China - University Development Project

Document of The World Bank FOR OFFICIAL USE ONLY Repor No.7561 PROJECT PERFORMANCE AUDIT REPORT CHINA UNIVERSITY DEVELOPMENT PROJECT (LOAN 2021-CHA AND CREDIT 1167-CHA) DECEMBER 30, 1988 Operations Evaluation Department This document has a restricted distribution and may be used by recipients onl in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  ABBREVIATIONS AND ACRONYMS CNBIC - China National Book Import Corporation CNTIC - China National Technical Import Corporation CRC - Chinese Review Commission FILO - Foreign Investment and Loan Office GOC - Government of China IA,' - International Advisory Panel ICB - Interaational Competitive Bidding LPO - Loan Project Office (at Universities) MOE - Ministry of Education MOF - Ministry of Finance PRC - People's Republic of China SEdC - State Education Commission SDR - Special Drawing Rights SPC - State Planning Commission UDP - University Development Proiect Government of China Fiscal Year January 1 - December 31 Academic Year September 1 - August 31 Currency Exchange Rates Name of Currency (abbreviation): Yuan (Y) Exchange Rates: US$1 = Y Appraisal Year Average (1980) 1.53 Implementation Period Average (1981-86) 2.27 Completion Year (1987) 3.70  MRlOMUVIL UI OnLy THEWORLD SANK Washton. D C 20413 US.A. 0*Ca'4i ONte d Oat Opseaamu IfwM11sw December 30, 1988 MEMORANDUM TO THE EXECUTIVEDIRECTORS AND THE PRESIDENT SUBJECT: Project Performance Audit Report: China - University Development Proiect (Loan 2021-CHA/Credit1167-CHA) Attached, for information,is a copy of a report entitled 'ProjectPerformance Audit Report: China - University Development Project (Loan 2021-CHA/Credit1167-CHA)"prepared by the Operations Evaluation Department. Attachment This document has a restricteddistribution and may be used by recipients only in the perfomnansce of their offcial duties. Its contents may not otherwise be disclosedwithout World Bonk authoriation.I  I A IL .AL t ,.- Ls PROJECT PERFORMANCE AUDIT REPORT CHINA UNIVERSITY DEVELOPMENT PROJECT (LOAN 2021-CHA AND CREDIT 1167-CHA) Table of Contents Pate No. PREFACE ...................................................... i BASIC DATA SHEET .. ii EVALUATIONSUMMARY.. v PROJECT PERFORMANCE AUDIT MEDOFANDUH I. Prolect Background. 1 A. Context. 1 B. Project Objectives and Design .1 C. Implementation Plan. 2 D. Project Cost and Financing Plan. 2 II. Prolect Implementation and Outcome. 2 A. Project Management. 2 Physical Facilities ................... . 3 Equipment ................... , 4 Specialist Services. 4 Fellowships. 4 Procurement. 5 Disbursements. 5 B. Project Cost. 6 C. Operating Performance. 6 D. Institutional Development. 8 E. The Performance of the Bank. 9 F. Sustainability. 9 III. Findings and Issues .10 A. Overall Assessment .10 B. Findings aad Lessons .10 C. Issues Arising .11 Equipment Utilization and Replacement .11 Staff Development .11 ATTACHMENT Comments from the Borrower .. 13 This document hasa restricted andmaybe usedby recipients distribution onlyin theperformance duties. of theiroflficial Its contents be disclosed may nototherwise withoutWorldBankauthorization.  Table of Contents (Cont'd) PROJECT COMPLETION REPORT Pate No. I. Introduction ........ ................................ 17 II. Project Background and Composition ................. . 17 III. Project Implementation ...... ........................22 IV. Project Costs and Financing ............. ............ 34 V. Initial Project Outcomes ............................ 37 VI. Conclusions and Lessons Learned ........... .......... 45 LIST OF TABLE 2.1 Planned Increase in Science and Engineering Enrollment'at Project Universities 3.1 Civil Works and Furniture 3.2 Phasing of Equipment Procurement 3.3 Book Procurement 3.4 Status of Selected Imported Equipment 3.5 Personnel Participating in Operation and Management 3.6 Utilization Rate of Laboratories 3.7 Specialists by Discipline and Country of Origin 3.8 Overseas Fellowships by Country of Study 4.1 Estimated and Actual Costs by Category of Expenditure 4.2 Appraisal and Actual Schedules of Disbursements by Fiscal Year 4.3 Analysis of Bank Group Financing 5.1 Expansion of Output at Project Universities 5.2 Undergraduates Enrollments by Project University 5.3 Postgraduate Enrollments by Project University PCR ANNEXES 1. Project Universities 2. Civil Works ana Furniture 3. Equipment and Books 4. Distribution of Equipment 5. Terms of Reference for Chinese Review Commission 6. Terms of Reference for International Advisory Panel 7. Letter Summarizing IAP/CRC Evaluation Report 8. Subject Specialists by Institution and Discipline 9. Subject Specialists by Institution and Country of Origin 10. Fellows Sent to Various Countries, by Institution 11. Fellows Sent Abroad, by Institution and Discipline 12. Distribution of Expenditure in Foreign Exchange  - :L - AUDIT REPORT PROJECT PERFORMANCE CHINA DEVELOPMENT UJNIVERSITY PROJECT (IOAN 2021-CHAAND CREDIT 1167-CHA) PREFACE 1. This is a Project Performance Audit Report (PPAR) on the UniversityDevelopmentProject (Loan 2021/Credit 1167-CHA),involvingan IBRD loan and an IDA credit in the amounts of US$100 million and SDR 81.4 million respectively, to the People's Republic of China, with the objective of strengthening higher education in science and technology. The loan and credit were approved on June 23, 1981, and became effective on February 4, 1982. The closing date of June 30, 1986 did not require extension. The credit was fully disbursed on November 12, 1985 and the loan, on January 21, 1987. 2. The PPAR consists of the Project Performance Audit Memorandum (PPAM) prepared by the Operations Evaluation Department (OED) and the Project Completion Report (PCR) prepared by the Asia Regional Office on the basis of a draft report prepared by the Government and an Evaluation Report submitted by a group of Chinese and foreign experts. The PPAM is based on the attached PCR, the Staff Appraisal and the President's Reports, the loan documents, the transcripts of the Executive Directors' meetings at which the project was considered, on a study of project files, and on discussions with Bank staff. An OED mission visited the People's Republic of China in April/May 1988, and discussed the effectiveness of the Bank's assistance with representatives of the Foreign Investment and Loan Office (FILO) in the State Education Commission (the implementing agency) and of a group of project universities. Their kind cooperationi and valuable assistance in the preparation of this report is gratefully acknowledged. 3. The PCR provides a complete account and assessment of the project experience, and discusses the performances of the Bank and the project executing agency. The PPAM elaborates on particular aspects such as implementation arrangements, equipment use and the fellowship program. 4. Following customary OED procedures, copies of the draft audit report were sent to the Government in October 1988. A letter of acknowledgement from the Borrower is reproduced as Attachment I.  - IL - PROJECT PERFORMANCE AUDIT REPORT CHINA UNIVERSITY DEVELOPMENT PROJECT (LOAN 2021-CHA AND CREDIT 1167-CHA) BASIC DATA SHEET DATA KEYPROJECT item ApDraisal Estimate Actual TotalProject Cost (USSmillion) 296 25U Underrun (S) - 14X TotalProject Cost (Yuan million) 462 723 Overrun (X) 611 Loan/Credit Amount(US2million) 100/100 1N/la6 Disbursed 166/166 16/16 Cancel led e Date Physical Components Completed e6/a3/s6 o6/3a/s5 Proportion Completedby AboveData (X) - 1 Proportion of Tie Overrun (1) - Financial Performnce- Good Institutional Performnce Good ESTIMATED CUMULATIVE AND DISBURSEMENT ACTUAL (in US2million) FY 32 eS 34 8S 86 87 Appraisal Estimte 5.e 3.6ao 76.66 185.00 26.W 23.63 Actual 12.0 32.76 81.6e 157.26 196.74 296.01 Actual as I of Estimate 2.4 93.6 168.1 116.5 97.9 163.6 Note: SOR for Credit 1167-CHA disbursements are exproessd in USdollar equivalent as of the dateof March31, 1981, for consistencywith disbursement estimatesmadeat appraisal.  - iii - STAFF INPUT (Staff weeks) FY 81 62 8J 64 s 8e 87 Total Pr.- apprasal 82.2 1.2 - - - - - 88.4 Appraisal 96.9 - - - - - - 9e.9 Nogotiatlon 25.1 - - - - - - 25.1 Supervision 0.1 18.6 24.4 17.7 9.1 6.8 14.2 65.4 Other - 0.1 - - - - - 0.1 Total 16S.3 16.0 24.4 17.7 9.1 6.8 14.2 242.9 OTHER PROJECTDATA Original Actual or Item Plan Est. Actual First Mention 'n Files 01/31/S8 01/31/81 Governmnt's Application 07/--/SO /a Negotiations 04/--/S1 04/26/61 Board Approval 06/ -/61 06/23/81 Loan/CreditAgre_mnt Date -- 11/04/81 EffectivenessDate -- 02/04/82 ClosingDate 66/30/6 - Credit 06/30/86 06/38/66 /b Loan 06/30/86 06130/88 Borrower People'sRepublicof China ExecutingAgency Ministryof Education Follow-onProject: Name Development Second University Project CreditNumber 1651-CHA Aoouht USJ148 m. i;on Loan AgreementDate 03/16/86 I Based on the paper 'China's Highor Educationin the Past Thirty Years and Conceptual Outlinesfor Future Development' submittedby the Government to the Bank in July 1960. Lb Credit 1167 fully dizbursedon 11/12/65 and Loan 2021 on 01/21/87.  - iv - MISSIONDATA Sent Month/ No. of No. of Staff Date of Mission b. Year DaYn Persons Days* Report Prepprlseal Sank 09/U 23 6 16 01/i1/S1 Appraesal Bank 11/1 34 7 Ui/S1/Si 28 Total 62 18 898 Supervteson1 Bank 62/62 7 309 93/25/82 Supervision2 Bank 06/88 6 1 8 /1/83 Supervision3 Bank 10/83 9 1 11 12/22/83 Supervision4 Bank 02/84 a 1 6 03/22/84 Supervision5 Bank 06/84 7 1 9 96/93/84 Supervision6 Bank 08/84 2 3 9 10/19/84 Supervislon7 Bank 10/86 4 1 6 11/25/8bLa Supervision8 Bank 95/86 16 1 22 07/23/86 Completion Bank 02/87 15 3 46 07/23/S6 Total 69 15 145 a Estimatednumber of staff-days attributableto this project (includingtravel time). */ Informationgatheredfrom aide memoire. No formal supervisionreportwas written. ALLOCATIONOF LOAN/CREDITPROCEEDS (In US Dollars) Category Loan 2021 Credit 1167 1. Equipmentand Spare Parts 89,992,e68.19 80,0986,797.79 2. SpeclalistServices 2,548,628.17 3,714,541.29 3. Fellowshipsand Training 7,468,803.64 16,196,127.89 SpecialAccountLb -- 3,633.58 TOTAL IS,on. on. es6 l,o,19.9 on9 b/ Residualderivingfrom exchangerate flucturtions.  PROJECT PERFORMANCE AUDIT REPORT CHINA UNIVERSITY DEVELOPMENT PROJECT (LOAN 2021-CHA AND CREDIT 1167-CHA) EVALUATION SUMMARY Introduction This project was the first lending operation of the World Bank Group in China; it consisted of an IDA Credit of SDR 81.4 million and a Bank Loan of US$100 million. The project was approved by the Board in June 1981 and became effective in February 1982. Total project cost was US$253 million, compared to an appraisal estimate of US$295 million. Project funds were fully disbursed within five years and the credit/loan did not require an extension. Project Objectives The project aimed at strengthening 28 (originally 26) key (i.e., top-level) universities in selected scientific and tech%ical fields through: (i) provision of facilities (financed by the Government), equipment and library materials; (ii) specialist services (mainly in the form of foreign professors visiting the project universities); and (iii) foreign fellowships for faculty, administrators and graduate students. Implementation Experience Despite a delay in project effectiveness by several months due to the belated availability of IDA funds, project implementation proceeded expeditiously. The scope of the project was enlarged in four directions: first, through the addition of two universities (see above); second, through the inclusion of biology as one of the disciplines supported by the loan/credit; third, through the provision of about $4.5 million of library materials; and fourth, through a substantial expansion of the fellowship program. Among the institutional achievements of the project (apart from the cuccessful strengthening of the relevant un versity departments) were the creation of the Foreign Investment and Loan Office (FILO) in the State Education Commission. FILO has now become the central implementation agency for all externally financed national projects in the sector. This  - vi - institutional development was paralleled by the establishment of Loan Project Offices in the particioating universities; these offices continue to function as planning and implementation entities for investment activi- ties at the university level. The creation of a Chinese Review Commission and its counterpart, an International Advisory Panel, was instrumental in the effective implementation of the specialist services and fellowship components and of the accelerated reintegration of the project universities in the international mainstream of modern scientific and technical educa- tion and research. Results In almost every respect, project outcomes have surpassed appraisal expectations. Enrollments both at graduate and post-graduate levels have been growing faster than anticipated, the staff improvement program has reached much larger numbers, and as a result numerous new courses and programs have been created, research projects undertaken and contributions to international research made. The only instance where expectations have not yet been fulfilled is in the area of post-graduate fellowship holders. Their return is much slower than expected, but the data are still insufficient for any defini- tive conclusion. This area, however, deserves continued close monitoring. Sustainability Budget allocations for the operation and maintenance of the pro- ject equipment are generally austere but adequate. They are supplemented by income generated through contract work for outside agencies, notably industry. With the maintaining of present funding levels, the sustainabi- lity of the project snould not present a major problem. The unavailability of foreign produced equipment components and delays in servicing major equipment items in the case of malfunctioning are drawbacks that impede a continuous smooth operation of the project equip- ment. This difficulty is likely to diminish as the volume of foreign equipment in China increases and more and more foreign suppliers find it necessary to establish a maintenance service, thus reducing response times considerably. Findings and Lessons The project proved that it is possible to undertake a large-scale improvement and modernization program in education and research wi.nin a short time if an effective implementation structure is in place and a broad base of professional manpower is already available for systematic upgrad- ing. The active participation of foreign scholars of renown at the level of the individual univzrsities and as part o' the implementation structure can be expected to speed up this process and to establish an international network of contacts essential for continuous cross-fertilization of educa- tion and research.  AUDIT MEMORANDUM PROJECT PERFORMANCE CHINA UNIVERSITY DEVELOPMENT PROJECT (LOAN 2021 AND CREDIT 1167-CHA) I. PROJECT BACKGROUND A. Context 1. This project was the first lending operation of the World Bank Group in China. It supported one of the four key areas of the Government's Four Modernizations Plan of 1980 which aimed at a large-scale modernization process in agriculture, industry, defense and science/technology. Of these four sectors, science/technology was the most suitable for expeditious lending by the Bank as it was a rather compact and well-structured sector whose needs could be identified comparatively easily and which had highly qualified persornel at central and provincial levels whose active partici- pation in projfct preparation and implementation could be counted on. 2. The preparation period for this project was unusually short, particularly for an initial lending operation: less than twelve months elapsed between first contacts and project approval by the Board. This shortening of the upstream phase of the project reflected both the Government's sense of urgency and the Bank's willingness to demonstrate that administrative and technical obstacles could be overcome bv a con- certet effort. B. Project Objectives and Design 3. The project was to support the first phase of the Government's program to improve higher education, directed at strengthening of science and engineering departments at 26 key universities.1/ 4. More specifically, the project was to assist the development of undergraduate and post-graduate programs through: (a) a large-scale equipment program focussing on the provision of four types of facilities: general science laboratories, specialized laboratorics. analysis and testing laboratories and computer centers; (u) a foreign fellowship pvogram corprising short-term upgrading of about 400 faculty staff and MasteOls/PhD fellowships for another 400 students; and 1/ Of China's more than 1,000 institutions of higher education, about 100 are in the category of key universities.  (c) Twenty-five years of specialist services to assist in the devel- opment of teaching and research programs in physics, chemistry, engineering and computer sciences, and in department, university and nationwide system management. 5. Later modifications were the inclusion of two more universities, the addition of biology to the four priority areas mentioned in para. 4(c) above, the expansion of the fellowship and specialist programs, and the provision of about US$4.5 million worth of books and library materials. C. Implementaticn Plan 6. The Ministry a.fEducation (which later becdme the State Education Commission or SEdC) was to be responsible for overall project implementa- tion under the charge of the Vice-Minister for Planning and Development who would be assisted by two project coordinators supported by the relevant sections of seve3 MOE bureaus. In addition, the Ministry of Foreign trade would assist in procuring foreign equipment. The beneficiary universities were to carry out a considerable amount of detailed preparatory work for building new (or modifying existing) facilities which were to be financed by the Government, develop initial equipment lists, identify fellowship candidates, etc., on the basis of agreed criteria and procedures. Project implementation was expected to last five years. D. Project Cost and Financing Plan 7. Total project cost was estimated at US$295 million equivalent, with foreign exchange costs at 68 percent or US$200 million. Bank Group support came in the form of a US$100 million Bank loan and an SDR 81.4 million (US$1CO million equivalent) IDA credit which together equalled the estimated foreign exchange costs. The balance of US$95 million equivalent was to be financed by the Government. II. PROJECT IMPLEMENTATION AND OUTCOME A. Project Management 8. Despite a half-year delay in effectiveness caused by a belated availability of IDA funds, the project was carried out within the envisaged implementation period. A tight management of funds permitted increases in the scope of the project (see para. 5). By 1985, appraisal targets for enrollments and facilities utilization had been achieved or surpassed. 9. In view of the novelty and technical complexity of project acti- vities, two advisory bodies were established to ensure the identification and ranking of the universities' requirements and their proper meshing with the most up-to-date expert knowledge and equipment. The first was the Chinese Review Commission (CRC), composed of 20-25 faculty members who were experts in the fields covered by the project and organized in four (later five) working groups according to the manor fields covered by the project.  -3- Its work was supervised and coordinated by one Chairman and five Co- Chairmen, all recognized authorities in their fields as well as senior university administrators. 10. Their counterpart was an International Advisory Panel (IAP) com- prising one chairman and five members with established international reputations in their fields (the five major disciplines to be supported by the project) and hailing from the countries which were anticipated to be the main sources of equipment, specialists and study places for fellowship holders. The IAP was being assisted in its work by an Executive Director and a secretariat located in Washington, D.C. 11. Because of the perceived urgency of this project, a good deal of the project preparation at the level of the individual university (e.g., drafting equipment lists and specifications) took place during the initial phases of implementation. Increased staff inputs and the use of consul- tants during this critical phase ensured that this did not lead to imple- mentation delays. 12. This brief summary of global project achievements should make it clear that on the whole, the project has been an undeniable success, parti- cularly in view of its obvious handicaps--being of a large size2/ and having a wide geographic spread, being the first Bank Group operation in China and aiming at closing .r narrowing a technological and inveatment gap of several decades. Any qualifying comments to be found in subsequent sec- tions of the PPAM should be seen in the light of this overall result. 13. Physical Facilities. The construction of new, and expansion or renovation of existing facilities to accommodate the equipment were financed exclusively from national resources. The area required proved considerably larger than anticipated at appraisal, partly because of a post-appraisal decision to house most of the equipment in special centers, partly because of the later inclusion of biology as one of the disciplines to be fostered by the project. The total area comprised more than 300,000 m 2 , some 22 percent above appraisal estimates. Total actual cost, about Y 86 million (or US$56 million at the appraisal exchange rate) for civil works, was about 36 percent above appraisal estimates, about two- thirds of this increase being attributable to the before-mentioned increases in area, the remainder to cost increases which came about as a result of a Government decision to liberalize price determination through- out the economy. 14. It deserves mentioning that these facilities, despite the expan- sion of the building program, were all completed on or even ahead of schedule and could receive the equipment upon its arrival at the project sites. This was in stark contrast to the experience of many education projects elsewhere which is characterized by substantial delays in civil works which often lead to additional storage cost and deterioration of equipment procured on schedule, or to a costly rearrangement of equipment purchases. 2/ This project was the Bank Group's largest lending operation in the education sector. 15. Equipment. About 85 percent of the loan/credit proceeds were used for the purchase of equipment and library materials (a post-appraisal addition). Within the overall allocation of funds, each participating university had discretion as to the type of equipment to be purchased. Each university established a loan office, an institutional t4 evelopment which has survived the project and now serves to channel ot'er investment funds into specific investments and to oversee their implementation. 16. Equipment procurement was organized in two large tenders, with a minor amount being purchased directly. Acquisition of library materials was through direct contracts with seven publishers and book distributors. 17. In general, experience with the equipment has been goods more than three quarters of all items could be installed and operated without any problems and another 20 percent had minor shortcomings which could be resolved by the recipient universities themselves or with the assistance of the supplier. Major problems occurred only with three to four percent of the equipment (PCR, para. 3.11), with some of them persisting at the time of the audit mission. Occasionally these problems were complicated by the remoteness or small size of the supplier. 18. Specialist Services. Almost 400 foreign specialists (30 percent more than envisaged at appraisal) visited the project universities for an average length of about one month to advise on post-graduate studies and research prograns and the use of the project equipment. It was in this component and in the fellowship program that the expertise and numerous contacts of the IAP members proved invaluable. Apart from representing the five areas of science and technology covered by the project, the visiting specialist program also encompassed general subjects such as university management, budgeting and accounting, records keeping, and library opera- tions. A plan to introduce a new system of planning in five project universities advanced at appraisal (SAR, paras. 3.14-3.17) was not carried out but replaced by national seminars with participants from all project universities. While this alternative economized on the use of foreign specialists and project funds (PCR, para. 3.16), it probably did not have the demonstration effect that a well-executed pilot project would have had. 19. Fellowships. The largest difference between appraisal estimates and actual achievements occurred in the fellowship program where the original targets (400 faculty members for studies of one year or less and 400 younger fellows for a stay of more than one year) were exceeded several times over: about 900 long-term fellows (pursuing studies for a Master's or PhD degree), over 1,500 visiting scholars and over 200 participants in short study tours had benefitted from the project by the time the credit and loan were closed. This expansion of the program was achieved through the expedient of limiting the funding of fellows to one year, obliging them to find alternative funding thereafter. While this policy did cause diffi- culties for the recipient universities and may have led to hardship for individual fellowship holders, this was considered to be more than made up for by the resulting increase ia program size. However, this expansion may well have carried hidden costs which even now are not fully apparent as the discontinuation of the fellowships after one year must have weakened the links between those students and their home universities (para. 28 below). 20. The *arly phaies of the fellowshipprogramwere characterized by an extremely asymmetrical distribution of fellows by country of study: during the period August to December 1982 (at the start of the program), 93 percent of fellowshipholderswent to US universitiesand from January to March 1983, 72 percent. It was only after Bank staff and IAP members had pointed to the desirability of having a more broadly based selectionof recipientuniversities that the Government took 'overt and deliberate steps"3/ to achieve a better balance: in future cohorts,the share of fellowshipholders to be sent to US universities was not to exceed 40 per- cent. Nevertheless,at the end of project implementation, more than 68 percent of degree students and over 53 percent of visitingscholarshad been attending (or were still studyingat) US universities.4/ 21. Procurement. Since this was the first Bank Group operation in China and at the same time the largest loan/creditthe Bank had provided in the educationsector, there was need for a large-scaleeffort to provide guidanceto Chinese counterpartstaff at central governmentand university levels in proceduralmatters related to international competitivebidding, the preparationof equipmentlists and specifications, and bid evaluation. The Bank respondedwell to this challenge: it made available an experi- enced senior staff with expertisein procurement matters for intensivework on this projent and similarly a computer expert to review the large and difficultsubcomponentof computer equipment purchases. In addition,two consultantsassisted with equipment lists and specifications, and two procurementseminarsorganizedby Bank staff in China includedimplementa- tion staff both of the Ministry of Education (later the State Education Commission)and the participating universities. Thanks to this program of intensivepreparation,the procurement process went on the whole smoothly and was on time. 22. Adopting a broader perspective,it should also be noted that this first Bank operation in China had an undeniabledemonstration effect on other projects and ztors as it introduced for the first time the full spectrumof modern project managementtools, includingproject preparation and appraisal techniques, international tendering procedures, and monitoring/evaluation processes. 23. Disbursements. All the credit and loan funds were disbursed (by December 19, 1985 and January 2., 1987, respectively) without need for an extension of the Closing Date. The disbursement process was facilitated through the establishment of a Special Account in the amount of SDR 0.8 (later 2.0) million. 3/ Supervision Report Aide Memoire, December 6, 1983. 4/ A comparison of fellowship data before April 1983 (239 out of 271 Master's/PhD fellows at US universities) with the final figures (620 out of 906) suggests that this effort was only partially successful, as 60 percent of long-term fellowship holders went to US universities during the remainder of the project.  -6- B. Project Cost 24. Total project cost was US$253 million, almost 15 percent lower than the appraisalestimateof US$295 million equivalent,despite the addi- tion of two universities and of library materials,and expansionof the fellowshipprogram. The lowvr cost was the result of exchange rate move- ments in favor of the US dollar. In national currency,however, the actual cost was Y 728 million, an increase of over 60 percent above the appraisal estimate of Y 452 million. There was no problem foi the Governmentto finance the local cost increases. C. Operating Performance 25. The project has beer successfulin most of its aspects. n purely quantitativeterms, appraisalexpectations were clearly surpassed: between 1979/80 and 1985/86 undergraduate enrollment rose from about 110,000 to more than 160,000,i.e.. by almost 30 percent, against an expected increase of less than 15 percent. For post-graduate studies,enrollmentgrowth was even more impressive,from less than 7,000 to over 30,000 (vs. an expected rise to 10,000). This permitted an improvementin the faculty/student ratio from 1:4.5 to 1:6.5, thus mitigating one of the main concernsof the appraisalmission, low staff utilization 'SAR, para. 2.19). Similar improvemencin utilizationcan be observed for facilitiesand equipment: in 1985/86 the total hours of weekly usage for teaching,researchand social services (contracting out) averagedabout 40 percent for specialized laboratories, general laboratories, and analytical and testing centers, and over 70 percent for computer centers. While these figures conceal con- siderable differences between individual universities, on the whole they appear satisfactory for facilities many of which were only in their first full year of operation. Spot observations at the time of the audit mission seem to suggest that the universities have been able further to increase the utilization of these facilities. 26. However, the Evaluation Report by the IAP and CRC5/ cautions against an automatic equating of certain levels of equipment utilization with appropriate and adequate equipment use. The IAP/CRC argument is that the use of very expensive state-of-the-art equipment for mundane teaching purposes (for which it may not always be ideallysuited) or for industrial R&D work rather than for research proper may be sub-optimal. While the audit staff does not have the necessary speciai subject expertise required to assess the level and "quality" of utilization of a specific equipment item in a given department and university, the fact that in 1985/86 in a number of project universities the use of the various project facilities for research purposes was quite modest,6/ seems to suggest a certain degree 5/ Evaluation Report, Chinese University Development Project I by the International Advisory Panel and Chinese Review Commission, May 1986. 6/ IAP/CRC Report, Appendix I.  -7- of "overcalibration' in the equipping of the ficilitiesZI (with the excep- tion of the computer centers). While some of the low use factorsmay well reflect initial 'break-in'difficulties, this would certainlybe an area worthy of continuedmonitoringby the Chinese educationauthorities. 27. Project achievements in qualitative terms have been equally impressive: the improvementsin physical and staff resourcesthrough the equipment and fellowship/expertprograms have permitted a significant increase in the number of courses and degrees offered by virtually every project universityat graduateand post-graduatelevels. Research activi- ties have been stepped up, and a large number of provincial,national and international prizes attest to the surge in researchscope and quality, as do publicationsin international scientificjournals. 28. It is .nly in one area where appraisalexpectations have yet fully to materialize. This is the return to China of fellowshipholders,or more precisely,of post-graduate students. The participantsin the visiting scholars program have mostly returned (over 72 percent by the end of 1986), and many of them have since been promoted to positionsof greater responsi- bility, thus playing the leadershiprole anticipatedfor them. However,by that same date only 39, or less than 5 percent of the degree studentsha1 returned,and spot observationsduring the audit mission did not suggest a significantincreasein this number. There are several possible explana- tions for these arrears: first, the bulk of the program fellows did not leave until 1984/85which puts their expectedgraduationdate beyond 1986.8/ Second, a number of them have been authorizedto extend their studies from Master's to PhD level. However, there can be little doubt that significant numbers of fellowship holders are postponing their return. As was mentioned briefly in para. 19 above, the cessationof support after the first year of study may have weakened the link between the fellowship holders and their home universities. The necessityto excel academically (in order to find alternative scholarship money) may have led in turn to employment offers upon completion of studies which may have been (or been perceived as being) better than the university positions available upon 7/ It should be noted that the average cost per equipment item in this project was slightly over US$13,000 (PCR, Table 3.4), compared to less than US$7,000 for the Colleges of Engineering of the universities assisted through the Sector Program on Higher Technical Education in Korea, a comparable operation that took place at the same time (OED Report No. 7252, PCR, Table 3.3). 8/ However, a look at the fellowship statistics by starting year and expected length of studies still points to a sizeable gap, as about 150-160 students would have been expected back by the end of 1986, or four times the actual number.  - 8 - their return.9/ However, in the absence of more detailed information these explanations are speculative. Moreo-,er, the preliminary nature of the relevant data should caution against d'_finitiveconclusions.10/ What is warranted, though, is a continued observation of this process by the Chinese authorities and World Bank staff; the appropriate vehicle for this monitoring would be supervision of the follow-or projects, in particular of the Second University Development Project (Cr. 1551-CHA). D. Institutional Development 29. Apart from the obvious institutional development in the project universities resulting from the esteblishment of new laboratories and analysis and computer centers and the addition of new fields of study and research capabilities, the project brought about significant institutional development in the area of project formulation, appraisal and implementation. 30. The most important achievement in this area was the creation of the Foreign Investment and Loan Office (FILO) in thc State Education Commission which is now in charge of all national investment projects in the education sector involving foreign financing. Parallel to this apex institution was the development of Loan Project Offices in the project universities which continue to work on university development and planning tasks. 31. The International Advisory Panel and the Chinese Review Commission proved to be particularly effective "conveyor belts" for bringing large- scal( innovation and international standards in science and technology 9/ A series of translations of Chinese newspapers and review articles dealing with this subject became available to the audit staff after the draft of the PPAM had been prepared and circulated in the Bank. Several articles in this collection suggest that the experience of early fellowship holders may have influenced the attitudes of subsequent cohorts. The discrepancy in research conditions between their foreign guest universities and their home institutions (in such diverse matters as promotion prospects and salary levels, housing, sufficiency and timeliness of research budgets, and a burdening with administrative chores perceived as a waste of their highly developed and specialized expertise) was seen as the main factor causing a postponement of the scholars' decision to return (Educational Exchange and the Open Door, in: Chinese Education. A Journal of Translations, Vol. XXI, No. 1, Spring 1988). 10/ Even if the low return rate observed so far would emerge as a longer- term trend, this would not necessarily mean a permanent loss of these young scientists: the recent experience of India shows that such a brain drain may well to some extent be reversed if the employment and career outlook for these highly trained professionals in their home country improves sufficiently (Nature, Vol. 333, May 19, 1988).  -9- education and research to the project universities, all in a remarkably short time. This same model, albeit on a reduced scale (three instead of six panel members), has been applied to the Second University Development Project, the Provincial University Project and the Polytechnic/Television University Project. E. The Performance of the Bank 32. The effective techniicalassistance given by Bank staff and consul- tants in all procurement-related matters has been dealt with in detail in para. 21 above. The project also benefitted from above-average continuity in project staff, most uDstream and downstream work being done by two staff, both of them senior and experienced sector specialists. F. Sustainability 33. Annual O&M allocations for the equipment provided under the proj- ect are in the range of 5-10 percent of the equipment value, but nearer the lower limit, an adequate (albeit austere) level of funding.11/ Individual universities are successful in assuring additional funds through contract work for entities outside the university (e.g., industry). A certain degree of understaffing of laboratories and centers set up under the proj- ect which was noted by the IPA/CRC Report seems to have been overcome, to judge from observations in the sample of project universities visited by the audit staff. Given a continuation of present funding patterns, the sustainability of the project should not present major problems.12/ 34. There is one aspect of sustainability that deserves special mention: the difficulties and delays in obtaining spare parts and repair services for some of the most compleA equipment. Due to the large dis- tances involved, equipment failures often entail long 4aiting times for spare parts and idling of very expensive equipment. It also appears that the import of equipment components entails lengthy administrative proce- dures. There are several ways in which the effects of the remoteness of both suppliers and universities could be mitigated. 11/ A 1963 OECD studv reported average annual repair costs of 10 percent of equipment in seven of its European member countries (OECDs Depreciation and the Need for Replacement of Scientific Equipment, Paris 1963, p. 21). Given the differences in salary levels, the figure for China may be sligh_ly lower (unless foreign personnel has to be used.) 12/ The question of equipment obsolescence and the eventual need for its replacement (para. 31) is not strictly speaking an issue of project but rather of program sustainability.  - 10 - 35. The first would be one (or several) equipment maintenance center(s)13/ with teams of maintenance experts and a supply of the most often needed components; accurate r-2cord-keeplngon equipment maintenance, failures and repairs in every project university should make it possible to develop in a relatively short time an inventory for needed supplies. 36. Second, the Government may want to consider providing FILO with a modest discretioz;aryfund for direct foreign purchases of spare parts, in order to reduce the waiting period for the repair of major equipment items for which opportunity costs of lying idle would clearly exceed the repair costs involved. 37. Third, in the bid evaluation for major equipment purchases in future projects (say, for items costing in excess of US$50,000), the Government and the Bank may want to consider giving a greater than usual weight to proven maintenance capability of suppliers and satisfactory response time. In the longer run, as the stock of foreign equipment increases, more and more suppliers will find it advantageous to establish service centers in the country. III. FINDINGS AND ISSUES A. Overall Assessment 38. Notwithstanding some specific reservations regarding the project's scope and problems related to the rapid obsolescence of equipment and the cost of replacing it (para. 41 below), the project has been a successful undertaking of a task of unprecedented size: furthermore, this project, the first Bank Group operation in China, was carried out within its appraisal time frame even though its scope was increased during implementation. B. Findings and Lessons 39. This project has been an indisputable success, judged by its implementation record and the achievement of its quantitative and qualita- tive targets, despite a late start due to staff shortages and unfamiliarity with Bank procedures. The experience shows that a large-scale moderniza- tion program in the education sector can be carried out successfully in a short period provided that an effective implementation structure is in place at the outset, and a sufficiently large pool ^f qualified manpower is available for systematic upgrading. 13/ The experience of the Higher Technical Education Sub-Sector Program in Korea (Loan 1800-KO) has confirmed the effectiveness of this concept.  - 11 - 40. The main lessons from this project are summarized as follows: (a) The establishment of a new ana effective national project imple- mentation unit, the Foreign Investment ane Loan Office (FILO) led and staffed by technical specialists, instead of relying on exist- ing bureaucratic structures to manage this complex project was the key to a successful project implementation (PPAM, para. 30; PCR, paras. 3.1, 6.5(a)); (b) The innovative organizational arrangement of the Chinese Review Commission (CR-) and its counterpart, the International Advisory Panel (IAP), as advisors and operational arms of FILO was a criti- cal factor in implementing a large and complex technical assist- ance program which formed the heart of the project (PPAM, para. 31; PCR. 3.14); (c) The establishment of a Loan Project Office (LPO) in each project university with the responsibility of carrying out its own development activities in cooperation with FILO ensured mutual reinforcement and effective project implementation at the concerned institutional level (PCR, paras. 3.2-3.3); and (d) Rapid modernization of university curricula and research in the sciences and engineering can be realized through close coordina- tion of the introduction of new scientific equipment with high quality technical assistance (PCR, paras. 5.7 and 6.5(i)). C. Issues Arising 41. Equipment Utilization and Replacement. With the benefit of hind- sight, it would appear that under the circumstances that gave rise to this project, several smaller-sized phased le-.ding operations would have been preferable to this very large project. A lesser degree of equipment dupli- cationl4/ for very sophisticated and expensive items would probably have enhanced their utilization and encouraged inter-university cooperation. Equally important, a series of smaller projects would have provided feed- back on specific problems and possibilities. Finally, the question of equipment obsolescence and its eventual replacement has to be considered. As long as a quarter of a century ago, the useful life of research equip- ment was deemed to be about five to ten years (electronic equipment 3 to 5 years and all other items--mechanical, electrical, thermal, optical, etc.--6 to 12 years).15/ Since then, accelerated development in science and technology has most likely shortened the replacement interval; an obvious example are computers. Since all the equipment in this project was 14/ To cite one example from the IAP/CRC report (op. cit., p. 40), one university now has four electron microscopes, two each for one institute and one center. 15/ OECD: op. cit., p. 19.  - 12 - practically installed at the same time, there will be an equally condensed obsolescence process a few years from now and the Government will have to face the unenviable choice of a rapid loss of advanced research capability or of massive equipment replacement. A phasing of the investments made under this project would have evened out the obsolescence/replacement cycle and would have extended the period of adequate research capability. 42. Staff Development. The practice of requiring overseas fellows on higher degree programs, after completing the first year of study, to obtain a scholarship from the host university or other sources to finance the rest of their studies, apparently has contributed to delays in the return of trained staff to their home universities. The PCR found that, as of December 1986, less than 5 percent of the 906 fellows had returned to China, and the audit mission's impression was that there was no significant change in early 1988. The abovementioned practice was aimed at increasing the number of staff trained in post-graduate degrees, but the inadvertent hidden costs might include the severance of links between the fellows and their home universities.  - 13 - c2Mns TRU UOMROWR F*ROM ATTACHME I STATE EDUCATION COMMISSION THEPEOPLE'S REPUBLIC OF CHINA No. 37 Da Mu Cang Hu Tong Xi Dan Beijing China Tel: 658731 Telex: 22014 SEDC CN Mr. iraham POanaldson December 8, 1RA Chief Agriculture, Infrastructure And liuman Resources Division (perations I-valuation l)epartment The world Rank 1818 It Street, N.W. Washington, D).(:. 20433 'JS Pear Nlr. Donaldson: Thank you for your letter Hated )ctober 24, '988. !'je, in princinle, aqree with a Draft Project 0 erformance Audit Report about the Chinese lUniversity nevelonment Project(l,oan 2021/1167-CliA), which we recteived November 19, 1Q8R. 'We have no comments on detailed descrintion of performance of the project. We are lookinq forward to further cooneration with the Rark. Sincerely Yours, MIa weixianq W.ang xianminq Zhu '3uozhanrq Wang vuanren State P.ducation C mini Reijing, CHiINA  - 15 - CHINA UNIVERSITY DEVELOPMENT PROJECT (LOAN 2021-CHA AND CREDIT 1167-CHA) Project Completion Report September 30, 1987 Country Department III Asia Regional Office  - 17 - CHINA UNIVERSITY DEVELOPMENT PROJECT (LOAN 2021-CHA AND CREDIT 1167-CHA) PROJECT COMPLETION REPORT I. INTRODUCTION 1.1 The University Development Project (Ln. 2021-CHA and Cr. 1167-CHA) was the first World Bank Group financing to the People's Republic of China since 1980. The total cost of the project was estimated to be US$295 million equivalent, of which US$200 million equivalent was financed by the World Bank Group and US$95 million equivalent by the Chinese Government (GOC). The Loan Agreement for Loan 2021-CHA (for US$100 million equivalent) and the Development Credit Agreement for Credit 1167-CHA (for SDR 81.4 mill.on, or US$100 million equivalent with the exchange rate previiling cmn March 31, 1981, the last day of the month preceding negotiations) were signed on November 4, 1981. 1.2 This Project Completion Report (PCR) is based on a clraft comple_ion report prepared by the Foreign Investment and Loan Office (FILO) of the State Education Commission (SEdC) of the People's Republic cf China (PRC), which was the implementing unit of the project. Their report was based Asn the documents and records in the project files, on evaluation reports prepare!d by each of the project institutions, and particularly on the joint evaluation report prepared by the International Advisory Panel (IAP) ancl the Chinese Review Commission (CRC) for the project, as well as on the results of c)n-the-spot inspections to each of the 28 project universities made by a team of seven experts and staff members. Observations made by a Bank project completion report mission which visited China in March 1987 have been incor,porated throughout. II. PROJECT BACKGROUND AND COMPOSITION The Setting 2.1 In the thirty year period starting in 1949, higher educalcion enrollments in the PRC expanded tenfold, from 0.12 million in 196.9 to 1.1 million in 1979. However, in 1979, only 0.5% of China's total latbor force had higher education, which is low when compared to other developing Asian countries or to developed countries. The output of higher education in scientific and engineering fields is significantly lower than that required by the modernization needs in those fields. In 1980, China's Four Modernizations Plan called for substantial progress towards achieving internatioiialstandards in agriculture, industry, defense, and science and technology by 1.985, and for quadrupling the country's gross vplue of industrial and agricultucal output per capita between 1980 and 2000. 2.2 Achievement of these goals would depend on th'aability of the education system to produce a sufficient number of well-trained professional  - 18 - and technicalstaff, includingscientistsand engineers,over the coming decades. By the late seventies,the status of computingscience and engineeringin China was 20 years behind that of the advancedcountries in terms of both hardwa?re and software. By 1980, the acute shortageof scientists and engineers both in quantityand in quality and the use of ielatively old technology in various industrieswere recognizedas key rep.ons for the underdevelol)mentof scienceand technologyin China, impedingthe country'sability te,fully exploit its human and natural resources. 2.3 To meet t.heneeds for higher level educatedmanpower, the GOC drew plans to expand thr3enrollment,improve the quality,and increasethe research capabilities of the higher educationsystem. Enrollmentin full-timehigher educationwas expected to increaseby 7Z per year, and that in post-graduate educationby 30Z p)eryear throughoutthe eighties,reaching2.2 million and 0.2 million,resplectively, by 1990. To improvequality, th,Ž GOC focused on increasingstaff capabilities,improvingteachingprograms,and increasingthe availability of laboratory equipmentfor teachingand researchwork. To achievebetter s'zandards in higher education,some universities were designated as key institutions and receivedpriority in resourceallocation. The COC also decided to award masters and doctoraldegrees for postgraduate programsbeginn:ing in 1981. The strategyfor improvingscience and engineering education called for investmentin two areas: (a) improvement of general science and engineeringeducationat the under-raduate level; and (b) strengthening of training in selectedspecializations at the postgraduate level. ProjectFormul.ation 2.4 In July 1980, the Bank's Vice Presidentfor the East Asia and Pacific RegiconalOffice!met with the former Ministryof Education(currently the SEdC) andif.rst discussedthe idea of a higher educationdevelopment project. This project was selectedand identifiedas the first Bank Group financingto China. The Bank Group conductedextensive studiesof general economicancisectoralprioritiesin 1981 and confirmedthe high priorityof investingin higher education. The Bank Group and the GOC agreed to cooperate closely to speed up project preparationso that the project could be signed as soon as po!isible,and several senior officialsof relevantdepartmentsof the Ministryof Educationwere assigned to the project. Followingtwo Bank Group missions in Septemberand Novemberof 1980, which visited key Chinese univer- sities and assistedthe GOC in preparation work, the projectwas approved by the Bank Gri)up'sBoard of Directorsin June of 1981. However, the signingof the loan in,icredit agreementswas postponedto November4, 1981, due to a temporaryhiatus in Ir1A credit funds availability. The loan and credit became effectiveon February 4, 1982. Project De!icription 2.5 -Dbjectives.The objectiveof the UniversityDevelopmentProject (UDP) was to support the first phase of the GOC's program to strengthenhigher education by helping to increasethe output and quality of educationand research i.nthe disciplinesof science and engineering. Specifically, the project i-acludedtecmnicalassistance,equipmentand civil works to:  - 19 - (a) increasethe number of graduatesand the volume of researchwork at 28 project universities(see Annex 1) selectedby the GOC by improvingutilization of staff and space, and developinggraduate programs; (b) raise the quality of graduatesand tesearchwork at the 28 universities by strengtheningteachingand researchprograms, improvingstaff quality,and modernizinglaboratoryequipmentand facilities; and (c) strengthenmanagementat universitylevel through improvedrecord keeping and more comprehensive accountingpractices;and at the Ministry of Education level, through improvededucationstatistics, more comprehensive accountingpractices,improvedmonitoringand evaluationcapacity,and better preparationfor future investments in the educationsector. (a) Expansionof Outputs 2.6 Staff and Space Utilization. The plannedenrollmentexpansionat the project universities(Table 2.1) was to be obtainedthrough an improved utilization of staff and space, which were at about 50% of desirable levels. As a result of improvedschedulingtechniquesic was expectedthat average teacherworkloadswould increaseto 8-12 hours per week, and utilizationof classroomsto 60-80% and that of lecture halls and laboratories to 50-70%. Techniquesand proceduresto increaseteacherworkloadsand improve scheduling of teachingaccommodations would be developedand experimented with at five projectuniversities(Beijing,Qinghua,Fudan and Nanjing Universities, and HuazhongInstituteof Technology), with support of specialistservices (3 man- years) and fellowships(15 r,ian-years)providedunder the project. Once the exparimentsproved feasible,improvedtechniquesand procedureswould be introducedto remainingproject universities to reach the plannedenrollment expansion. 2.7 GraduateProgram. The projectwas to assist in developing formalizedgraduateprogramsat the project institutions by providing specialistservices in the fields of chemistry,physics,computer science and application, engineering,and biology (added later). It was expectedthat by 1985/86: (a) a minimum total of about 50 masters degree programswould be established at the project universities;and (b) the number of graduate studentsin science and engineeringwould be increasedfrom 6,000 in 1980/81 to about 10,000.  - 20 - Table 2.1: PLANNED INCREASEIN SCIENCE AND ENGINEERINGENROLLMENT AT PROJECT UNIVERSITIES Increase between 1979/80 1985/86 1979-85 (I) Science 39,000 51,000 30 Engineering 53,000 74,000 40 Total 92,000 125,000 36 (b) Improvementof Quality 2.8 Improvementof quality activitiesunder the project included teachingand researchprograms,staff development, and the developmentof laboratoryequipmentand centers. 2.9 Teachingand ResearchPrograms. The projectwas to help improve undergraduate scienceand engineeringteachingprograms,establishcurricula for graduateprograms,and develop more coordinated researchprograms. Two academicadvisorybodies were to be created under the project to assist in qualitativeimprovement and quantitative expansion: (a) a review commission (CRC) comprisedof Chinese experts;and (b) an advisorypanel (IAP) to the project universities and the CRC comprisedof foreign experts. The CRC would be headed by a chairmanand be organizedin four groups: chemistry,physics, computerscience,and engineering(a biology group was added later). The project included25 staff-years of specialistservicesto assist the comission in its work. The provisionof specialistserviceswould be coordinated by an advisorypanel consistingof five foreign panelists: a chairmanand one co-chairmanin each field of chemistry,physics,computer scienceand engineering(a fifth co-chairmanin biology was added later). The panel would help identifyand coordinatethe work of subject specialists who would visit project universities and help develop curricula(especiallythe structureof graduatedegree programs),provide researchdirection,lecture on their own disciplinary areas, and establishcontactsin other universitiesin China and abroad from which collaboration could be sought. Specialist serviceswere to be allocatedas follows: 72 man-monthsfor the IAP, and 228 man-monthsfor the disciplinespecialists, about equally divided among chemistry,physics,computer scienceand biology,with a slightlyhigher allocationfor engineering. 2.10 Staff Development. The project planned to help strengthenacademic and professional qualifications of science and engineeringstaff at the projectuniversitiesby: (a) enlargingthe number of staff with advanced degrees through the provisionof longer term (two to three years) overseas fellowships for 400 staff; and (b) helping acquaintabout 400 staff with  - 21 - researchand teaching programs,teachingmethods,and operationand maintenance of equipmentat universitiesand researchinstitutesoutside the country through the provisionof shorter-term(about one year) fellowships abroad. Thus, a total of 800 overseasfellowshipsfor staff developmentwere to be financedby the project,totalling1,250 staff-years. The proposed fellowshipprogram would increasethe proportionof scienceand engineering staff with higher academicand professionalcapabilityat the project universities from 7% to 10%. In-countryfellowships were also includedin the project in support of interuniversity exchangeof staff and studentsto promoteexchange of teachingprogramsand research. 2.11 LaboratoryEquipmentand Centers. One aim of the projectwas to improvethe quality of trainingand researchby overcomingthe insufficiency and obsolescence of laboratoryequipment. The projectwould achieve this aim by providingequipment for the followingtypes of laboratories and centers at the project institutions: (a) laboratories for practicaltraining in undergraduate courses;and (b) 46 laboratorycenters for graduatetraining, researchand servicesconsistingof 20 laboratorycenters,13 testingand analyticalcenters, and 13 computercenters. Equipmentfor undergraduate labor.tories would be for general strengtheningof scienceand engineering courses,particularlyfor the third and fourth year students. Equipment for centerswould be for specialized training,research,and services,and serve the needs of various universitydepartments as well as other educational institutions, oovernmentagencies,and industry. The project would also finance the developmentof computersoftware. (c) Strengtheningof Management 2.12 UniversityManagement. The project was to rectifyweaknessesof managementat the universitylevel by introducing techniquesand proceduresto improve the schedulingof staff and facilities, the operationof libraries, studentrecord keeping,managementof computingservices,and university financialmanagement. These procedureswould be introducedon an experimental basis at five project universities(Beijing,Qinghua,Fudan and Nanjing Universities, and Huazhong Instituteof Technology). Programsjudged successfulby the GOC would be extended to remainingproject universities. The project includedthe provisionof 9 staff years of specialistservices, and 63 staff years of overseasfellowships to assist in strengthening universitymanagement. 2.13 Ministry of EducationManagement. The project was to help improve the capacityof the MOE in educationstatistics, accounting, monitoringand evaluation,and preparation of future sectoralinvestments through provision of technicalassistanceand introduction of computertechnology. Improvements would be made in proceduresfor collectionof statistics, as well as in methods of compilationand analysisof data. The project includedthe provisionof 10 staff years of specialistservices,and 16 staff years of overseasfellowshipsto assist in strengthening MOE management.  - 22 - III. PROJECT IMPLEMENTATION Project Organization 3.1 At appraisal the original plan was that project management would rely on the existing organizational units of the Ministry of Education. Accordingly, one of the leading MOE officials was assigned as project director, assisted by two project coordinators. Actual project implementation would be carried out by various MOE departments and bureaus, coordinated by the project management team. However, shortly after the loan and credit were signed in November 1981, MOE decided to establish a completely new organization which could manage the implementation of education projects, whether financed by this or by any future World Bank Group loans or credits. Thus the Foreign Investment and Loan Office (FILO) was created to manage the implementation of World Bank Group financed projects. It was charged with the following main functions: (a) monitor and advise on the progress of civil works and the procurement of local equipment and furniture; (b) organize equipment procurement through International Competitive Bidding (ICB) or direct purchase, with the assistance of the China National Technical Import Corporation (CNTIC); (c) supervise fellowships for overseas training and study tours; (d) arrange foreign specialist services with the assistance and advice of the IAP and CRC; (e) monitor and control project costs, keeping records and accounts, and submit disbursement applications to the World Bank Group through the Ministry of Finance; (f) supervise overall project progress and provide periodic progress reports to the MOE/SEdC leadership and the World Bank Group; and (g) plan and design future projects for World Bank Group financing, in close cooperation with the Department of Planning and Finance of SEdC. During the past five years FILO has grown steadily and now has over fifty full-time st.ifforganized into five divisions: project coordination, equip- ment procurement, technical assistance, finance, and administrative affairs. Besides this project, FILO is coordinating the implementation of three other higher education projects. The timely and efficient implementation of these projects suggests that FILO's staffing pattern is appropriate for its responsibilities. 3.2 In addition, a Loan Project Office (LPO) was created at each project university to carry out the following main tasks in cooperation with FILO:  - 23 - (a) monitor civil works and contribute information requirements for the procurement of equipment and furniture under either ICB or local purchase arrangements; (b) organize in-country transportation and supervise the installation and acceptance of new equipment under warranty; (c) make local arrangements for inviting and receiving foreign specialists; (d) make local arrangements for sending abroad study tour groups and overseas study fellows; and (e) supervise overall project implementation at the university and provide periodic reports, including financial accounts, to the university president and FILO. The LPO continues to operate at every university visited by the completion mission even though the project has been completed. The LPOs manage the impor.ation of the modest amounts of equipment and spare parts which can be afforded from the annual budgets of the universities. It is expected or at least hoped that further World Bank Group loans or credits will become available in the future and, in that eventuality, the LPOs will be ready to play a continuing role in the preparation and implementation of future Bank Group financed projects. If no further Bank lending is forthcoming, the LPOs will handle whatever investments the universities can afford. The directors of the LPOs are usually either university vice-presidents or other high- ranking university officials, working part time. The real strength of the LPOs lies in the senior full time official, who is assisted by a small number of temporary staff who are chosen from different departments of the university, some working full-time and others part-time. The LPOs receive help in some tasks from various units in the universities including their offices of facilities management. The running costs of the LPOs are met from the universities' own operating budgets. 3.3 Various LPOs lent some of their own staff to FILO when it was created and as it grew during the project period. This practice not only solved FILO's manpower shortages, it also contributed to the smooth communication and coordination between FILO and the project institutions. Routine communication between FILO and the LPOs was handled through telephone and written correspondence, with very little travel required. 3.4 All in all, these arrangements for organizing the implementation of the project within the country appear to have worked well and contributed to its timely completion, especially bearing in mind that this was the first project of its kind in China. Changes in Project Scope 3.5 Tongji University in Shanghai and the Shanghai Institute of Finance and Economics were included in the list of project universities in June 1982, after the loan and credit had become effective. The former institution  - 24 - specializesin several fields of engineeringand both are among the key universities. However,the total loan/credit amount providedto these two institutionswas relativelysmall, US$1 millionand US$250,000respectively, and thereforehad no significant adverse impacton the rest of the project. Civil Works and FurnitureProcurement 3.6 Although the loan/credit did not financeany civil works or furniture,the project did require extensiveprovisionof new, extended,or remodeledbuildingsto house the enhancement and expansionof scientific research,testing,teachingand universityadministration which were the goals of the project. All civil works and furnitureprocurement within this project were financedwith local funds, followinglocal procedures. The buildingsto house the new equipmentprocuredunder the loan/credit were all completedon scheduleand before the deliveryand installation of the equipment. As shown in Table 3.1 and Annex 2, the total area actuallyconstructed or renovated under the project was about 22% greater than was estimatedat appraisal,while the cost of these civil works was about 36% higher than the appraisal estimate. These differences were due in the first place to the underestimation of real construction or renovation needs made at appraisal, due to the lack of reliabledata. Another factorwas the decisiontaken after appraisalto concentrate most of the new scientific and computerequipmentin special universitycomputingand scientifictestingcenters,which had to be established and housed anew, rather than scatteringthem among various departments in each university. In addition,construction costs rose during this period since they became negotiableas part of the overall reforms in the economy. On the whole the standardof design and construction has been adequateto meet the needs of the operatorsof the new equipment. The furnitureprovidedunder the projectwas either purchasedor manufactured directlyby the project institutions, and the costs turned out to be lower than if the furniturehad been purchasedat the market. The actual total expenditures in furniture,however,was nearly three times the appraisal estimate,as shown in Table 3.1, mainly due to the large increasein the quantityof furnitureaccomodatedinto the laboratories, especiallyin the two kinds of centers. Table 3.1: CIVIL WORKS AND FURNITURE Area in m2 Cost in Y'000 Appraisal Actual Appraisal Actual Civil Works New constructionand extension 190,708 234,467 71,511 101,709 Renovation 73,592 89,210 14,933 15,759 Furniture 2,784 8,083 Note: Appraisalestimates includedesigns,constructionand price contingen- cies.  - 25 - Laboratoriesand Testing Centers 3.7 The decision to concentratemost of the new scientificand computing equipmentin special universitycomputingand analyi;al testingcenters proved to be generallywise, with two caveats: (a) concentrating all computer terminalsin one room located in the computingcenter at each university precludednetworkingwith laboratories and other departments;and (b) concen- trating the advanced equipment(especially for the chemistryfields) in central analyticaland testingcenters meant that often it would be located far from those people who are directlyusing it for teachingand research. Procurementof Equipmentand Books 3.8 Equipmentpurchases(Annexes3 and 4) represented about 85% of World Bank Group financingfor the project. The equipmentwas intendedfor use in four differenttypes of installation in the project universities: laboratories for basic courses, laboratories for specialized courses,analyticaland testing centers,and computingcenters. The MOE's major objective in providingequipment for the project institutions was to strengthenthe instruction of undergraduate and graduatestudentsin the sciencesand engineering. Only equipmentwhich was assured of a high rate of utilization was approvedfor project funding. The originalequipmentlists were drawn up by teams of Chinese experts and the CRC, based on proposalsmade by the project institutions. The use of ICB tended to standardize the various items of equipment,comparedto the diversityof brands and specifications originallyproposedby the project institutions, thereby simplifying the preparation of bid documentswhile at the same time yieldingcost savings arising from the bulk purchases. This processof standardization was most pronouncedin the purchaseof computers. Whereas the project institutions varied in the priority they attachedto the three main uses for computers-- namely research, student instruction, and administration--MOE ultimately decided to give highest priorityto the use of computersto teach computing skills to students,even though it realizedthat this would reduce their utility for the other two uses, especiallyresearch. This highest priority objectivewas then written into the specifications given to bidders for the computingequipment. However,as prioritieschanged while the project universities became more research-oriented during the period of project implementation, some of the project universities thought it would have been preferableto acquire computingequipmentbetter able to handle all three functionssimultaneously and with greaterefficiency. However,given both manpowerand financialconstraints on adding computingcapacity,it is the mission's judgementthat MOE chose the most prudent course of action under the circumstances. As furtherexperienceis acquiredin the use of computing facilities, additionalequipmentcan be obtainedin the future to better meet the researchand administrative functions. 3.9 About 90X of the importedequipment(in terms of cost) was procured throughtwo phases of ICB in accordancewith World Bank Group Guidelines, while the remainderwas obtainedthrough direct purchasefrom foreign suppliers, as shown in Table 3.2. Proceduresfor procuringimportedequipment were centralizedand coordinated by FILO, and the bidding was then implemented  - 26 - through the CNTIC. Over '00expertsand professional staff from the project universities participatedin the review of equipmentlists, preparation of biddingdocuments,evaluationof bids, and signingof contractsfor all items. Work proceed,-on these various phases in parallelto complete the procurement process a fast as possibleand to ensure the highest quality result. It was estimatedthat the keen competition among the bidders for this newly opened market brcught the bid prices to between 10% and 15% below standardprices. Althoughsome itemswere receivedlate, most of the ordered equipmentwas receivedwithin a year of contractsigning. Three transfer stationswere establishedat the major port-cities of Beijing,Shanghai,and Tianjin to facilitaterapid inland transportation, each one directed by a projectuniversityin that city. Besides the importedequipment,Y58.9 millionworth of locally producedequipmentwas procuredby the project universitiesseparatelywith local funds and under local procedures. Table 3.2: PHASINGOF EQUIPMENTPROCUREMENT Number of Contractvalue Payments Cost sets in US$'000 in US$'O00 in Y'000 First phase of bidding 7 236 85,393 83,027 Second phase of bidding 1,330 54,740 53,115 - Direct purchase 2,076 15,731 15,993 - Local purchase - - - 58,929 Total 10,642 155,864 152,135 58,929 3.10 The purchaseof importedbooks was not specifiedin the loan and credit agreements. However,after discussions between MOE and Bank Group staff in 1983, an amount of US$5 million of loan/credit funds was allocated for this purpose. It was felt that the provisionof books of high academic quality would be a necessary complementto the staff development and equipment purchasesfinancedby the loan/credit. Since neither FILO nor the 28 project universities generallyhad the requisitestocks of up-to-datebook catalogs, nor a wide experiencewith international book ordering,the MOE decided that the Special Book Fund PurchaseOffice at the Beijing UniversityLibrarywas to be responsible for importingbooks for all institutions, in cooperation with several overseassuppliers. The actual amounts purchasedfrom seven overseas book dealers and publishersin six countriesare shown in Table 3.3. Initial EquipmentOperationand Maintenance 3.11 The installation,testing and acceptanceof importedequipmentwas conductedaccordingto rigorousstandardsgeared to the equipment specifications.Equipmentwith a unit price over US$100,000was installedby the manufacturer, and acceptancetests were carried out by the staff of the user-universities.'wheredeficiencies were found, vendors cooperatedin  - 27 - Table 3.3: BOOK PROCUREMENT Budget Actual Location allocation purchase (Us$'000) (uss'ooo) Baker-Taylor USA 1,750 1,252 Blackwell/NA USA 1,400 1,367 Blackwell/BH UK 900 894 Springer FRG 300 304 John Wiley UK 150 148 Kyowa Shizai Japan 400 384 Commercial Press Hong Kong 100 100 Direct purchase (Nankai University) 40 Total 5,000 4,489 providing replacement units or parts, or payment of compensation where necessary. As shown in Table 3.4, a survey of the status of equipment performance at project completion in 1986 revealed that about 96% of the equipment was rated as either good or fair. Equipment was rated good if it could be directly installed after arrival, needing no repairs, fair if it needed repairs which were subsequently fixed, and poor if the equipment was unusable at arrival and only passed the acceptance test after repeated intensive remedies. However, while this overall picture is quite positive, there have been some conspicuous cases where a few major equipment items, most notably mainframe computers and mass spectrometers havz been subject to breakdowns, and where r3pairs have been delayed. Table 3.4: STATUS OF SELECTED IMPORTED EQUIPMENT Status Sets of equipment Cost of equipment Sets Z US$ million % Good 6,363 77.7 76.3 71.6 Fair 1,520 18.6 26.8 25.2 Poor 306 3.7 3.5 3.2 Total 8,189 100.0 105.6 100.0 3.12 Various measures have been adopted to enhance institutional capacity to maintain and operate the equipment and thus to ensure its maximum utilization. For example, in the bidding document bidders of sophisticated foreign equipment were strongly encouraged to establish service centers in  - 28 - China for their goods. Willingnessto do so was given preferencein the evaluationof bids. Many suppliershave either done so, or are in the process. The GOC has also allocatedboth US$4.5 million and Y30 million (of nonprojectmoney) per year specifically for the maintenanceof equipment importedunder this project. The project universities, for their part, have also strengthenedtheir manpowerand organizations responsiblefor equipment maintenance. Workshopson the operation, maintenance, and managementof sophisticated analyticalequipment in common use were conductedin the country,with over 400 participantsfrom universities in and outside the project. Contractsfor equipmentwith a unit price greater than US$100,000 includedprovision for overseas traini.g by the manufacturers for future equipmentoperators. These numberedmore than 700 persons. Upon return to their campuses,these persons,in turn, trained other staff. The resulting numbers of qualifiedstaff managingand operatingproject equipmentis shown in Table 3.5. IN OPERATIONAND MANAGEMENT Table 3.5: PERSONNELPARTICIPATING Lab for Lab for Staff by specialized basiic Analytical Computer title courses courses centers centers Others Total Professors 143 257 70 28 1 499 Engineers 127 252 97 79 8 563 Lecturers 615 1,155 241 162 62 2,335 Technicians 371 1,229 481 571 68 2,720 Total 1,256 2,893 889 840 139 6,017 3.13 The project universities have establishedincreasingly standard proceduresfor the routine use and maintenanceof equipment,based on exchange of experiences. These proceduresapply to: equipmentacceptance, operating regulations, technicalrecords,user registration, error, repair,and damage records,operatorterms of reference,and the efficiencyanalysisof equipment. The combinedeffect of the measures describedabove has permitted the laboratories and centers to be used between 36 and 78 hours per week, as Table 3.6 shows. Thus, the utilizationrate has reachedor exceededthe target 60% to 80% for the project. However, the time the equipment is actuallybeing used for teachingand research is lower, as universities use the equipmentto provide service work for industryin order to raise additionalfunds for operationand maintenance. Advisory Panel The Chinese Review Commissionand International 3.14 The Credit Agreement (Sections3.06 and 3.07) called for the Borrowerto establisha special pair of mechanismsto give high quality advice to the implementingagency, SEdC, throughoutthe life of the project, especiallyon technicalmatters. Indecd,these mechanismsare among the most  - 29 - Table 3.6: UTILIZATIONRATE OF LABORATORIES (Yearlyaverage hours per week) Lab for Lab for Analytical specialized basic and testing Computer courses courses centers centers Others Teaching >20 >28 >20 >50 >20 Research >20 >10 >15 >15 >12 Service <10 <5 <5 <9 <6 Total >44 >40 >40 >78 >36 innovativeand importantfeaturesof this project from the perspectiveof worldwideexperiencewith Bank Group financededucationprojects. The first mechanismcreated was the Chinese Review Commission(CRC) which, under the terms of the Agreement,was chargedwith "assisting(SEdC) and coordinating the development of science and engineering educationand researchat the Project Universities, and advisingon the installation, operation,and maintenance of equipmentby the Project Universities." The terms of reference for CRC, cleared with the Bank Group, are given in Annex 5. They gave the CRC a role to play in alL.strategic planning aspects of the project, e.g., curricularimprovement,staff development, managementdevelopment, construction and equipmentpurchasing, and recruitmentof foreign specialists for the project universities. They also called on the CRC to make regular inspections and submit reports on the project universities, to visit foreign countries,and to conductdiscussions with the World Bank Group. A group of distinguished senior Chinese scholarswas appointedto the CRC. In addition to a chairman,there were five co-chairmen, each of whom took responsibility for one of the major subjectareas supportedby the project: physics/ electronics,computing,engineering, chemistry,and biology (which was added later). Administrative support for the CRC was providedvery efficientlyby FILO. 3.15 The other half of the project'stechnicaladvisorymachinerywas the International Advisory Panel (IAP) which was created a few months after the CRC was established. Its responsibilitv was to provide international technicaladvice and assistanceto project institutions and the CRC, in consultation with FILO, and reportingto the MOE. It was specifically charged with coordinatingthe selectionand briefingof foreign specialists and organizingthe international contribution of severalnational seminarsin China on various topics in universitymanagement. The running costs of the IAP were financedwith loan/credit proceeds. Its Terms of Referenceare given in Annex 6. The Panel was made up of a chairmanand five co-chairmen covering the same broad subject areas as their CRC counterparts. They were all distinguished academicsfrom differentindustrialcountries. The Panel was supportedby a secretariat which was based at the NationalAcademy of Sciences  - 30 - of the United States and which was managed by an executivesecretary. The eambersof the CRC and the IAP worked closely togetherand conductedeither joint or separatevisits to project institutions.Each year they held two joint policymeetingsat which substantiveissues or problemsrelated to higher education developmentor project implementation were discussed candidly, leading to the formulation of recommendationspertainingto both the projectinstitutions and the MOE. The administrative work of the Paneland the organizingof the foreign specialists and seminarswas carried out by the executivesecretaryand his staff with great efficiency. Although these arrangements were relativelycostly, the calibre and timelinessof the technical support servicesand recommendations providedby the CRC and the IAP were of the highest standard. The CPC and IAP prepareda final joint Evaluation Report which was presentedto SEdC in May 1986. It summarized projrct implementation experienceand containedsummariesof the many reports of fieldvisits and of specialists' recommendations.Annex 7 containsthe letter of transmittalof the report, which gives the CRC/IAP'sgeneral recommendations and conclusions. ForeignSpecialists 3.16 Altogether390 foreign specialists were brought to China under the project from 16 countries,which was substantially higher than the original estimateof 300 specialists(Annexes8 and 9). The increasewas made possible throughcareful cost controls,such as limitingthe average length of stay to about 3.5 weeks and loweringthe unit costs below the rate estimatedat appraisal. Table 3.7 indicatesthe distribution of the specialists by disciplineand country. This distribution by disciplineis roughly in line with the intendeddistribution(para. 2.09). Particulareffortswere made by the IAP and the CRC to select highly qualifiedspecialists from as many countriesas possible. The specialists gave lectures,supervisedstudents, advised on researchplans and activitiesin progress, held seminars,and advised on undergraduate and graduatecurriculaat their host universities. The process for selectingeach specialistbegan with each universityproducing a nominationlist in accordancewith an overall plan made by MOE. The lists were reviewedby the IAP and CRC who were often able to suggestbetter qualifiedalternativenames of candidates. After the final list was approved by MOE/SEdC,the IAP contactedthe candidatesto confirm the invitationand arrange the work scheduleand travel. At the completionof his service,each specialistsubmittedtwo reports,one to the host universityand the other to the IAP. Some of the foreign specialists had expertisein selectedareas of universitymanagement. These persons providedtheir servicesby conducting national seminarson special topics as: libraryoperations; computercenter management;computersoftwaremanagement;studentrecord keeping;university financialmanagementand accounts;and educationstatistics(see para. 3.19). The use of nationwideseminarsto which all project institutions sent representatives permittedthe number of foreign specialists to be reduced from 53 as planned at appraisalto 32. 3.17 In sum, the completionmission was told repeatedlyby universityand SEdC personnel that the program for providingspecialistserviceswas implementedsuccessfully. The specialists had high-levelexpertiseand worked enthusiastically.  - 31 - Table 3.7: SPECIALISTSBY DISCIPLINEAND COUNTRYOF ORIGIN Discipline USA UK Japan FRG Canada France Others Total Physics 40 6 14 6 2 1 8 77 Electronics 11 1 4 - - - 3 19 ComputerScience 22 22 6 4 1 3 6 64 Chemistry 35 7 5 4 3 3 4 61 Biology 30 2 5 - 2 - 11 50 Management 23 6 1 1 - - 1 32 Engineering 29 20 5 19 6 2 6 87 Total 190 64 40 34 14 9 39 390 Staff Development 3.18 All fellowships awarded under the project (Annexes10 and 11) were given to teaching staff. Most fellowships were awarded for study in the disciplines includedin the project,but a relativelysmall number went to disciplinesother than .nose mentioned in the SAR, such as English or Mathematics. Long-termawards were made for degree programs,while short-term awards were made for advanced study by visitingscholars. Fellowship candidateshad to apply directlyfor admissionto foreignuniversities of their choice, and after receivinga letter of acceptancefrom a foreign university,they would be recommended by the project universities if the followingguidelineswere met: (a) they should study in a specialityto be strengthened by the project;(b) they should have good academicrecords and researchabilities;(c) they should pass a foreign languageproficiencytest; (d) candidatesfor degree programs should be less than 35 years old, while short-termvisitingscholarsshould be less than 50, with exceptionssubject to approval;and (e) visitingscholarsshould have definiteaims in studying abroad. At the outset, an overwhelming majorityof fellowswent to the Ulnited States. But since this did not comply with GOC policy of diversification, and was criticizedby the IAP, measureswere taken to change this pattern after mid-1983,which reduced the portion of fellowswho studied in the United States to 59% by the time the projectwas completed. 3.19 Early in the project,the COC took the view that the staff development deficit of the institutions was much larger than what the availableloan/creditfunds could cover. To increasethe number of fellows who could benefit from loan/credit funds, each fellow was expected to obtain scholarship or other local funding once he/she had completedthe first year of study abroad. Thus the project universities were permittedto send abroad more felljwsthen their originalallocations, providedthat the loan/credit resourceswere available,and that the fellowscontinuedto meet the guidelines(para. 3.17). As Table 3.8 shows, a total of 2,676 fellows were sent abroad, of whom 1,376 had returnedbefore the loan/credit closing date.  - 32 - Of this total, 906 were long-term fellows, while1,565went as visiting scholars and another 205 went in short-term studygroups. These figures represent abouta three-fold increase over the initial estimates.However, some of the receiving universities complained aboutthis practice and have resisted admitting Chinesestudents without a guarantee of financing for the fullduration of the course. Some short-term fellows who were able to obtain additional localresources were able to transfer to higher degreeprograms with theconsent of theiremployer-universities. Although the project originally provided for in-country feliowships, thesenevertook place,due partlyto the lack of experience or established mechanisms for inter- university transfers of staffat the time,and partlybecause as new postgraduate programs were established at the 28 project universities; staff who tookin-country degreesdecided to studyat theirown institutions rather than to seek fellowships. Table3.8: OVERSEAS FELLOWSHIPS BY COUNTRYOF STUDY Type USA UK Canada Japan FRG France Others Total Returned (by 12/86) Degreestudy 620 84 124 16 20 13 29 906 39 Visitingscholar 840 121 230 158 86 40 90 1,565 1,134 Subtotal 1,460 205 354 174 106 53 119 2,471 1,173 Shortterm study group 147 - 8 29 - 4 19 205 203 Total 1,607 205 362 201 106 57 138 2,676 1,376 Management Improvement 3.20 The improvement of education sector management is a large and complex undertaking. The project helped this endeavor by providing technical assistance to introduce techniques and procedures in operating libraries, managing computer centers, managing computer software, keeping student records, accounting and finance management, and educational statistics. A series of seminars on thesefields were held by teamsof experienced specialists. They were each held at a selected project university, and attended by relevant stafffrom the otherproject universities. Techniques and procedures of highereducation management in foreign countries were introduced, experiences were exchanged, coefficients and recommendations were made by the specialists. SEdC and the project universitiesare now making theirplansfor strengthening management on the basisof theseexperiences and recommendations. 3.21 The decisionto organizenationwideseminarsto be attendedby representatives fromall projectinstitutionsrepresenteda significant departure from the planmade at appraisal to engagein experimental  - 33 - innovationsin universitymanagementtechniquesin these topics at five pilot universities(para. 2.02). The seminarsdid succeed in presentingnew ideas and experiencesfrom other countrieson various aspects of university management. However, these ideas were not applied in practiceat pilot universities,as was intendedat appraisal. Furthermore, the mission had difficultyin tracing actual participants who had attended the nationwide seminars,or in finding evidencethat the ideas introduced had diffused in practice. In addition to the seminars, a number of study groups either comprehensiveor with specificpurpose,were sent abroad to study university managementin the visited countries. 3.22 With regard to the project objectiveto strengthenMOE management, rather than recruitingspecialists to advise MOE directlyon various education managementtechniques,as expectedat appraisal(para. 2.13), MOE/SEdC managementreceived technicaladvice either directly from the IAP members, especiallyat the semi-annualjoint policy meetings (para. 3.14), or by attendanceof relevantMOE/SEdCstaff at the nationwideseminars. This deletionof managementspecialists for SEdC itself allowed more subject specialists to be providedto the project universities. However,it is questionable whether SEdC's need for modernizingits capacitiesin educational statistics, financialmanagement, and evaluationhave been met. The project also assistedSEdC to strengthenits computercenter by equippingit with a new computersystem. This has significantly acceleratedthe modernizationof its information collectingand analysistechniques. Covenants 3.23 The covenantsagreed by and between the COC and the Bank Group were in general fulfilledby the MOE/SEdC. However,almost all elementsof project implementation were started late in comparisonwith the scheduleproposed at appraisal. This is mainly becauseof delays in loan/credit signing,a short preparation period, an initial shortageof staff, and lack of experiencein implementing foreign-assisted projects. Since late 1982, however, the project progressedon schedule. The first annual progressreport of the project was submittedto the Bank Group one year late, in order to avoid a report which coveredless than a year, and thereforethe first report actuallycovered progressof almost two years. The annual reports includeda series of indicatorsof managementand educational change which were voluntarily developedby FILO, even though they were not actually required. The next reportswere submittedon time and supplemented with audited financial statements, althoughthe latter were not requestedin the loan/credit agreementsfor this project. The Bank Group's Role 3.24 The Bank Group contributedstaff resourcesto the preparation of the projectand these contributions were useful especiallybecause this project was the first Bank Group financedproject in China and the Chinese staff assignedto this task did not have any previousexperienceof project preparation, design and implementation.In the implementation period, the Bank Group sent eight supervisionmissions to China to ascertainthe project progressand discuss the solutionof problemsencounteredin project  - 34 - implementation with FILO. At the end of 1980, the Bank Group sent a mission comprised of two officials with rich professional experienceto conduct workshopsin Shanghaito introduceprinciples, guidelinesand techniquesof International Competitive Bidding. In Februaryof 1981, anothermission visitedBeijingto help preparea model biddingdocumentand review the specifications of the items to be issued in the first phase of bidding. These missionswere instrumental to the successof the equipmentprocurement. The Bank Group also sent staff to attend regularly the joint meetingsof IAP and CRC, thus providing valuable advice to the project and servingas a communication link with the Bank Group on aieas of mutual interest. The Bank Group missionswere generallysatisfied with projectaccomplishments, and were appreciated by MOE/SEdC. IV. PROJECTCOSTS AND FINANCING and Actual ProjectCosts Estimated 4.1 At appraisal,the total costs of the projectwere estimatedat Y452 million,or US$295 millionequivalentas of May 1981, including contingencies.Table 4.1 and Annex 12 show appraisalestimatesand actual costs by categoryof expenditure, in Yuan and US$ equivalents, computedby using the exchangerates prevailingin each period. Actual costs in yuan were about 61% higher than appraisalestimates, while actual costs in US$ were about 14% less than appraisalestimates,reflecting the devaluation of the yuan during the period. The foreigncost component of the project turned out to be 74%, higher than the appraisalestimateof 68%. 4.2 Over the period of implementation of the project,several changes took place which affectedthe distribution of expenditures and costs: (a) the value of the SpecialDrawing Rights (SDR's) expressed in U.S. dollars decreased graduallyduring the period: (b) the number of project institutions was increased from 26 to 28; (c) US$5 millionequivalent was allocatedfor book purchasesafter the projectbecame effective, and (d) the value of the yuan expressedin US$ decreasedseveraltimes during the period. Local cost overrunsof buildings and furniturewere partly due to price escalationand partly due to increases in the construction area. In the other categories, cost performance was basicallyin conformity with that estimatedat appraisal. Disbursements 4.3 At appraisal,it was agreed that the GOC would financeYuan 145 million,representingthe totalityof local funds,while the Bank loan would financeUS$100 millionequivalentand the IDA credit SDR 81.4 million,or US$100million equivalentusing the exchangerate as of March 31, 1981, thus coveringthe foreignexchangecomponentin its entirety(US$200million equivalent). 4.4 The appraisaland actual scheduleof disbursements from the loan and credit by fiscal year is shown in Table 4.2. The project was completedby June 30, 1985, which a closing date of June 30, 1986. Even though the actual  Table 4.1: ESTIMATED COSTS AND ACTUAL OF EXPENDITURE BY CATEGORY - - …- - - - -…Yuan Million - - - - - - - - - - - - - - - - - - - - - - USS Million - - - - - - - - Actual Cost Appraisal Estimate Actual Cost Appraisal Estimate Foreign Total Local Foreign Total Local Foreign Total Local Foreign Tot: Loco! Building A - 126 51 - 61 44 - 44 furniture 78 - 78 126 Equipment 449 S08 29 135 164 21 167 177 and books 46 206 2S1 69 Specialist 2 15 17 - 4 4 1 S 6 is services 1 6 7 74 78 2 19 21 1 25 26 Fellowships 3 29 32 4 - 13 42 66 - - - Contingencies 19 65 84 - - 638 728 96 200 296 66 187 263 Total 146 306 452 190 26 74 100 32 88 1OO 26 74 le X of Total 32 68 10  - 36 - disbursement schedule was behind the schedule proposed at appraisal during the first two years of project implementation, disbursements were completed on schedule: the credit was fully disbursed by December 19, 1985, and the loan was fully disbursed by January 21, 1987. Table 4.2: APPRAISAL AND ACTUAL SCHEDULES OF DISBURSEMENTS BY FISCAL YEAR IBRD fiscal Actual year and Appraisal estimate Actual disbursements as Z of semester Semester Cumulative Semester Cumulative appraisal 1982 lst - - - - - 2nd 5 5 0.12 0.12 2.4 1983 1st i0 15 0.86 0.98 6.5 2nd 20 35 31.77 32.75 93.6 1984 1st 20 55 27.56 60.31 109.7 2nd 20 75 20.77 81.08 108.1 1985 1st 30 105 47.00 128.08 122.0 2nd 30 135 29.17 157.25 116.5 1986 1st 40 175 26.66 183.91 105.1 2nd 25 200 11.83 195.74 97.9 1987 1st - 200 4.22 199.96 100.0 2nd - 200 0.04 200.00 100.0 Note: SDR disbursements for Credit 1167-CHA are expressed in US$ equivalent as of the date of March 31, 1981, for consistency with disbursement estimates made at appraisal. 4.5 Even though the SDR 81.4 million credit was fully disbursed, representing US$100 million with the exchange rate prevailing on March 31, 1981, it only represented US$85.5 million equivalent using the exchange rate prevailing on the date in which each disbursement was actualiy made. Table 4.3 gives an analysis of Bank Group financing, by category, using the exLhange rates prevailing in each period, for a total of US$185.5 million equivalent for both the loan and credit.  - 37 - Table 4.3: ANALYSIS OF BANK GROUP FINANCING (in US$ million) /a Loan/credit Categoryof Appraisal agreements Bank Actual expenditure estimate allocation disbursement expense Equipment 135.0 155.0 157.1 152.1 Books - 4.5 Specialist services 4.0 5.0 5.8 5.3 Fellowships 19.0 25.0 22.6 25.0 Unallocated - 15.0 - - Contingency 42.0 - - - Total 200.0 200.0 185.5 186.9 /b /a US dollar equivalentof SDRs was estimatedusing the exchange rate prevailing at the date of each disbursement. /b "Actual expense" exceeds "disbursement" by US$1.4 million. This amount was paid with other resources. V. INITIAL PROJECT OUTCOMES 5.1 Overview. The University Development Project was effective in assisting the GOC to achieve some of its educational objectives. Although some of the changes which occured during the period of project implementation of the project can be directly linked to project activities, there were other improvements in higher education which resulted from the general achievements of the overall national higher education program. The main outcomes of the project will be discussed below under the same categories used in the project description in Chapter II. These were: (a) expansion of output; (b) quality improvements; and (c) strengthening of the management of universities and MOE/SEdC. Expansion of Output 5.2 The project attained its objective on expansion of outputs as much or more through the influence of GOC policies and agreements with the Bank Group, as through direct project expenditures. At appraisal, it was expected that undergraduate enrollments in science and engineering at the project universities would increase from about 92,000 to 125,000, while the number of graduate students would increase from about 6,000 to 10,000 during project implementation. Table 5.1 summarizes the expansion of outputs at project universities by the end of the project period. Actual undergraduate enrollments reached almost 160,000, about 30% higher than the appraisal forecast, while postgraduate enrollments reached 30,000, about three times  - 38 - Table 5.1: EXPANSION OF OUTPUT AT PROJECT UNIVESITIES 1979/80 Aooraisal target Actual L'ndergraduate Enrollment Science 39,6n4 51,10fl 63,839 Engineering 69,397 7t4")0O 99,137 Total lO9,001 125,000 162,026_ Postgraduate Enrollment Doctor - 2,616 Master 6,780 10,000 27,741 Facultv Doctor degree holder - - 669 Master degree holde- - - 7,515 "niversitv graduate - - 27,628 Others - - 3,12 Total - 38,9336 Teacher/Student ratio li'.i _ 1/6.5 Uitilizationof classroons (.) 50 60-80 35 U'tilizationof lecture hall (%) - 50-70 75 U'tilizationof laboratories (C) -5f-78 ieeKlyooen hours of librarv 60 34  - 39 - higher than expectedat appraisal. The expansionwas possiblewithout large investments in infrastructure or additionalstaff, mainly through improvements in the utilization of staff and space. The teacher/student ratio decreased from 1/4.5 to 1/6.5 during project implementation, and the average utilization of classrooms, lecturehalis and laboratories exceededexpectations at appraisal. In 1979/80classroomutilization rates averagedabout 50% among the universities. By 1985/86these rates had increasedin many universities, as follows: 62% for Xi'an JiaotongUniversity, 68% for Fudan University,87% for Beijing Medical University, 88% for JiaotongUniversity, and 92% for South China Instituteof Technology. The utilization rate for laboracories varied from 84% at BeijingMedical Universityto 92% at Beijing Normal University. There was also a substantial increasein the number of hours per week during which universitylibrariesremain open: from an average of 60 hours per week in 1980 to 70-80 hours per week in 1985/86. However,some universities were considerably above that average, for example: Xi'an JiaotongUniversitywith 90 hours, and Fudan Universitywith 92 hours. Tables 5.2 and 5.3 indicatethe increasesin undergraduate and postgraduateenrollmentsin science and engineering for each of the 28 project universities. Improvementof Quality 5.3 Improvement of quality at the 28 key universities in China played a major role not only in their own development, but also in the overall strengthening of higher educationin China, especiallyin the scienceand engineering disciplines. In this project the COC put more emphasison the qualitative upgradingthan on the quantitative expansionof the universities. Therefore,the largest proportionof project funds was used for the improvement of teachingand researchquality through the provisionof equipment(togetherwith related physical facilities) and technical assistance. 5.4 ImprovingTeachingand ResearchPrograms. During the life of the project the COC placed highest priorityin curricularreform in higher educationon improvinggeneral science and engineeringeducationat the undergraduate level, and on strengthening selectedgraduatelevel programs, particularly, physics,chemistry,engineering, biology,and computer science and its applications. One useful indicatorof curricularreform is the rate of increasein new undergraduate or graduatelevel course offerings,and the proportionof electivecourses in the curriculum. The rates of increaseof new course offeringsvaried considerably among the project universities visited by the mission, but many of the institutions doubled their offerings during the project,while others increasedthem by even more. To the extent that these new course offeringsare adding new content to the university curricula,this trend is to be encouraged. However, there is a risk that some of the new courses are merely a result of subdividing fields of study into excessively narrow specializations.The major increasesin enrollmentsof doctoraland master'sdegree studentsshown in Table 5.3 indicatesthat the project'sobjectiveof creatingat least 50 new master's level study programs (para. 2.07) was easily exceeded. On average,about 20% of the undergraduate curriculumis now spent on electivecourses,which representsa doublingover previouslevels. Another importantchange in curriculumorganization has been the adoptionof the "credit system" for measuring and certifyinglearning.  - 40 - 'ible 5.2: ':YDERGRADUATI ENROLLKENTS BY PROJECT UNIVERSITY 1979/80 1985/86 Engi- Engi- ricrease Science neering Total Science neerting Total (1) Sichuan University 29220 - 2,220 4,435 - 4,435 1)0 ChongqingUniversity 183 4,373 4,556 314 6,498 6,R12 .9 Xitan Jiaotong University - 6,350 6,350 1,054 8,299 9,353 47 Lanzhou University 2,519 - 2,519 3,406 - 3,406 35 ZhongshanUniversity 2,995 - 2,995 3,509 - 3,509 17 South China Institute of Technology - 7,178 7,178 473 8,528 9,001 25 Wuhan University 2,676 - 2,676 4,119 256 4,375 63 Huazhong University of Science and Technology - 6,792 6,792 527 10,506 11,033 62 Fudan University 2,549 - 2,549 4,393 - 4,393 72 Shanghai Jiaotong University 316 4,509 4,825 384 6,483 6,867 42 East China NormialUniversity 2,908 - 2,908 4,404 - 4,404 51 NJanjingUniversity 3,541 . 3,541 7,746 - 7,746 LL9 Nanjing Institute of Technology - 4,543 4,543 184 6,226 6,410 Zhejiang Universitv 1,015 5,698 6,713 971 7,344 8,315 2- ,niversitv of Science and Technology of China i,673 979 2,652 2,160 1,263 3,423 ? Xiamen University 2,136 - 2,136 1,708 524 2,232 - Shandong Universitv 2,461 - 2,461 3,458 - 3,458 Beijing University 3,966 - 3,966 5,274 - 5,274 33 Oinghua University 429 7,337 7,766 1,012 9,591 10,603 36 Beijing Medical University 2,718 - 2,718 4,964 - 4,964 i3 Beijing Nor-malUniversity 2,219 - 2,219 2,811 2,439 5,250 !37 Beijing Agricultural University 793 - 793 1,733 - 1,733 LL8 Nankai University 2,218 - 2,218 3,107 - 3,107 40 Tianjin University - 5,352 5,352 279 8,451 8,730 63 Dalian Institute of Technology 288 5,225 5,513 1,469 6,301 7,770 41 Jilin University 2,800 - 2,800 3,139 - 3,139 12 Tongji Universitv 121 5,027 5,148 499 7,249 8,248 A: Shanghai Institute of 251 - 251 271 - 271 B Financial Economics Total 42,995 63,363 106,358 67,903 9U,458 158,261 49 Aporaisal Target - - - 51,000 74,000 125,000 36  - 41 - Table 5.3: POSTGRADUATE ENROLLMENTS BY PROJECT UNIVERSITY 1979/80 1985/86 Increase Master Total Master Doctor Total ('') Sichuan University 67 67 328 4 332 393 Chongqing University 67 67 789 27 816 1,118 Xi'an Jiaotong University 217 217 1,498 151 1,649 660 Lanzhou University 150 150 637 52 689 359 Zhongshan University 156 156 572 37 609 290 South China Institute of Technology 130 130 901 28 929 615 Wuhan University 154 134 1,436 76 1,512 882 Huazhong University of Science and Technology 401 401 1,208 102 1,310 227 Fudan University 233 233 1,208 133 1,341 475 Shanghai Jiaotong University 479 479 1,460 137 1,597 233 East China Normal University 174 174 708 29 737 324 Nanjing University 325 330 2,190 370 2,560 676 Nanjing Institute of Technology 134 134 1,031 51 1,082 707 Zhejiang University 241 241 1,370 135 1,505 524 University of Science and Technology of China 110 116 1,i12 78 1,190 926 Xiamen University 2 8 310 26 336 4,10") Shandong University 194 194 693 25 718 270 Beijing University 366 366 1,162 185 1,355 27) Qinghua University 749 7S9 2,026 395 2,421 223 Beijing Medical University 227 227 537 79 616 171 Beijing Normal University 134 134 1,010 75 1,085 710 Peijing Agricultural University 68 68 502 30 *32 682 Nankai University 152 152 486 52 538 254 Tianjin University - - 751 10 761 - Dalian Institute of Technology 194 194 1,535 147 1,682 767 Jilin University 258 258 1,227 118 1,345 421 Tongji University 268 268 858 58 917 242 Shanghai Institute of Finance 22 22 196 6 202 818 and Economics Total. 5,672 5,689 27,741 2,616 30,357 434 Appraisal Target - - 10,000 - 10,000 -  - 42 - This innovationmeasures the student'sacademicperformance in a cumulative manner, and facilitatesthe introductionof more electivecourses on new fields of study. 5.5 ForeignSpecialists. The work of the 390 foreignspecialistsat the projectuniversities (para. 3.15) also had an impact on instructionalquality and content. The specialists were able to disseminatethe latest developments in their respectivefields through conductingseminars,'ectures,or demonstrations for universitystaff from both the host as well as other nearby universities. Specialists contributed books and equipmertto their hosts, or providedadvice in the selectionof new equipmentor books for purchase. Others assistedin the initialtesting and use of the equipmentpurchasedwith loan/credit funds. They also left behind specificrecommendations to their host insLitutions dealingwith curriculum, research,experiments, equipment, books, overseasstudy, etc. 5.6 Staff Development. The provisionof overseasstudy fellowshipsto over 2,500 fellows is beginningto have a very wide impact on China's higher education. The scientists, engineersand universityadministrators who went for study abroad have thereby been enabled to develop professional and even personalties to their counterparts in the scientificand acaderric community around the world. The flow of ideas, information, publications, and material to Chinese scientists which was initiatedfrom these new relationships will continuefor the future. The returnedfellowsare introducing innovative methods,and are employinge greater variety of materialsin their teaching. They can be expectedto be open to further educationreform in the future. However,the mission found that some returneesare experiencing delays either in obtainingresearchgrants or promotionsto higher grades. These may be due to budget constraints, or to restrictive age regulations. If left unsolved, this problemcould reduce some of the benefits to China'shigher education sector which should accrue from the impressiveboost to China's supply of scientific talent brought about by the fellowshipprogram. A further cause for concern is that by December 1986 only 39 of the 906 fellowswho had gone abroad for degree (as opposed to short term) study had returned(Table 3.8). While this low return rate is due largely to the longer durationof their courses,specialattentionshould be given to monitoringthe return of degree course fellowsduring 1987 when the numbers should be increasingrapidly. A tracer system should be put in place to monitor whether degree fellowsare returningas scheduledto the work for which they are being educated, and to determinecauses and correcLiveactions if results differ markedly from plans. 5.7 LaboratoryEquipmentand Centers. Over 80% of the loan/creditfunds were used for importingequipment,most of which is fully operational. However,there have been numerouscomplaintsof breakdownof a few items of equipment,most notablyin the area of computers. This problemwould have been more manageableif a service center had been establishedin the country for such sophisticated equipment. Althoughthis is happeningfor most equipment, the delay in doing so for the computersis reducingthe benefitsthat could be gained from this equipment. Laboratorybuildingsneeded to house the importedequipmentwere ready in time and met technicalrequirements. Computercentersand analyticaland testingcenters were establishedin more universities than foreseenat appraisal,in order to raise the utilization  - 43 - rate of the advancedequipmentand facilitateresearchwork by the university teachingstaff. The introduction of the new scientificand computing equipmentunder the projecthas enlargedcourse content,and opened up new fields of research. As a result,even undergraduates were able to use the new equipmentto prepare their graduationtheses. Computerliteracyincreasedat all universities, reachingan average of 90% of the teachers in science and engineering fields. While some universities, such as Beijing Medical or BeijingAgricultural universities reportedthat no studentshad computer skills before the project,by 1985 these institutions reportedbetween 40 and 501 computerliteracyrates, while other universities such as South China Institute of Technologyor Xi'an JiaotongUniversityreported97% literacy rates among undergraduates.Many universities were reportingcomputer literacyrates of 80% to 90% among postgraduates and teachingstaff. Computer literacyfor undergraduate studentsincreasedsubstantially in all universities. About 90% of the total number of experiments requestedby the syllabiwere either new experiments for undergraduate or graduate courses,or old experiments renewed to make use of the new equipment. This was a substantial improvement over 1980, it.which only between 50Z and 70% of requiredexperiments were new or improved. Most postgraduate studentsat the projectuniversities have learnedto use the advancedequipment,which is activelybeing used for academicexperimentsand/or scientifictheses or designs. Strengthening of Management 5.8 The project played a modest role in strengthening managementat the projectuniversities, some of which have started to revise and implement changes in their accounting, statistics,student record keeping, book circulation, librarybibliographic information, equipmentmanagement, accommodation scheduling, etc. followingrecommendations from related seminars,specialists, study tours, Bank Croup missions,and other sources. However,while organizingnationalseminarsmust have been very informative for a large number of participants, they could not substitutefor actually pilot testingnew managementtechniques. Rather, the seminarsare to be seen as a preliminary step to the pilotingwhich remains to be done. SEdC established a computercenter with project financing,which allowed them to make sound contributions to the manpower survey and educationalplanningand projectionsfor the rest of the century,as well as for routine statistical administration. 5.9 UniversityManagement. There were several changes in the administrativestructureof projectuniversitieswhich can be attributedto the project,such as: (a) A Loan Project Office was establishedat each university,as describedin para. 3.2; (b) Special guidelineswere issued at all project universities to regulatethe use of importedequipment,creatingspecial chains of command to manage the use of the new technologywithin the university;  - 44 - (c) The establishmentof university-wide scientifictestingand computingcenters has strengtheled linkagesbetween departments within universities; (d) The availabilityof the new computingequipment led to curricular changes in computingscience,and it also inducedadministrative changesat the universitylevel; (e) As a direct outcome of project activities,linkagesbetween universities and betweenuniversities and other units were created to conductcommissioned research; (f) New structuresin the academicorganization were created in order to implementthe new grading and degree systems; (g) The return of large numbers of scholarsand postgraduatestudents requiredchanges in policiesdealing with the placementand promotionof staff in the projectuniversities; (h) Scientificseminarswere organizedat various project universities, as part of the activitiesof foreignspecialists; (i) Five high level national seminarswere organizedby SEdC: one on financial management,one on librarymanagement,one on student record keeping,and two on computers. These were attendedby participants from all project universities; (j) Cooperation between universities in differentregions was initiated in order to train studentsor organizeresearch,either on the basis of mutual benefitwit;.out charge or on the basis of commissioned trainingand cummissioned research. These activitiescomprised relationships to other universities within China as well as to universities outside the PRC. All projectuniversities were involvedwith universities abroad, mainly with those in Western Europe, U.S.A., Canada, and Japan. In contrast,only a few institutions (most notably,JiaotongUniversityin Shanghai)were affiliatedwith aiding universities in less developedregions in China. However,equipmentpurchasesunder the projectwill allow all project universitiesto maximizetheir benefitsfrom commissioned trainingand research;and (k) The thousandsof postgraduate places which were created at project universities have been instrumentalfor the developmentof staff from second and third echelon universities. 5.10 Ministryof EducationManagement. Improvements in the administrativestructuresand activitiesat the central and regionallevel include: (a) the establishment of CRC, IAP, and FILO; (b) the introduction of computer technologyand know-how to the SEdC;  - 45 - (c) partial improvementof record keeping and data processingin the field of educationstatisticsin SEdC; and (d) the growing public and academicdiscussionof western scientific methods of teachingand research. Sustainability 5.11 If project outcomesare to be sustainable,attentionshould be given to the following: (a) From the financialpoint of view, SEdC might have difficultiesin providingsufficientforeigncurrencyfor maintenanceof equipment at project universities. Problemsmay arise in one or two years, especiallyin those cases where the warrantyperiod is about to expire. Project universities should prepare for this eventualityby finding alternatesourcesof income for maintenance. (b) From the policy point of view, the project outcomesappear to be sustainable, as the policy emphasisgiven under the project continuesto be supportedby the long-termplans in education,as well as by the seventhfive year plan. (c) In order to maximize the potentialof teachingand research, promotionproceduresfor young and middle-agedstaff should be improved. (d) Attention should be paid to the danger of increasingapplied researchat the expense of pure research. More and better results could be achieved if the departmentsin charge give some incentives for individualresearchinsteadof maximizingcommissioned research only. (e) Incentivesshould be given by the GOC for increasedinter-university interactions in China, so as to maximize the transmissionof the benefitsof the project to second and third echelon universities. At the same time, relationships betweenuniversities and productive units will become a major source for the transferof knowledge and a major source of additionalincome. VI. CONCLUSIONSAND LESSONS LEARNED 6.1 The main objectivesof the UniversityDevelopmentProjectwere met. In particular,the output of graduates in science and engineeringat the project institutions and the volume of researchwork was expandedthrough improvedspace utilizationand initiation of graduate study programs. Furthermore, the quality of study and researchhas improvedthrough the staff development and new equipmentprovidedby the project. The increasednumbers of high caliber graduatesin the scienceand engineeringfields will make  - 46 - important contributions to China's economicgrowth in the decades to come, providednearly all the the overseasfellowswho are studying for degrees overseasreturn as scheduledto teach and do researchin universities in China. Finally,new techniquesin managementhave been presentedto large audiencesof universiLyand SEdC administrators who are in a positionto adopt new practicesin their institutions. The innovations in university organization, particularly the establishmentof scientifictestingand computingcenters,will improvethe efficiencyof the project universitiesin providing high quality researchfacilitiesto students,teachingand research staff, and users outside the universities. 6.2 The major risks for the projectwere faced squarelyand largely overcome,especiallythose posed by the fact that this was the first project in China over financedby the Bank Group. Severalactions reduced the risks considerably: specialhelp was providedby Bank Group staff to introduce Chinese projectstaff to international procurement procedures;MOE/SEdC createdFILO, which ensured smooth project implementa:ion; similarly,the project institutions created their own LPOs which handled local implementation arrangements; the CRC and IAP were successfulin providingFILO with the supportit needed to mobilizehigh quality technicaladvice; the civil works programwas completedearly enough to accomodatethe new importedequipment; and fellowsgoing abroad for study were able to gain proficiencyin foreign languagesbefore going abroad, as required. The projectas a whole was completed within the schedulewhich was made at appraisal. 6.3 A few ajstmn were made to the project. Two institutions were added to the originallist, and about US$5 million worth of books were procuredto complementthe other educationalquality inputs providedby the project. These adjustmentsenhancedthe value of the project. However,on the less positiveside, the mode for introducing new managementtechniqueswas altered from conductinglimited tryouts at selected"pilot" institutions to holdingnationalseminars. While the seminarsno doubt served a very useful purpose in raising awareness,they were not an exact substitutefor conducting actual tryoutswith the new managementtechniques. LessonsLearned 6.4 The Bank Group's participation in this projectcame at the start .Ap of the Bank Group's activities in China. It catalyzed an important infusion of technologyand equipment into a higher educationsystem which had been isolatedfor almost thirty years and devastatedby the CulturalRevolution. In human resourceterms, it facilitatedthe reentryof Chinese academics into the internationalscientific world. By putting the project in place so quickly (twelvemonths from initialcontact to Board approval),it helped to establishthe Bank Group's initialoperationalcredibilityin China. The projectalso created many precedentsand paved the way for projectsin other sectors. 6.5 The impleraentation of the project providedthe GOC and the Bank Group with a rich experiencebase from which to learn many useful lessons for use in future Bank Group financedprojects. Among these lessons are the following:  - 47 - (a) given the fact that this was the first Bank Group financedproject, the GOC made a wise choice in creatinga dedicatedproject implementation unit, FILO, rather than leaving implementationto the regular line organization of MOE/SEdC (para. 3.1); (b) the secondmentof staff from the LPOs to FILO facilitatedproject implementation(para. 3.3); (c) the careful selectionof expensive,sophisticated equipmentsuch as computersrequiredexplicitprioritization of the competinguses to which that equipmentwould be put. In the case of the computers, MOE/SEdC correctlyhave highest priorityto the instructionaluse (para. 3.8); (d) the use of ICB gave the COC significantcoqt savings in the purchase of sophisticated equipment (para. 3.9); (e) whenever sophisticatedequipment is to be imported,bidders should be requiredto includewithin their bids the itemizedcost of crtating in-countryservice centers,togetherwith a d2scriptionof their proposedmethods for doing so (paras.3.11 and 5.7): (f) the implementingagencies (MOE/SEdCand the project universitiesin this case) should provide adequateannual budget support for the operationand maintenanceof the newly importedequipment (paras. 3.12-3.13); (g) the CRC and IAP providedappropriate and coordinatedmechanismsfor the deliveryof high quality technicalassistance,relievingFILO and the Bank Group in large measure of the burden of supervising this critical part of this,first project. In spite of the high cost of these arrangements, they were justified in the case of this project because the higher educationsector in China needed special measures to reestablish contactswith the rest of the scientific world after a long period of isolation. Although such arrangements are probablynot necessary for all higher education projectsin China, it would be wise to adopt a similar arrangementin cases where "world class" technicaland professional expertisecombined with high level domesticacademicadvice is clearly needed (paras. 3.14-3.15); (h) the project demonstratedthat it is possible to multiply the use of fellowshipfunds by requiringfellows to seek financialsupport from their host universitiesbeyond the first year of study (para. 3.19). However, this requiresstudentswho are highly motivatedand the willingnessof host universities to accept Chinese studentswithout a guaranteedsource of funds for the duration of their study program; (i) the closely coordinatedintroductionof high quality technical assistance, new scientific,computingand testing equipment,and  - 48 - staff developmentcan bring about a rapid modernizationof universitycurriculaand researchin the sciencesand engineering (para. 5.7); (j) while national seminarsmay be an appropriate means for presenting informatio:.on new educationalmanagementtechniquesto large interested audiences,they should be seen as only a preliminarystep to trying out such techniquessystematically in "pilot" institutions (paras.3.21 and 5.8); (k) the return rate of overseas fellowson degree courses should be monitoredcarefullyby creatinga tracer system (para. 5.6); (1) the introductionof new technology,includingrelated technical assistanceand staff development, can bring about significant organizationalchange to host universities(para. 5.9); (m) the imperatives of implementinga large investmentproject, containingsignificantly new technologies in a relativelyshort time period,can faciLitatethe creationof new organizational units and processesin the education sector,includinghorizontallinkages among senior academicsfrom universities (para. 5.9); (n) providedfinancingis assured for operatingand maintainingnew equipment,and newly trained staff are given reasonable opportunities for promotion,the initial benefitswhich are being derived from the project should be sustainable(para. 5.11).  ANNEX 1 CHINA UNIVERSITY DEVELOPMENT PROJECT (LOAN 2021 AND CREDIT 1167-CHA) PROJECT COMPLETION REPORT Project Universities Province/City Sichuan University Sichuan/Chengdu Chongqing University Sichuan/Chongqing Xi'an Jiaotong University Shaanxi/Xi'an Lanzhou University Gansu/Lanzhou Zhongshan University Guangdong/Guangzhou South China Institute of Technology Guangdong/Guangzhou Wuhan Universitv Hubei/Wuhan Huazhong University of Science and Technology Hubei/Wuhan (Huazhong Institute of Technology) Fudan University Shanghai Shanghai Jiaotong Universitv Shanghai East China Normal University Shanghai Nanjing 'Universitv Jiangsu/Nanjing Nanjing Institute of Technology Jiangsu/Nanjing Zhejiang Universitv Zhejiang/Hangzhou University of Science and Technology of China Anhui/Hefei Xiamen University Fu,ian/Xiamen Shandong Universitv Shandong/Jinan Beijing Universitv Beijing Qinghua University Beijing Beijing Medical University (Beijing Medical College) Beijing Beijing Normal University Beijing Beijing Agricultural University Beijing Nankai University Tianjin Tianjin University Tianjin Dalian Institute of Technology Liaoning/Dalian Jilin University Jilin/Changchun Tongji University * Shanghai Shanghai Institute of Finance and Economics * Shanghai * These two universities were added to the oroject during the imolementation period.  CHINA UNIVERSITY DEVELOPMENT PROJECT (LOAN 2021 AND CREDIT 1167-CHA) PROJECT COMPLETION REPORT Civil Works and Furniture New construction Renovation Appratsal Actual Appraisal Actual Other buitding Furniture a2 Y OOO M2 y-OOO .2 y-OO *2 y OOO 2 Y'OOO (Y 000) Sichuan University 7,203 2,244 9,916 4.717 - - 756 95 95,327 20,187 60 Chongqing Universttv 2,716 1,632 10,341 4,703 1,907 306 3,597 198 106,462 21,094 143 Xitan Jiaotong University 8,575 2,428 8,241 3,663 3,470 5 3,487 350 107,712 25,491 114 Lanzhou Universtty 3,250 989 8,295 2,504 - - 670 110 96,579 17,253 570 Zhongshan University 7,800 2,652 9,130 5,610 3,009 530 1,500 136 175,970 41,986 240 South China Institute of Technology 494 439 2,018 1,018 8,475 959 2,000 1,283 105,767 20,357 504 Wuhan University 6,000 2,448 14,219 4,677 992 41 - - 122.752 24,334 - Huazhong University of Science ani Technology (Huazhong Institute of Technology) - - 3,600 1,980 2,875 714 7,062 610 23,843 35,160 160 Fudan University 8,570 4,060 20,304 9,840 490 112 - - 85,602 16,020 320 Shanghai Jtsotong University 1,302 337 19,801 5,703 5,867 745 8,000 640 106,656 47,382 256 East China Normal 11niversity 4,000 1,632 8,080 2,813 1,520 724 1,605 274 76,291 14,988 99 Nanjing University 12,982 4,508 9,563 4,951 1,100 306 2,500 350 136,176 33,065 205 Nanjing Institute of Technology 4,060 1,224 4,545 3,050 1,100 306 1,800 567 83,843 14,805 305 Zhejiang University - - 1,419 617 4,130 867 5,100 1,275 147,908 29,654 651 University of Science and Technology of China 6,700 2,489 7,304 4,460 500 275 3,000 1,000 98,000 23,500 100 Xiamen University 2,800 8)6 3,381 1,728 800 163 250 251 145,938 31,128 242 Shandong University 10,750 4,233 5,711 1,679 700 31 10,418 2,347 99,781 18,530 918 Beijing University 34,750 2 364 4,543 2,777 12,125 2,601 21,000 3,085 122,220 28,130 411 Qinghua University - - 5,007 3,732 4,780 2,213 7,428 1,180 165,803 40,700 132 Beijing Medical University (Beijing Medical College) 10,000 3,570 8,000 2,430 3,900 304 - - - - 1,160 Betjing Norsal University 12,990 3,162 4,040 1,080 800 61 2,100 620 94,164 21,030 300 Betjing Agricultural University 3,700 938 10,773 2,806 7,660 694 1,353 203 44,706 9,460 300 Nankai University 16,067 5,314 11,487 4,640 2,340 306 983 129 146,981 23,980 250 Ttanjin University 11,314 3,060 14,975 6,780 400 92 2,400 526 159,493 33,070 - Dalian Institute of Technology 11,200 4,086 8,500 4,300 92 133 1,201 210 121,486 26,560 150 Jilin University 3,535 1,295 9,230 4,500 3,560 541 1,000 320 59,290 12,430 128 Subtotal 26 universities 190,708 71,511 222,523 96,758 73,592 14,933 89,210 15,759 2,935,690 630,294 7.719 Tonling University - - 2,644 951 - - - - 121,380 22,448 61 Shanghat Institute of Finance and Economics - - 9,300 4,000 - - - - 27,681 6,912 250 Total 28 Universities 190,708 71,511 234,467 .01,709 73,592 14,933 89,210 15,759 3,084,751 659.654 8.030 Notes: (1) "New construction" Includes new construction and extension. (2) "Other buildings" include those buildings that were built before the oroject period, but not included in the appraisal report and annual progress reports as project buildings. (3) Scale factors: area in square meters; cost in thousands of yusan. t~~~~~~~~~~~~~~~~~~~  CHINA UNIVERSITY DEVELOPMENT PROJECT (LOAN 2021 AND CREDIT 1167-CRA) PROJECT COMPLETION REPORT Equipment and Books Imported equipment Local imported books Budget Contract Final pay equipment Budget ctual (US$-000) Set (US$S000) (US$S000) (Y'000) (US$S000) (US$S000) Sichuan University 4,350 282 4,831 4,676 1,831 170 143 Chongqing University 3,500 340 3,725 3,595 2,238 150 104 Xi'an Jiaotong University 7,000 590 7,270 7,020 1,106 200 179 Lanzhou Ulniversity 3,450 253 3,907 3,812 1,001 150 140 Zhongshan University 4,350 299 4,511 4,437 1,202 170 109 South China Institute of Technology 5,250 590 5,467 5,434 1,223 170 114 Wuhan University 4,350 238 4,478 4,284 L,467 170 146 Huazhong University of Science and Technology (Huazhong Institute of Technology) 5,250 553 5,445 5,495 950 170 183 Fudan University 7,000 1,157 7,465 7,341 1,470 200 186 Shanghai .JiaotongUniversity 7,000 474 7,367 7,241 3,071 200 167 East China Normal University 4,350 328 4,742 4,443 1,752 170 174 Nanjing University 7,000 313 7,325 7,201 1,262 200 200 Nanjing Institute of Technology 5,250 424 5,208 5,103 1,703 170 !60 Zhejiang University 5,600 416 5,951 5,760 2,418 170 161 llniversityof Science and Technology of China 6,150 265 6,433 6,206 1,014 170 177 Xiamen University 3,450 258 3,807 3,650 1,016 150 128 Shandong University 3,450 220 3,619 3,498 546 150 122 Beijing University 13,000 975 13,204 12,925 8,950 400 308 Qinghua University 13,000 560 13,552 13,648 8,119 350 368 Beijing Medical University (Beijing Medical College) 4,350 534 4,198 4,142 1,184 170 162 Beijing Normal University 4,800 204 4,862 4,636 2,829 170 142 Beijing Agricultural University 4,350 679 4,046 4,012 893 170 159 Nankai University 4,350 305 4,734 4,628 1,297 170 194 Tianjin University 5,800 411 6,114 5,993 1,391 170 112 Dalian Institute of Technology 5,250 204 5,429 5,373 1,071 170 173 Jilin University 5,250 419 5,473 5,292 1,621 170 142 Tonjing University 1,000 28 1,003 938 600 100 81 Shanghai Institute of Finance and Economics 250 3 232 220 702 50 53 SEdC 1,000 20 1,465 1,132 - - - Contingencies 13,012 - - - - 385 - Total 162,162 10,642 155,863 152,135 58,929 5,405 4,488 PA'  - 52 - ANU 4 CHINA PROJECT (LOAN 2021 AND CREDIT 1167-CHA) UNIVERSITY DEVELOPNENT PROJECT COMPLETIONREPORT Distribution of Equipment (US$UOOO) Analysis General Computer & testing Special- lab center lab ized lab Total SichuanUniversity 1,595 640 2,441 - 4,676 Chongqing University 1,027 832 459 1,277 3,595 Xi'anJiaotong University 1,368 2,058 1,204 2,390 7,020 LanzhouUniversity 1,594 692 1,526 - 3,812 Zhongshan University 1,200 763 1,905 569 4,437 South ChinaInstitute of Technology 1,467 1,778 775 1,414 5,434 WuhanUniversity 1,040 670 2,574 - 4,284 HuazhongUniversity of Scienceand Technology (Huazhong Institute of Technology) 1,652 1,951 1,068 824 5,494 Fudan University 2,752 1,490 2,074 1,025 7,341 ShanghaiJiaotongUniversity 1,921 2,085 689 2,546 7,241 East ChinaNormalUniversity 1,659 1,147 1,637 - 4,443 NanjingUniversity 1,469 2,119 3,129 484 7,201 NanjingInstitute of Technology 1,067 1,772 1,002 1,262 5,103 Zhejiang University 1,105 1,519 3,136 - 5,760 University of Scienceand Technology of China 1,246 1,674 3,286 - 6,260 ZiamenUniversity 1,212 657 1,781 - 3,650 Shandong University 1,258 632 1,608 - 3,498 BeijingUniversity 5,314 2,116 2,696 2,799 12,925 QinghuaUniversity 2,043 2,450 2,155 7,000 13,648 BeijingMedicalUniversity (BeijingMedical College) 1,348 602 2,192 - 4,142 BeijingNormalUniversity 1,579 630 2,427 - 4,636 BeijingAgricultural University 1,834 610 1,568 - 4,012 NankaiUniversity 1,812 650 2,166 - 4,628 TianjinUniversity 1,769 2,066 1,552 606 5,993 DalianInstitute of Technology 1,787 1,952 - 1,634 5,373 JilinUniversity 2,009 1,533 1,750 - 5,292 Tonjing University 306 - 632 - 938 Shanghai Institute of Finance and Economics 32 188 - - 220 SEdC 382 750 - - 1,132 Total 44,847 36,026 47,432 23,830 152,135 Percentage 29.48 23.68 31.18 15.66 100.00 Appraisalestimate(withcontingency) 57,465 34,125 44,357 32,856 168,803 Notes: (1) At implementation,onlyUS$162,562,000 were budgetedfor equipmentprocurement, the rest being transferredfor book purchase and fellowships. (2) Becauseof fluctuation of the exchangerate betweenSDR and US dollars,the actualdisbursement for equipment procurement was loweredfrom US$162,162,000 to US$152,135,000.  - 53 - ANNEX5 CHINA CHINESE REVIEW COMMISSION Terms of Reference 1. The Chinese Review Commission(CRC) is established and authorizedby the Ministryof Education(MOE) to review or advise the followingaspects: (a) The teaching/researchprograms (especiallypost-graduate education) and improvementplans in the fields related to the project in projectuniversities; (b) Teacher trainingplans (especially trainingabroad) and inter- nationalacademicexchangeprogramsin the fields related to the project in projectuniversities; (c) The construction and equipmentpurchasingplans for laboratories (includingthose for basic courses),computerand analyticaltesting center related to the fields which are strengthenedunder the project in projectuniversities; and (d) Plans and measures for strengthening teachingand administrative managementin project universities. 2. CRC will examineat regular time the implementationwork and project progressof projectuniverqities and submit reports or recommendationsto MOE in time. 3. CRC, authorizedby MOE, will inspectproject universitiesat regular time jointlywith members of the InternationalAdvisoryPanel (IAP) to study and discussproblemsof various kinds, and fulfill the tasks mentionedabove with the assistanceof IAP. 4. CRC will submit to MOE the annual work report on the discipline bases and comprehensivework report at mid-term (June 1983) and completion (June 1985) periods,send copies of the reports to the World Bank for record. 5. CRC will act as advisorsor representatives of the Loan Office of MOE if necessaryto visit foreign countries,negotiatewith the World Bank on related issues and participate in related internationalmeetings. 6. Chairman,Vice-chairmen and members of CRC will devote certain period of time to carryingout activitiezand tasks mentionedabove. Their universities should make arrangementsnecessaryfor them to perform their duty.  - 54- ANNEX 6 Page 1 CHINA INTERNATIONAL ADVISORYPANEL Terms of Reference AdvisoryPanel is being establishedto assist 7-1 The International advise the ProjectUniversitiesin carryingout their respectiveparts of the projectand the Chinese Review Commissionin its work during the period July 1, 1982 to June 30, 1986. 1. The International AdvisoryPanel consistsof six members includingat least one each from the United States,Great Britain,France,West Germany and Japan. The United States'member will serve as Chairmanof the Panel. The other five members will have the status of Co-Chairmenof the Panel. 2. The Chairmanwill be a senior AmericanUniversityadministrator with specializedknowledgeand experiencein the fields of scienceand engineering, preferablywith experiencein universitydevelopmentprogram. Each of the other Co-Chairmenwill be an expert in one of the fields Physics,Chemistry, Biology,Computer Scienceand Application, and Engineering, selectedso that specializedknowledge in each of the field is providedby the Panel. 3. The AdvisoryPanel is responsibleto the Leading Cadre in charge of the implementationof the Projectand Planningand Developmentin the Ministry of Education. Its operationswill be _onductedin the light of an overall plan formulatedby the Panel subjectto approvalby the Ministryof Education. 4. The Panel is responsiblefor: (a) Familiarizingitself with the educational programsboth at the undergraduateand the graduatelevel, and with the research programs,scienceand engineeringrelated to certain specified specializationsof the Project in the 26 universitiesdesignatedto participatein the Project. (b) Working in conjunction with the Chinese Review Commission,and with the Administrations of the designateduniversities, the Panel will assist and advise in: (i) the selectionof the teachingand researchequipmentto be procuredwith the project funds. (ii) the updatingof undergraduate curriculaand graduateprogram developingappropriate researchprograms for one or two select specialitiesrelated to the Project,and the managementof the computerand analyticaltesting centers, initiallyin nine selecteduniversities, with later extensionto other designateduniversities.  - 55 - ANNEX 6 Page 2 (iii) the development of university faculty in all the designated universities through the selection and placement of fellows for study as specified in the Project. (iv) the enhancement and improvement of management at the insti- tutional level in five selected universities, through improved record keeping and more comprehensive accounting practices; and at the ministerial level through improved education statistics, including procedures for the collection of statistical data, more rational methods of data processing and compilation, more comprehensive accounting practices, and enhanced monitoring and evaluation capacity. 5. The Panel is also responsible for working with the Chinese Review Commission and the administrations of the designated universities in the selection of subject area specialists for short term technical assistance programs as required. Specialists will be selected by Panel Co-Chairmen and will be recommended by the Advisory Panel to the Ministry of Education for approval. The specialists will also be recommended by the Chinese Review Commission to the Ministry of Education for approval. In the selection of specialists, the Panel and the Commission should consult with each other. Specialists will advise on educational and research programs and will conduct lectures and seminars in their fields of competence. 6. The Panel will assist the Ministry of Education in extending the achieve- ments of the project to other appropriate universities through assistance in organizing seminars, workshops, and written reports. 7. The Panel members will be willing to give lectures and conduct seminars in their respective fields of specialization, as appropriate. 8. The Chairman will be prepared to devote six months per year, including three months per year, more or less, in the People's Republic of China, divided between two semi-annual visits. The Co-Chairman will be prepared to devote three months per year, more or less, including 1-2 months' stay in the People's Republic of China. The Panel will also meet in Washington, Beijing, or in such other places, if necessary, as may be convenient in order to develop its overall agenda, to prepare reports, and to conduct such other business as may be required in the execution of its responsibilities. 9. The Panel will submit a report of its activities to the Ministry of Education and an appraisal of the Project's progress at the end of each calendar year beginning in December 1983. More comprehensive reports on the Project will be submitted to the Ministry of Education in December 1983 the Panel, the Chinese Review commission, the Ministry of Education, and the World Bank (the International Bank for Reconstruction and Development and the International Development Association) will assess the operation of the Panel with an opportunity to modify its operation as appropriate and desirable.  - 56 - INTERNATIONAL ADVISOR'Y PANEL PaNe 1 of 4 CHINE' E tN,IVER5ITND EVELOPME\T 7'RO!EC- May 6. 1986 The Honorable Li Peng Vice Premier and ChairmanState EducationCommission The People's Republicof China Beijing. People's Republ c of China Door Mr. Vice Premier: We have the honor t- report to you on the first Chinese Univorsity Development Project, supported by a $200 million (U.S.) loan credit from the World Bank. We have sorked togetherover the past four years in our respectiveroles as Chairmanof the International Advisory Panel and as Chairmanof the Chinese Reviev Commissionfor the Project. The report ve present to you here is the joint and unanimous report of the Pane3 and the Commission. The Project provided28 Projectuniversities vith some $155 aillion of researchand teachingequipmort,some of it the finest in the vorld, sent some 2400 Chinoes visiting scholarsand post graduatestudentsfor study abroad and brought some 400 foreign ezports foi short visits to Chinese universities. Tho help providedby this loan has been essential for the rapid strengthening of Chinese universitysience and engineering educationand for the rapid moveoment of Chinese university science and engineeringresearchtoward world-clcs standards. The Loan Project achievedthe three objectivesspecifiedvhen it vas undertaken: 1) it expanded the enrollmentin the Projectuniversities. 2) it Lzprovedthe quality of both teachingand researchand 3) it imp- roved the quality of universitymnagement. Theseachievements provide a sound baso for continuinginvostmentin the development of science and engineeringfields vital to China's future. We wish to commend the former Ministryof Educationfor the recent reforms in Chinese higher educationand for guiding the Loan Prcject to its current successfulstate. In order to reap the benefitsof this investmentthere are a number of points vhere your continuedsupport and interestare required: 1. The future of any society depends on its young people, and opportunitiesfor the developmentof young universityfaculty members are  - 57 - ANNEX 7 Page 2 of 4 essential. Cbina is fortunateto have a body of young people. increas- ingly educated at a high level. and dedicatedto careers in teachingand research. These young people must be given evezy encouragement to improve their skills and insightsand to have their abilitiesand their dedication rewardedby early promotionsand by opportunities for continuedstudy and developmentat home and abroad. 2. The excellentteachingand researchfacilities vhich are now in place in the Projectuniversitiesroquirecontinuedsupport. This support includesthe development of highly trained technicians, the provisionof support facilitiesand operationssuch as electronicshops, glessblowing shops. machine shops. instrument-making shops and consumablesupplies. These facilitiesand oporationsare expensivebut they are essentialfor the success of the teachers and investigatorswith their fine equipment. 3. Provision must be made for the maintenanceof the high quality researchand teachingequipmentand for its replacement on a regular bsis. Advancedequipsentis necessarilycomplex and its complexitymakes it subject to salfunction,no matter how great the quality of its con- struction. To make the most of the large investmentthere must be pro- vision of means to repair and modify the equipmenton a regular basis. Some of the requiredservice can be providedby Chinese technicians trained for the purpose,and some will require serviceby the *mu- factu-r-Lbr- To -- nrovisionof spareparts,both at the universities and in central locations. It also means the development of nationalservice centers for equipmentwhich is used at many researchlocations. It is inevitablethat the finest equipmentwill become obsolete, and must be replaced,as the researchfield progresses. Today's advanced equipmentis yesterday'sresearchfrontier. 4. Means aev requiredto fund basic and applieduniversityre- search. Universitiesare turning to industrywhere financialsupport is availablein *xehangefor undertakingtesting and simple development worik. It is importantfor universitiesto build close ties to industry but it is wrong, in our opinion,for the universities to use their ad- vanced equipmentfor routine testing or simple development work. This is especially true for the key SCDC univorsities where support of fundamental research is vital to the health of the entire Chinese researchand development enterprise. There are isportant applied research problems which must be solved as China continues its rapid development, and it is importantfor key  - 58 - ANNEX 7 Page 3 of 4 universitiesto work with industryin identifying those problems. and doing the long-rangeresearchnecessaryfor their solution. We believe that careful attentionmust be paid to this problem so that the univer- sities vill not waste their precious equipmentand human resourceson short-range. routine problems. While the universitiesseek to develop stable financialsupportfrom industryand other sources.it will be importantto continue central uabrellasupport of both teachingand researcbin order to consolidate the gains achievedwith the Loan Project. 5. There is great opportunityfor the rapidly-developing univer- siti*s to cooperatewith the Chinese Academy of Science Institutes. Such cooperationcan provide opportunities for the universitiesto have access to the fine equipmentin the Institutesand it can provide the Institutes with access to some of the most advancedequipment anywherein the world. More importantly.it givos the people involvedthe opportunityto work together,with mutual stimulation. It gives an opportunityfor Institute scientists to superviseadvanced research by universitypost-graduate studentsand to gain the stimulationthat comes from working with someof the ablest young people anywhere. 6. We recommendthat China take every opportunityto participatein science and engineeringresearchat an internationa level. This will give the world the opportunityto learn about the high quality researchin Chineseuniversities.and it will give Chinese scientistsopportunities to have their work judged by internmAional standards. This international participation can come about through ezchangeof scholarsand students, through attendanceat international conferences, throughpublicationin international journalsand through the cultivationof friendships and collaborations with scientistsand engineersabroad, once the collabor- ations have been establish:d. 7. As this developmentunfolds, it is importantto emphasize that the quality of educationand researchis more importantthan the quantity. Quality includes broadeningthe curriculawhich are now narrow. and strengthening the fundamental base underlyingmore specializedlearning. It is important that the curricula remain up-to-datewith evolvingscience and technology, and that engineering theory be intograted with engineering practice. Particularly important is stisulation of the creative and innovative spirit, both in teachingand in research  - 59 - ANNEX 7 Page 4 of 4 Through the World Bank Loan Project Chinese science and engineering universities have taken a big step forward,a step that would have beoen denied to them without the Project. The Ministry of Education was quick to seize the oppor,.unity and the State Education Coamisaion is promoting the continued health of the Project. Given the necessarycontinued support and encouragement. these Projectuniversities, and the other univorsities who will cooperate with tbem and learn from them, will move rapidly into their proper place in the international world of quality educationand research. We hope that ou work in guiding the Project,and that our report on the Project.will be useful to you in your all-importanttask of guiding China's future devotopment. Sincerelyyours. Dale R. Corson Chairman International AdvisoryPaa&el Zhang Guan tou Chairman.Chinese Review Commission  CHINA UN4IVERSITY DEVELOPMENT PROJECT (LOAN 2021 AND CREDIT 1167-CHA) PROJECT COMPLETION REPORT Subject Specialists by Institution and Discipline Elec- Engi- Computer Manage- Physics tronics neering science Chemistry Biology ment Total Sichuan University 4 1 1 2 2 2 - 12 Chongqinrg University - - 6 1 - - - 7 Xi'an Jiaotong University 2 - 14 3 - - 1 20 Lanzhou University 2 - - 1 4 3 - 10 Zhongshan University 3 - - 1 2 2 - 8 South China Institute of Technology 1 1 7 4 - - - 13 Wuhan University I I - 3 5 .2 1 13 Huazhong University of Science and Technology (Huazhong Institute of Technology) - 1 5 3 - - 5 1' Fudan University 10 1 - 3 3 4 5 26 Shanghai Jiaotong lJniversity 5 2 8 3 2 1 - 21 o East China Normal University 3 - 2 2 1 - - 8 Nanjing University 6 2 - 3 5 4 8 28 Nanjing Tnstitute of Technolog" 2 2 2 3 - - - 9 Zhejiang University 2 - 2 4 5 - - 13 University of Science and Technology of China 5 1 1 1 3 - - 11 Xiamen University 2 - 1 7 2 - - 12 Shandong University 3 1 - 1 1 - - 6 Beijing University 6 1 3 4 6 7 4 31 Qinghua University 2 3 19 6 2 1 3 36 Beijing Medical University (Be-jing Medical College) - - - - - 8 - 8 Beijir.g Normal University 8 - - 3 - 2 - 13 Beijing Agricultural Universit, - - - - - 8 - 8 Nankai University 2 - - 2 2 3 - 9 Tianjin University 3 1 6 3 2 - - 15 Dalian Institute of Technology 1 - 9 4 3 - - 17 Jilin University 4 1 1 3 5 - - 14 Tonjing University - - 3 - - - - 3 Shanghai Institute of Finance and Economics - - - - - - 5 5 Total 77 19 87 64 61 50 32 390 _  - 61 - ANNEX9 CHINA UNIVERSITY DEVELOPY(NEr PROJECT (LOAN 2021 AND CREDIT 1167-CHA) PROJECT COMPLETIONREPORT Subject Specialistsby Institutionand Country of Origin USA UK DFR Japan Canada France Others Total Sichuan University 5 2 3 - - - 2 12 Chongqing University 3 1 2 - I - - 7 Xi'an Jiaotong University 8 6 3 2 1 - - 20 Lanzhou University 7 1 - 1 I - - 10 Zhongshan University 4 - - 2 2 - - 8 South China Institute of Technology 4 5 1 - - - 3 13 WuharnUniversity 4 4 1 3 - - 1 13 Huazhong University of Science and Technology (Huazhong Institute of Technology) 9 1 2 1 1 - - 14 Fudan University 20 - - 3 1 1 1 26 Shanghai Jiaotong University 10 2 1 8 - - - 21 East China Normal University 7 - 1 - - - - S Nanjing University 15 5 - 3 1 1 3 28 Nanjing Institute of Technology 2 3 - 2 - _ 2 9 Zhejiang University 7 1 1 - - 2 2 13 University of Science and Technology of China 5 4 - - - 1 1 11 Xiamen University 7 3 2 - - - - 12 Shandong University 3 2 - - - - 1 6 Beijing University 13 2 3 3 1 1 8 31 Qinghua University 12 9 7 - 1 2 5 36 Beijing Medical University (Beijing Medical College) 4 - - - - - 4 8 Beijing Normal University 6 1 - 4 1 - 1 13 Beijing Agricultural University 4 - - 2 1 - 1 8 Nankai University 6 2 - - 1 - - 9 Tianjin University 8 2 2 2 - - 1 15 Dalian Instituteof Technology 4 5 3 2 1 - 2 17 Jilin University 7 3 - 2 1 1 14 Tonjing University 1 - 2 - - - - 3 Shanghai Institute of Finanice and Economics 5 - - - - - - 5 Total 190 64 34 40 14 9 39 390  CHINA UNIVERSITY DEVELOPMENTPROJECT (LOAN 2021 AND CREDIT 1167-CHA) PROJECT COMPLETION REPORT Fellows Sen. to Various Countries by Institution USA Canada UK Japan DFR France Others Total Returned Sichuan University 39 9 4 5 - - 2 59 13 Chongqing University 37 10 9 5 3 4 3 71 20 Xi'an Jiaotong University 60 16 23 5 2 3 4 113 63 Lanzhou University 55 15 5 6 1 2 2 86 42 Zhongshan University 62 11 5 3 - 4 - 87 47 South China Institute of Technology 71 14 1 1 1 - 4 92 37 Wuhan University 56 9 7 14 2 3 2 93 56 Huazhong Universityof Science and Technology (HuazhongTnstitute of Technology) 64 5 5 11 8 6 - 99 51 Fudan University 52 11 9 1 1 1 10 85 42 ShanghaiJiaotong University 83 15 5 3 5 1 - 112 20 1 East China Normal University 56 11 3 3 3 2 3 81 37 a Nanjing University 72 8 5 25 8 6 8 132 77 ' Nanjing Instituteof Technology 43 10 24 2 1 - 5 85 29 Zhejiang University 80 15 15 6 5 4 7 128 58 University of Science and Technology of China 63 13 8 6 3 - 6 99 27 Xiamen University 64 16 2 3 2 1 - 92 47 Shandong University 31 14 3 4 2 1 4 59 12 Beijing University 55 24 19 8 6 9 13 153 133 Qinghua University 102 35 17 15 17 3 11 204 157 Beijing Medical University (BeijingMedical College) 78 14 5 7 - 6 11 121 76 Beijing Normal University 75 9 3 8 1 - 3 99 60 Beijing AgriculturalUniversity 37 13 7 10 - 1 4 72 45 Nankai University 56 17 2 4 6 1 1 87 42 Tianjin University 67 19 I 10 10 7 - 7 120 50 Dalian Instituteof Technology 42 8 10 15 7 - 11 93 41 Jilin University 69 8 1 16 4 - 5 108 61 Tonjing University 13 2 3 5 11 - - 34 26 Shanghai Instituteof Finance and Economics 5 3 1 2 - I - 12 7 Total 1,607 362 209 203 106 59 130 2,676 1,376 Note: Among the returned fellows, 39 are of degree study, 1,134 are of advanced study, 203 are of short-term N study groups. o  CHINA UNIVERSITY DEVELOPMENT PROJECT (LOAN 2021 AND CREDIT 1167-CRA) PROJECT COMPLETION REPORT Fellows Sent Abroad by Institution and Discipline Engineer- Computer Manage- Physics Chemistry Biology Mathematics Ing science Language uent Others Total 16 13 7 8 - 10 4 - 1 59 Sichuan University - 5 71 8 1 - 1 40 13 3 Chongqing University 3 - 113 56 1 3 5 20 20 5 Xi'an Jiaotong University - 14 86 26 16 8 10 1 7 4 Lanzhou University 8 - 37 87 18 9 6 5 - 4 Zhongshan I1niversity 25 92 16 8 - - 20 19 4 - South China Institute of Technology 9 2 10 93 21 17 13 8 - 13 Wuhan University Huazhong University of Science and Technology 6 1 5 99 35 1 2 2 29 18 (Huazhong Institute of Technology) 7 12 85 25 10 6 3 6 12 4 Fudan University - 16 112 8 4 1 8 46 25 4 Shanghai Jiaotong University 1 17 81 9 11 7 9 4 10 13 East China Normal University 4 47 137 23 19 7 11 - 16 5 Nanjing Untversity - 1 85 16 1 2 2 37 21 5 Nanjing Institute of Technology 5 20 128 41 13 2 4 21 18 4 Zhejiang University 2 3 99 40 15 6 5 5 21 2 University of Science and Technology of China 1 23 92 13 19 13 6 - 6 11 Xiamen University 2 1 - 59 27 3 8 9 - 9 Shandong University 47 153 41 16 15 12 - 11 10 1 Beijing University - 30 204 64 15 5 6 51 24 9 Qinghua University Beijing Medical University (Beijing Medical I 5 1 96 121 College) 2 10 6 - - 30 12 6 3 - 3 12 1 32 99 Beijtng Normal University 6 1 57 72 - 5 1 1 - 1 Beijing Agriculttural University 87 19 26 5 9 2 10 8 1 8 Nankai University 5 1 5 120 29 20 - 3 45 12 Tianjin University 8 3 93 14 10 - 5 30 16 7 Dal.an Institute of Technology 7 - 4 108 31 28 4 17 - 17 Jilin University 1 3 34 3 - - I 15 5 6 Tonjing University 4 4 12 Shanghai Institute of Finance and Economics - - - - - 1 3 631 303 133 153 372 343 121 45 525 Total "Others" include medical, agriculture, geography, psychology, geology, etc., as well as short-term study groups (205 persons of 66 Note: _ groups).  CHINA UNIVERSITY DEVELOPMENT PROJECT (LOAN 2021 AND CREDIT 1167-CHA) PROJECT COMPLETION REPORT Distribution of Expenditure in Foreign Exchange (USV0O0) Equipment Books Fellowships Total Sichuan University 4,675.7 143.3 706.8 5,525.7 Chongqing University 3,595.1 103.9 901.3 4,600.2 Xi'an Jiaotong University 7,020.3 179.0 1,130.0 8,329.3 Lanzhou University 3,811.8 139.6 799.3 4,750.7 Zhongshan 11niversity 4,436.9 109.4 818.0 5,364.3 South China Instituiteof Technology 5,433.6 113.5 1,081.9 6,629.1 Wuhan University 4,284.0 146.6 786.3 5,216.9 Huazhong University of Science and Technologv (Huazhong Institute of Technology) 5,495.4 182.9 1,130.6 6,808.9 Fudan University 7,340.5 186.5 733.2 8,260.2 Shanghai Jiaotong University 7,240.9 166.9 1,275.0 8,682.8 East China Normal University 4,443.3 173.6 736.0 5,352.9 Nanjing University 7,200.9 199.7 963.3 8,363.9 Nanjing Institute of Technology 5,103.3 159.7 1,101.0 6,364.0 Zhejiang University 5,760.2 161.1 1,036.9 6,958.2 University of Science and Technology of China 6,205.7 177.2 805.0 7,187.9 Xiamen University 3,650.4 127.9 789.6 4,567.8 Shandong University 3,497.6 121.7 568.5 4,187.8 Beijing University 12,925.3 305.2 949.7 14,183.2 Qinghua University 13,648.1 367.9 1,461.9 15,477.9 Beijing Medical University (Beijing Medical College) 4,141.8 162.3 792.5 5,096.6 Beijing Normal University 4,636.3 142.4 705.8 5,484.6 Beijing Agricultural University 4,011.7 158.9 613.6 4,784.2 Nankai University 4,628.1 194.3 762.1 5,584.5 Tianjin University 5,973.1 112.1 1,307.5 7,412.8 Dalian Instit,-te of TechnoLogy 5,372.6 173.5 1,031.1 6,577.2 Jilin University 5,291.8 142.2 893.3 6,327.3 Tonjing University 937.8 81.2 281.3 1,300.3 Shanghai Institute of Finance and Economics 220.2 53.3 86.2 359.6 SEdC 1,132.3 - - 1,132.3 Study tour - - 798.2 798.2 Specialist services - - - 5,272.3 Total 152,134.8 4,488.6 25,046.0 186,941.7