combating terrorism in the past decade – with discouraging, if not dismal, results. Perhaps we have been addressing only the symptoms without attending to the root of the problem. It is high time to consider adopting an alternative approach.

The belt and road’s many infrastructure projects can create large numbers of jobs and generate economic activity, addressing the employment concerns of young people, while bringing peace, hope and stability to the troubled regions in the Middle East and North Africa, integrating them with the global economy through socio-economic reconstruction and helping to mitigate the social ills spawned by the rapidly growing wealth gap of Globalisation 1.0.

By the same token, belt and road projects, by creating jobs and alleviating local instability and hopelessness, might work like a dam to hold back the stream of refugees and immigrants clamouring to enter the European Union.

The belt and road strategy operates according to the geo-economic principle of “win-win” cooperation, and overcomes the zero-sum game of geopolitical confrontations that threaten to bring the world close to war.

It presents the world with a new model of growth. By incorporating sustainable development into today’s depressing global system, we can foster this new Globalisation 2.0 that embraces an inclusive, mutually beneficial, environmentally friendly and equitable platform of economic development, a system that works for all of mankind and leaves no one behind.

Dr Patrick Ho Chi-ping is deputy chairman and secretary general of the China Energy Fund Committee. This article is an abridged version of his recent speech at the China Institutes of Contemporary International Relations Forum 2017

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Beyond summits: what the evolution of China’s cities can tell us about the state of the economy

South China Morning Post
CommentInsight & Opinion

Curtis Chin says the feel-good boost generated by summits like the G20 in Hangzhou does not capture the real changes in the economy. More can be learned by tracking cities’ development after the meetings have moved on
Seven months ago, the world’s attention turned to Hangzhou ( 杭州 ) as leaders representing the Group of 20 largest economies met that September, at what was Barack Obama’s final appearance at a G20 summit as US president. The Hangzhou meeting was also the first-ever G20 summit hosted by China.

How long ago and far away that seems as a new US president has moved quickly to dismantle Obama’s initiatives and executive orders, to transform his own campaign promises into reality.

For followers of the US-China relationship, the focus now turns from Hangzhou to Mar-a-Lago, the landmark Palm Beach, Florida estate and club that is the site of the first summit meeting between US President Donald Trump and Chinese President Xi Jinping ( 習近平 ).

At the G20 Hangzhou summit, Obama sought to solidify his foreign policy for the Asia-Pacific region. A seeming breakthrough had come when he and the Chinese president signed on to the Paris climate agreement – a diplomatic milestone for the world’s two heaviest polluters.

Obama also sought to increase international and domestic support for the Trans-Pacific Partnership trade agreement, discuss international law and maritime security in the South China Sea, and seek action on terrorist activity, violence and humanitarian crises across the Middle East.

Those days are past, but the evolution of Hangzhou and other Chinese cities deserves continued attention.

Not as well known to many as Beijing, Shanghai or even Guangzhou, the once small city of Hangzhou has been transformed into a metropolis of seven million people and is also the heart of China’s Silicon Valley. Home to e-commerce giant Alibaba, which owns the South China Morning Post, Hangzhou continues to lure tech start-ups and serve as a home base for entrepreneurs, including those who made their initial wealth through Alibaba as it grew.

Like many other Chinese cities, Hangzhou’s growth was fuelled early on in part by manufacturing, development and construction. These are also key drivers of China’s continuing pollution challenge. The consequences of that growth were at least temporarily addressed in the lead-up to the G20 summit.

Roads were renovated and buildings given facelifts. Thousands of trees were planted. Residents were given the week off to reduce the number of cars on the road. Factories were closed, and migrant workers were sent home – all efforts to reduce air pollution and bring “G20 blue skies”.

Artificial fixes and facelifts aside, Hangzhou has performed well vis-à-vis other Chinese cities economically. In 2015, the Milken Institute – a non-partisan economic think tank where I serve as the inaugural Asia fellow – ranked China’s large, mid-sized, and small cities based on economic performance in its inaugural Best Performing Cities China report.

Key inputs in the economics ranking included job and wage growth, foreign direct investment growth, and a measure of high value-added industry employment, among others.

In 2015, Hangzhou ranked 25th among China’s first- and second-tier cities. A year later, the city had moved up to 20th in the 2016 report, behind best performing city Guiyang ( 貴陽 ) in the Guizhou (貴州) province. Hangzhou significantly improved its categorical ranking on one-year job growth (from 30th to 10th), but did worse in five-year overall job growth (11th to 16th).

Chinese students work on the Ares, a humanoid robot designed by them with funding from a Shanghai investment company, displayed during the World Robot Conference in Beijing in October 2016. China is increasing funding for technology-intensive industries, including aviation, robotics and biomedical technology. Photo: AP

As China’s leaders work to shift the nation’s economy from a focus on labour-intensive, low-cost manufacturing goods towards innovation-based products and high-quality, hi-tech manufacturing and services-driven growth, Hangzhou may well serve as a test case of what can and cannot be achieved long after artificial G20 summit-driven investments and changes fade from view.

Internally, China is increasing funding for technology-intensive industries, including aviation, robotics and biomedical technology. The government also continues to shift low-cost manufacturing inland and redevelop coastal cities as hubs for more innovation-based ­industries.

Regional growth clusters are envisioned, including a “Jing-Jin-Ji” (京津冀) megalopolis region, which would integrate Beijing, Tianjin ( 天津 ) and the Hebei ( 河北 ) area into one super region, and a Yangtze River economic belt that would encompass the giant metropolitan areas of Shanghai, Chongqing (重慶) and Chengdu (成都).

A map of China and Central Asia is displayed at an exhibition in Los Angeles last year on Dunhuang’s cave temples. A red line on the map marks out the ancient Silk Road. Today, China seeks to foster a new Silk Road on land and at sea, to better connect to new and established markets. Photo: AFP

Externally, China is seeking to improve economic access, integration, capital and knowledge flows, as well as information sharing to other economic regions. The most notable effort is the “One Belt, One Road” initiative that seeks to foster a new Silk Road on land and at sea to better connect China to new and established markets.

The impact on the economic performance of China’s cities and economic regions – and on everyday Chinese citizens’ lives – of such ambitious internal and external initiatives is unclear. Future results will provide further input on how government and city leaders can best transform and leverage cities for economic growth. This may well include the need for implementation of policies that increase access to capital and knowledge, and free up the power of the private sector, as with Alibaba in Hangzhou, to drive future growth.

This July, the world’s attention will move on to Hamburg as Germany serves as host of the 12th meeting of the leaders of the Group of 20. There, as in Hangzhou last year, there will be much discussion and talk. What will then follow is the reality check of whether actions result and whether beneficial policies are implemented and ­enforced.

Much attention is understandably given to multilateral meetings and bilateral summits, as in the Xi-Trump summit at Mar-a-Lago.

Even more important in our increasingly urbanised world will be to continue to look at and learn from what is happening on the ground in cities and surrounding areas even after the summiteers have left.

Curtis S. Chin is a former US ambassador to the Asian Development Bank, and managing director of advisory firm RiverPeak Group, LLC.