China - Poor Rural Communities Development Project

Updated Project Information Document (PID) Report No: AB1142 Project Name CHINA - POOR RURAL COMMUNITIES DEVELOPMENT PROJECT Region East Asia and Pacific Region Sector General agriculture; fishing and forestry sector (45%); Roads and highways (20%); General water; sanitation and flood protection sector (15%); Primary education (10%); Health (10%) Theme Participation and civic engagement (P); Rural services and infrastructure (P); Other rural development (P); Education for all (S); Other human development (S) Project P071094 Borrower(s) PEOPLE'S REPUBLIC OF CHINA Implementing Agency(ies) NATIONAL DEVELOPMENT AND REFORM COMMISSION Address: 38 Yuetan Nanjie, Beijing, 100824, China Contact Person: Mr. Xinhuai Wang Tel: 86-10- Fax: 86-10- Email: Leading Group for Poverty Reduction's Foreign Capital Project Management Center PRCDP Liaison Goup, Guangxi Autonomous Region, Sichuan Province, and Yunnan Province Address: Contact Person: Mr. Ou Qingping Tel: 86-10-82617155 Fax: 86-10-82617165 Email: fcpmc@public2.bta.net.cn Environment Category B (Partial Assessment) Date PID Prepared October 4, 2004 Auth Appr/Negs Date October 19, 2004 Bank Approval Date May 31, 2005 1. Country and Sector Background Background China is widely recognized for its achievements in reducing absolute poverty since the adoption of a broad program of rural economic reforms beginning in 1978. The Chinese government has a strong commitment to poverty reduction, and the scale and funding of its poverty reduction program, and the sustained dramatic reduction of absolute poverty over the last twentyfive years of reform, are exemplary by any standards. While the decline in poverty has been striking, it appears to have been uneven over time, across locality, and between social groups. Available evidence suggests that the reduction of poverty was greatest during the early-1980s, but may have stalled during years 1989-94. In addition, the reduction of poverty was greatest in the coastal provinces, and it is certain that the most severe rural poverty is now more concentrated in the central and particularly the western provinces. Certain disadvantaged ethnic minority groups, people with disabilities, and women are known to be heavily overrepresented among the poor. Lastly, athough almost all of China's poor reside in rural areas, there is a growing concern about the possible emergence of urban poverty.  2 PID Main Sector Issues China's rural poor still comprise a large share of global poverty. The rural poor are heavily concentrated in natural resource deficient mountainous areas of the central and western provinces where single sector poverty reduction measures have had limited sustainable impact. Overcoming the remaining rural poverty will require innovative approaches and continued strong support: (a) Participatory approach and other innovations. Development work around the world has found that giving stakeholders a voice in project design, management, and evaluation improves results. The Government recognizes the importance of strengthening the participatory approach in poverty reduction work, and several centers of excellence in participatory methods have emerged in recent years. Sichuan and Yunnan, in particular, have distinguished records of applying participatory approaches to poverty reduction work. Nevertheless, most of China's experiments with participation have been in poverty reduction project identification and preparation, and there is a strong need to extend participation into the implementation, monitoring and evaluation stages on a nationwide basis. Similarly, the Government has identified the need to better include NGOs and civil society in poverty reduction work. NGOs and civil society are playing an increasing role in poverty reduction work, and a variety of innovative approaches (such as the cooperation program between the more developed coastal provinces and the poorer interior provinces) have been adopted in recent years. Nevertheless, it is believed that NGOs and civil society can play a significantly greater role in China's poverty reduction work than they do at present. (b) Targeting. China's poverty reduction program and funding is targeted to 592 nationally-designated poor counties. Government estimates indicate that the proportion of the rural poor residing in the nationally designated poor counties has declined from 72% in 1994 to about 60% in 2000. This means that about 40% of the rural poor reside outside the poor counties and receive very little or no central government assistance. In addition, since central government assistance to the nationally designated poor counties is not targeted to the absolute poor within those counties, there is a tremendous leakage of available poverty reduction funding to the nonpoor within those counties. The effectiveness and efficiency of available poverty reduction funding can be significantly improved through better targeting. (c) Addressing the poverty of ethnic minorities and people with disabilities. Ethnic minority groups and people with disabilities are known to represent a highly disproportionate share of the rural poor. Ethnic minority groups make up less than 9 percent of the total population, but are believed to account for about 40 percent of the remaining absolute poor, and often live in the deepest poverty. Minority autonomous counties also account for more than 40 percent of the nationally-designated poor counties. The poorest ethnic minority groups often reside in extremely remote townships and villages, and the outreach of China's poverty reduction program to these isolated communities needs to be further strengthened. Similarly, people with disabilities and households with disabled members represent a large and rising share of the poor. It is believed that people with disabilities comprise about one third of the remaining rural poor at present (that is, of China's 29 million rural absolute poor in 2003, some 9 million were people with disabilities). In poor areas, there is a mutually reinforcing relationship between poverty and disability: the inadequacy of effective public health measures and medical care in poor areas increases the chances of suffering a disabling injury or illness, and people with disabilities (and their families) are often pushed into extreme poverty by medical costs related to their injury or illness and by limited or no employment opportunities other than farming. (d) Improving access to basic education and health services. The educational, health and nutritional status of the remaining absolute poor is deplorable. As many as half of the boys in many of China's poorest villages and, particularly in the most remote ethnic minority areas, an even greater share of the girls  3 PID do not attend or complete elementary school and will not achieve literacy. Infant mortality rates and maternal mortality rates in very poor counties exceed 10 percent and 0.3 percent respectively (or at least 50 percent to 100 percent greater than the national average), and are greater yet in the poorest townships and villages. Incidence of several infectious and endemic diseases, including tuberculosis and iodine deficiency disorders, is concentrated in poor and remote areas. Roughly half of children in households at or below the absolute poverty line are at least mildly malnourished (stunted), and iron, vitamin A, and other micronutrient deficiencies remain a severe problem among the poor. (e) Improving productivity of mountain agriculture. The majority of China's remaining absolute poor reside in mountainous areas with either low rainfall, limited arable land, or both. In many cases the farm population greatly exceeds the limited carrying capacity of these uplands. In Yunnan, for example, the provincial government selected 506 key townships as the core focus of its poverty reduction programs beginning in 1995. Almost all of these poor townships are distributed in high mountain ranges and uplands, and in minority and border areas. About 86 percent of Yunnan's remaining poor in 1996 reportedly resided in these 506 poor townships. Achieving even subsistence levels of agricultural production in many of mountainous areas is a difficult challenge. Existing single-sector strategies for mountainous area development have tended to underestimate the integrated nature of the problems and challenges, and have not led to adequate and sustainable improvements in the well-being of the poor in these areas. Instead, there remains a need to better integrate individual sector strategies into a more comprehensive multisectoral approach to promote economic development and sustainable poverty reduction in mountain areas. Investment priorities within agriculture include strengthening agricultural training and technical support services, and providing greater support for expanding animal husbandry, land improvement, food crop production, tree and cash crops, and watershed management. (f) Further strengthening basic infrastructure. China's poverty reduction program has emphasized the establishment and construction of a wide variety of basic rural infrastructure including water resource works, arable land, transport, power and communications. Between 1984 and 2000, for example, nearly 100 million mu (or 6.7 million ha) of basic farmland were improved or established in the poor areas, and drinking water systems were established for more than 77 million people and 84 million head of large animals. However, at present about 8% of poor area administrative villages are still not accessible by road, more than 25% of poor area adminstrative villages are not accessible by telephone, and there are about 21 million people in the nationally-designated key poor villages with difficult or inadequate local supplies of drinking water. Although great strides have been achieved, further improvements in basic infrastructure in China's poorest areas remains an effective and rapid means of improving people's lives and reducing poverty. The Government's Strategy Overcoming rural poverty remains one of the Government's top priorities, and is considered to be a very challenging task which will require many years of struggle and continued financial support. The National Poverty Reduction Conference held in May, 2001 approved the Government's curret strategy, "China: Rural Poverty Alleviation and Development Program: 2001-2010." The new Program updates the principles and strategies of the previous poverty reduction program and introduces a number of new initiatives including: (a) Participatory approach and the role of NGOs and civil society. The new Program calls for strengthening the participatory approach in poverty reduction work and for expanding the role of NGOs and civil society. The Government regards "the poor as the main body conducting and benefiting from the poverty alleviation and development striving," and has taken concrete steps to support empowerment at the  4 PID village level. Most importantly, a simplified participatory approach has been adopted in formulating village poverty reduction plans, and nationwide all of the more than 140,000 key poor villages have now established such plans on the basis of the participatory approach. In addition, with the support of the central and local governments, national social organizations, NGOs, and private enterprise are becoming increasingly active in poverty reduction work. Specific programs include the Glorious Cause, Spring Bud Plan, Project Hope, the New Great Wall Plan, and a host of local initiatives supported by small scale NGOs and individuals. These programs and initiatives directly assist in poverty reduction work, and also increase awareness among the general population of the need for continued poverty reduction work. (b) Targeting. In order to strengthen efficiency and outreach to the poorest villages and to reduce leakage to the nonpoor, the new Program has adopted an improved targeting system. A nationwide list of 148,000 key poor villages has now been established, and these key poor villages are now the core focus of the central and local governments' poverty reduction programs. It is believed that 83% of the remaining rural poor reside in these 148,000 poor villages. Provincial and local governments are required to take a lead role in assisting those key poor villages which are located outside of the nationally-designated poor counties. (c) Assistance for ethnic minority groups, people with disabilities, and women. China's poverty reduction program gives special emphasis to assisting poor ethnic minority groups, people with disabilities, and women. For example, the five autonomous regions and three provines with large numbers of ethnic minority people have received a large and preferential share (about 40%) of total poverty reduction program funding. Similarly, special programs and earmarked funding assist poor people with disabilities and women, and the new Program explicitly calls for continued assistance for these special groups. Nevertheless, it is certain that ethnic minority groups, people with disabilities, and women are both heavily overrepresented among the poor and comprise the poorest of the poor. Outreach to the most remote and disadvantaged ethnic minority people must be strengthened. Existing programs to assist people with disabilities focus primarily on farming and animal husbandry activities, and inadequate attention has been given to a quantitative understanding of the causes of disability, to preventive measures, and to rehabilitation measures and programs. (d) Basic education and health. Educational progress in China has been impressive, and the compulsory education system and increased funding for basic education has led to significant improvements in educational attainment throughout rural China. The new Program specifically calls for "implementing nine-year compulsory education in the poverty-stricken areas" by 2010. Nevertheless, these nationwide plans mask notable imbalances in the availability of educational services between the economically advanced and underdeveloped areas. There is a continuing need to ensure that there are adequate resources for the weakest parts of the education system, especially in the poor rural areas, in order to provide increased access to high-quality eduction to all. Similarly, the new Program calls for hospitals in most poor townships and clinics in most poor villages in order to control the main diseases in these areas, and the Government's Tenth Five Year Plan calls for improved sanitation and basic health care for all by 2010. However, while some progress has been made and some interesting experiments with improving access to basic health care services in poor townships have been piloted in recent years, there has been only minimal and sporadic improvement in access to basic health care in the poorest parts of China. (e) Mountain agriculture. Cropping and livestock production, which can be efficient and reliable ways of increasing income levels of the poor and improving basic production and living conditions, remain as priority activities to be supported by the new poverty reduction program. In addition, the new Program calls for increased training, improved extension of practical technologies and better marketing services, and strengthening of the participatory process to better ensure that the poor farmers themselves are empowered  5 PID to determine what agricultural activities they invest in. (f) Rural infrastructure. A core focus of China's poverty reduction program is assisting the poor through development activities which improve productivity. Investment in water conservancy, transport, power, communications, and other basic rural infrastructure is explicitly noted as a priority area. While investment in rural infrastructure has proven to be an extremely effective means of poverty reduction, it is important that (a) the level of such investment be lowered so that it can reach the poorest and most remote villages, (b) the poor are empowered to determine what infrastructure is most needed, and (c) infrastructure activities with little or no poverty reduction impact be excluded. (g) Local capacity building. The new Program also highlights the need to strengthen capacity at the local level. Specific measures include effective training programs for local staff, and the rotation of higher level staff to remote poor townships and villages for fixed periods. 2. Objectives The development objective of the project is to improve livelihoods security and achieve sustained participation of the poorest rural people in eighteen counties of the three project provinces. 3. Rationale for Bank's Involvement The major value added from the Bank and DFID's support has been to (a) keep the project closely targeted to assisting the poorest villages and households and the most remote and disadvantaged ethnic minority groups, (b) help design a multisectoral package of assistance activities which more closely reflects the expressed needs of the intended beneficiaries, and (c) upgrade the participatory process and establish a mechanism to ensure that the participatory process will extend through the full life of the project. Bank and DFID support also played the key role in the inclusion of the People with Disabilities Assistance Pilot and the Community Capacity Building components. 4. Description Component I: Sustainable Mountain Agriculture. The component will support agricultural development in each of the 1,063 project villages. Most of these villages comprise communities living in remote mountainous environments. The design and implementation of the component is based on the two principles of targeting and reaching all poor households, and environmental sustainability. The component includes the following activities: