China - Planning Support and Special Studies Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 15825 IMPLEMENTATION COMPLETION REPORT PEOPLE'S REPUBLIC OF CHINA PLANNING SUPPORT AND SPECIAL STUDIES PROJECT (Cr. 1835-CHA) June 26, 1996 Country Operations Division China and Mongolia Department East Asia and Pacific Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit: Yuan (Y) April. 1987 December, 1994 US$ 1= Y 3.71 US$ 1 = Y 8.70 Y1 =$0.27 Y I =$0.115 FISCAL YEAR January 1 to December 31 ABBREVIATIONS AND ACRONYMS AAPRC Audit Administration of People's Republic of China CICC China Investment Consulting Corporation CIECC China International Engineering Consulting Corporation MOF Ministry of Finance NPTC National Planners' Training Center PBC People's Bank of China PRC People's Republic of China PSSSP Planning Support and and Special Studies Project RMB Renminbi SPC State Planning Commission TATD Technical Assistance and Training Division TCC I Technical Cooperation Credit I TCC II Technical Cooperation Credit II  FOR OFFIaAL USE ONLY IMPLEMENTATION COMPLETION REPORT PEOPLE'S REPUBLIC OF CHINA PLANNING SUPPORT AND SPECIAL STUDIES PROJECT (Cr. 1835-CHA) Table of Contents Preface Evaluation Summary Project Implementation Assessment 1 A. Project Objectives and Evaluation 1 B. Achievement of Project Objectives 2 C. Implementation Record and Major Factors Affecting the Project 4 D. Project Sustainability 6 E. IDA Performance 7 F. Borrower Performance 7 G. Assessment of Outcome 8 H. Future Operations 8 I. Key Lessons Learned 8 Statistical Annexes Table 1: Summary of Assessments 10 Table 2: Related Bank Loans/Credits 11 Table 3: Project Timetable 12 Table 4: Credit Disbursements -- Cumulative Estimated and Actual 12 Table 5: Key Indicators for Project Implementation 13 Table 6: Key Indicators for Project Operation 13 Table 7: Studies Included in Project 14 Table 8a: Project Costs 15 Table 8b: Project Financing 15 Table 9: Economic Costs and Benefits 15 Table 10: Status of Legal Covenants 16 Table 11: Compliance with Operational Manual Statements 16 Table 12: Bank Resources: Staff Inputs 16 Table 13: Bank Resources: Missions 17 Annexes: A. Mission's Aide-Memoire (December 16, 1994) 18 B. State Planning Commission's Contribution to Implementation Completion Report 23 C. Subproject Implementation Summaries 29 This documnent has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed wiLhout World Bank authorization.  I  i IMPLEMENTATION COMPLETION REPORT CHINA PLANNING SUPPORT AND SPECIAL STUDIES PROJECT (Cr. 1835-CHIA) PREFACE This is the Implementation Completion Report (ICR) for the Planning Support and Special Studies Project in the People's Republic of China, for which Credit 1835-CHA in the amount of SDR 15.9 million (US$20.7 million equivalent) was approved on June 30, 1987, and made effective on December 11, 1987. The Credit was closed on December 31, 1994, after two years of extension. Final disbursement was made on January 26, 1995, at which time SDR 14.4 milhon (US$20.0 million equivalent) had been disbursed. A balance of SDR 1,532,670 (approximately US$2,260,075) was canceled. The ICR was prepared by Natasha Beschorner and David Rix, Country Operations Division, China and Mongolia Department, East Asia and Pacific Region, and reviewed by Klaus Rohland, Division Chief, and Juergen Voegele, Acting Project Advisor. The Borrower provided comments which are included as an annex to the ICR. The ICR is based on material in the project file and interviews with IDA and Borrower staff involved in project implementation. The Borrower's views on project implementation are reflected in the mission's aide-memoire (Annex A), in the Borrower's contribution to the ICR (Annex B), and in comments on the draft ICR. Borrower agencies responsible for implementation of sub-projects under the Credit provided individual evaluations of sub-project execution (Annex C).  I  - ii - IMPLEMENTATION COMPLETION REPORT CHINA PLANNING SUPPORT AND SPECIAL STUDIES PROJECT (CR. 1835-CHA) EVALUATION SUMMARY Project Objectives 1. In the 1980s, the People's Republic of China (PRC) began to undertake major reforms in macroeconomic policy and planning. The Government requested IDA support for developing the capacity of key institutions to implement these reforms. The Planning Support and Special Studies Project (PSSSP), approved in June, 1987, was developed in response to this request. 2. The PSSSP was designed to assist the PRC in strengthening its development policy and planning capability; in preparing and implementing intersectoral and innovative technical assistance projects; and in strengthening key institutions responsible for economic and financial reform. It financed a series of individual sub-projects, each with its own specific objectives. The Credit consisted of two components: (a) a line of credit for training, technical assistance and equipment to improve the efficiency of economic management agencies; and (b) the financing of consultant services, equipment and training programs for the execution of major sectoral studies. Implementation was handled jointly by the State Planning Commission (SPC) and the Ministry of Finance (MOF). Sub-project agencies were responsible for implementation of individual sub-projects. Institutional co- ordination presented a continual challenge for IDA and the Borrower. 3. The broad project objectives reflected IDA's country assistance strategy for the late 1980s. This strategy aimed to help China remove critical constraints in key sectors of the economy, particularly energy, transport, industry, agriculture, human resources development and technology transfer. The PSSSP's objectives were to promote the effective use of external resources through improved project planning and selection. The flexibility of project design enabled modification and inclusion of a range of sub-projects in priority areas, as the nature of the demand for institutional development assistance and type of policy advice evolved during the project's lifetime. Implementation Experience and Results 4. The project achieved a good balance among the three primary objectives. Seven sub-projects supported the strengthening of development policy and planning capabilities. They enhanced the technical expertise of agency staff, and strengthened ties between domestic and international institutions. The results and findings were taken into account in national planning decisions. Five intersectoral and innovative technical assistance programs were successfully implemented. In addition to their immediate practical benefits  - iii - in specific sectors, these sub-projects strengthened the capacity of the implementing agencies in research and analytical techniques, and broadened contacts with international institutions. They fostered the development of core groups of technical personnel. A further seven sub-projects focused on strengthening key planning institutions in economic and financial reform. These sub-projects exposed agency staff to international policies, procedures and skills, and developed their expertise in project management and preparation. In some cases, joint participation in seminars or study tours facilitated inter- agency cooperation and resulted in the establishment of formal working relations. One sub-project was canceled at the Government's request. 5. The sustainability of the project is likely to be maintained. The experience which the participating agencies acquired in the implementation of the project resulted in further borrowing for technical assistance. Strengthening institutional capacity has also facilitated the implementation of subsequent investment projects. Some sub-projects have led to further operations (see Annex C). The findings and recommendations of specific studies, such as the Yellow River Basin Economic Modelling Study, and the Study of National Flood Control and Dispatch System, have had a marked impact on development of subsequent investment operations. 6. The original Credit amount was SDR 15.9 million (US$20.7 million in 1987). A total of US$20 million was disbursed. The final disbursement was made on January 26, 1995, 25 months after the original closing date of December 31, 1992. Disbursements proceeded slowly in the first three years owing to delayed implementation of agreed sub- projects, over and under-estimation of funding requirements, late approval of additional activities and funding under existing sub-projects, and delayed formulation and approval of new sub-projects. The total foreign exchange cost of the project was US$20.0 million. Local project cost data are not available. 7. In the first two years of implementation, sub-project progress was somewhat uneven. Four sub-projects could not be completed and one was subsequently canceled. By July 1990, in the third year of implementation, only 30% of Credit proceeds had been disbursed. By the Credit closing in December 1994, about 85% of Credit proceeds had been disbursed. 8. The principal factors affecting project implementation, and therefore the timely achievement of project objectives were: (a) the fluctuating US dollar/SDR exchange rate, resulting in over-allocation of resources in US dollar terms to individual subprojects, and reduction of disbursements in SDR terms; (b) the impact of austerity and stabilization measures undertaken in China in the late 1980s; (c) the political events of 1989 which led to a hiatus in international contacts; (d) reorganization of government ministries and agencies; and (e) problems of coordination between SPC, MOF and subproject implementing agencies. Erratic reporting impeded consistent project monitoring. Implementation was constrained at times by the lack of a detailed implementation schedule and particularly by the failure to establish a clear institutional co-ordination and sub-project monitoring mechanism at the outset.  - iv- 9. IDA's performance was generally satisfactory. This was an innovative credit designed to involve a large number of agencies. The project was, however, highly demanding for IDA staff involved in project monitoring and supervision, particularly in the evaluation of sub-project proposals. IDA could have provided, in the early stages of project implementation, more guidance to subproject implementing agencies in procurement and consultant hiring, and in preparation of terms of reference. IDA attempted to remedy the problems of slow disbursement and irregular reporting by preparing new guidelines for progress reporting and proposal preparation with SPC. In addition, IDA demonstrated flexibility in agreeing to project extensions and approving new sub-projects in order to allocate undisbursed funds most effectively, and was highly responsive to the government's changing priorities. 10. The overall performance of SPC and MOF was satisfactory. However, it was not consistent, in particular because of SPC's limited experience in project management and international procurement procedures. IDA underestimated this lack of experience. The wide range and variety of sub-projects, and the large number of implementing agencies involved, made project co-ordination demanding for both SPC and MOF. Compliance with reporting requirements was erratic and the quality of reporting extremely variable. The formulation of sub-project proposals was particularly inconsistent. SPC and MOF should have taken a more proactive role in progress monitoring, provision of workplans and progress reports. Financial co-ordination between MOF and sub-project implementing agencies was often weak, particularly with regard to information on funding availability. The Borrower's performance improved in the course of project implementation. Summary of Findings, Future Operations and Key Lessons Learned 12. Notwithstanding some of the practical problems of implementation, overall project outcome is rated as satisfactory. The project achieved its primary objectives, and contributed to the capacity-building of participating agencies, and increasing technical expertise in specific sectors. Sub-project implementing agencies gained experience in project management, consultant hiring, procurement, work planning, progress monitoring and reporting, even if performance was erratic. 13. The PSSSP formed part of a group of umbrella technical assistance projects approved and implemented from 1983 to the present. More recently-approved and pipeline technical assistance operations are focusing on specific sectors: supporting financial sector reform, environmental management, economic law reform, and fiscal reform. 14. The experience of PSSSP provides four principal lessons for effective implementation of technical assistance projects in China. The first is the need to designate a single entity with responsibility for project implementation, and to define monitoring and accountability mechanisms and reporting requirements at the outset. IDA should take the lead in this regard. Second, clear definition of sub-projects and an implementation  schedule at the time of appraisal is more resource-efficient. A line of credit approach allows for flexibility, but is highly staff intensive. A sub-project approach also helps to maintain a balance of activities between overseas training and in-country seminars, and reduces bias towards overseas training and equipment purchase. Third, participating agencies should provide a thorough assessment of training needs and likely staff deployment early in the implementation process. Finally, both IDA and the co-ordinating agencies should pay greater attention to assisting sub-project implementing agencies in following IDA guidelines on procurement, particularly of international consultants.  IMPLEMENTATION COMPLETION REPORT CHINA PLANNING SUPPORT AND SPECIAL STUDIES PROJECT (CR. 1835-CHA) PROJECT IMPLEMENTATION ASSESSMENT Background 1. In the 1980s, the People's Republic of China (PRC) began to undertake major reforms in macroeconomic policy and planning. These reforms were designed to bring about a shift from centralized, direct controls and to increase reliance on indirect controls and macroeconomic policy instruments. This undertaking required considerable strengthening of the analytical capacity and organizational framework of leading institutions involved in the reforms, particularly the State Planning Commission (SPC), the People's Bank of China (PBC), and financial departments of sector ministries and agencies. Since 1980, the Bank/IDA had been providing technical assistance and training to China as a key element of the country's economic reform and modernization process. To further support its reform efforts, the Government specifically requested IDA support for medium and long-term planning studies as a background to preparation of the Eighth Five-Year Plan (1991-95), for technical assistance in staff development, data collection and policy planning, and analysis and research, and for provision of advisory services and training. The Planning Support and Special Studies Project (PSSSP), approved in June, 1987, was developed to meet the Government's needs in these areas. A. PROJECT OBJECTIVES AND EVALUATION Project Objectives 2. The objectives of the Planning Support and Special Studies Project, as defined in the President's Report and Recommendation (P-4599-CHA), were to assist the PRC in: (a) strengthening its development policy and planning capability; (b) preparing and implementing intersectoral and innovative technical assistance projects; and (c) strengthening key institutions responsible for economic and financial reform. The project was designed to finance a series of individual subprojects, and in the context of the project's overall objectives, each subproject had its own more specific objectives. These are identified in the sub-project descriptions provided in Annex C. Evaluation of Objectives 3. The overall project objectives reflected IDA's assistance strategy, which was to help China remove critical constraints in key sectors of the economy -- particularly energy, transport, industry, agriculture, human resources development, and technology transfer -- and to strengthen  -2- institutions involved in reform. IDA was also seeking to promote the effective use of external resources through improved project planning and selection. The project was intended to complement the Second Technical Cooperation Credit (TCC II) (Cr. 1664), approved in 1986, which was used to prepare investment projects for eventual IBRD financing. It was designed to provide a line of credit for training, technical assistance and equipment to improve the efficiency of economic management agencies, and financing for consultant services, equipment and training programs associated with major sectoral studies. It was implemented through a series of sub- projects, separately prepared and proposed, throughout the project implementation period. The flexibility of this design enabled a range and variety of sub-projects in priofity areas to be included in the project, as the nature of the demand for institutional development assistance and for types of policy advice evolved throughout the project's lifetime. 4. Project implementation was handled jointly by SPC's Comprehensive Planning Department and the Technical Assistance and Training Division of the World Bank Department of the Ministry of Finance (MOF). SPC was responsible for overall coordination of the project and for progress monitoring, while MOF was responsible for its financial administration. Sub-project agencies were responsible for planning, implementation and progress monitoring of individual sub-projects. Although SPC had the responsibility for approving sub-projects proposed by these agencies, some concern was expressed by SPC at an early stage about the lack of a cohesive vision and coordination among project activities. 5. No inordinate risks or implementation problems were identified at appraisal. However, this was the first project to be coordinated by SPC. The agency's limited experience in project management, and in particular with international procurement procedures, was underestimated in the appraisal process. The wide range and variety of sub-projects, coupled with the large number of implementing agencies involved, made project supervision highly demanding for both the SPC and MOF. For these reasons, the project was also highly demanding for IDA staff involved in project monitoring and supervision. Considerable staff time and expertise were required, particularly in the evaluation of sub-project proposals from the participating agencies. A further unanticipated risk related to duplication of effort across agencies where similar skills development was required. B. ACHIEVEMENT OF PROJECT OBJECTIVES 6. The project achieved a good balance among the three primary objectives (capacity development, sectoral assistance, and institutional development) across nineteen of the twenty sub-projects approved under the project. One sub-project -- Key Machinery and Basic Products (Sub-project #16) -- was canceled at the request of the Government. A more detailed analysis of specific project activities and outcomes is shown in Annex C. Capacity Development Objectives 7. Seven sub-projects supported the strengthening of development policy and planning capabilities: Planning of Electrical Power in Eastern China and Sichuan (Sub-project # 5), Petrochemical Development Plan (Sub-project #6), Formulation of a Science and Technology  -3 - Development Plan (Sub-project #12), Organization and Regulation of a Futures Market (Sub- project #9), Pricing Study (Sub-project #10), Planning of Electronics Industry Development (Sub-project #15), and Energy Price Research (Sub-project #17). These sub-projects significantly enhanced the technical expertise of participating agency staff, and strengthened ties between domestic and international institutions. The results and findings were taken into account in national planning decisions. Sectoral Objectives 8. The project financed the successful implementation of five intersectoral and innovative technical assistance programs: Yellow River Basin Economic Modelling Study (Sub-project #13), Development of Basic Scientific Research (Sub-project #14), Poverty Alleviation (Sub- project #18), Study of National Flood Control and Dispatch System (Sub-project #19), and Promotion of Quality Assurance (Sub-project #20). In addition to their immediate practical benefits, these sub-projects strengthened the capacity of the agencies concerned in research and analytical techniques, and broadened contacts with international institutions. They fostered the development of core groups of technical personnel. Institutional Development Objectives 9. The project made a major contribution to strengthening key planning institutions in economic and financial reform through seven sub-projects: Reinforcing Planning Commission and Strengthening Planning Tools (Sub-project #1), Management of Govemment Finance (Sub- project #2), Institutional Development of the People's Bank of China (Sub-project #3), Training of Planning Officials (Sub-project #4), Promotion of China's Consulting Industry (Sub-project #7), Development Strategy for the China Investment Consulting Corporation (CICC) (Sub- project #8), and Development of Audit Capability (Sub-project #11). Implementation of these sub-projects exposed agency staff to international policies, procedures and skills and developed their expertise in project management. This consequently strengthened government capacity for project preparation, and improved the capability of local consulting industries in project management, particularly procurement issues. In some cases, joint participation in seminars or study tours facilitated inter-agency cooperation and resulted in the establishment of formal working relations. Studies 10. The studies carried out under individual PSSSP sub-projects yielded the most wide- reaching benefits of all project components. They have made a significant contribution to the analytical capacity of sub-project agencies, and to project sustainability in general. In some cases, they have been used to prepare follow-up investment operations, financed by IBRD loans. A total of eleven sets of studies were carried out under the project, under the aegis of several sub- projects. Two of these, on petrochemicals and electric power in Sichuan and Eastern China, were undertaken in conjunction with sub-projects identified during appraisal (#5, #6), and the remainder in conjunction with sub-projects approved later in the project implementation period.  - 4- A planned study on iron and steel was dropped in 1989 at the request of SPC. SPC decided not to proceed with the study in the absence of a IDA lending operation for iron and steel investment. 11. Individual studies made important contributions in the development of energy policy, water resources management flood control, and understanding of market economic systems. PSSSP-financed studies were particularly valuable in preparation of some major investment projects. For example, the Yellow River Basin Economic Modelling Study (Subproject #13) was used as a basis for the 1992 Yellow River Investment Planning Study, and ultimately in preparation of the Xiaolangdi Multipurpose Project (Ln. 3727-CHA). It radically increased the efficiency of modelling techniques used by the implementing agencies. Reports produced under the Planning of Electrical Power in Eastern China and Sichuan (Subproject #5) were used in the planning of several IBRD operations, such as the Ertan Hydro Project (Ln. 3387-CHA), and the Sichuan Transmission Project (Ln. 3848-CHA). C. IMPLEMENTATION RECORD AND MAJOR FACTORS AFFECTING THE PROJECT Implementation Record 12. The project provided financing for consultant services, training, equipment and materials for conducting comprehensive sector planning studies; preparing and implementing innovative technical assistance activities through advisory services and studies; and strengthening key institutions responsible for the government's economic and financial reform program through in- service education and training. At the time of project appraisal, eight sub-projects had already been identified, and of these, seven had been approved. Three sub-projects were for sector planning studies (iron and steel, petrochemicals, and electric power generation), and five for institutional strengthening (for SPC, SPC's National Planners' Training Center (NPTC), China International Engineering Consulting Corporation (CIECC), PBC and MOF). These sub-projects were expected to be completed before June 1990. Other sub-projects were to be identified during the first year of project implementation, and proposals submitted according to guidelines outlined in the Development Credit Agreement. Transport, chemicals, mining, and water resource management were considered priority sectors. 13. In total, twenty sub-projects were identified for implementation under the project. Of these, one (Key Machinery and Basic Products Study--Subproject #16) was canceled in March 1994 at the request of the Government. Reform of the industrial sector and resultant changes in the role of the responsible ministry meant that this sub-project could not proceed as originally intended. Of the nineteen sub-projects implemented, nine were approved in 1987-88, three each in 1989, 1990 and 1992, and one in 1994. Extensions of sub-project activities, with corresponding additional allocations of Credit proceeds, were approved in 1993 and 1994 for eight sub-projects (# 1-4, 7,9,11,12). These sub-projects had made good progress in their initial phases and had substantially completed the work. At the time of Credit closing, 15 sub-projects had been completed or were in the final stages of implementation. Four sub-projects -- mainly those  -5- approved in the later stages of the project implementation period -- had been partially completed by the closing date. 14. In the first two years of implementation, sub-project progress was somewhat uneven. Four sub-projects could not be completed and one (for US$1.3 million) was subsequently canceled. Disbursements in the first three years proceeded slowly owing to delayed implementation of agreed sub-projects, over and under-estimation of funding requirements, approval of additional activities and funding under existing sub-projects, and delayed formulation and approval of new sub-projects. By July 1990, in the third year of implementation, only 30% of Credit proceeds had been disbursed. By the time of the Credit closing in December 1994, about 85% of Credit proceeds had been disbursed. On the subsequent closing of the Credit account in June 1995, over 90% of the Credit proceeds (in SDRs) had been disbursed. About US$2.26 million (SDR1,532,670) remained undisbursed, and six sub-projects carried over substantial undisbursed balances (see Annex C). Over half of the total undisbursed balance was attributable to the cancellation of Sub-project #16 in 1993, which released US$1.3 million of Credit proceeds into the 'unallocated' pool at a late stage in the project implementation period. The total foreign exchange cost of the project was US$20 million. This was financed by IDA. The proposed Government local cost contribution was US$11.7 million at the time of appraisal. However, figures for Government contribution and local/foreign exchange cost breakdown were not provided by SPC or MOF for this report. 15. The Credit closed on December 31, 1994, two years after the original closing date. Two 12-month extensions of the closing date were approved: the first in July 1992, in the fifth year of the project, and the second in September 1993, the sixth year. These extensions were approved to enable completion of sub-projects that had suffered implementation delays, or that had been proposed in the latter years of the project implementation period. At the time of the first extension in 1992, 19 sub-projects had been approved, eight had been completed or were close to completion, with the remainder expected to be completed by the new closing date of December 31, 1993. In September 1993, it was clear that several sub-projects could not be completed by December 1993 as originally intended, and that as a consequence, a significant portion of the Credit would remain unutilized by that date. Accordingly, a second one-year extension of the closing date to December 31, 1994, was approved. In late 1994, a further 12- month extension to complete the Promotion of Quality Assurance (Sub-project #20) was informally requested by MOF. However, it was agreed that, in view of the fact that two extensions had already been granted, and that the availability of resources for continued formal supervision of the project was extremely limited, the Credit would close in December 1994 as planned. Major Factors Affecting the Project 16. Factors not subject to government control: A significant factor not subject to government control was the fluctuating exchange rate for SDRs. Over-allocation of resources to individual subprojects based on proposal cost estimates, and the resulting slowing of disbursements, were in part attributable to fluctuations in the SDR/UJS$ rate, from SDR 1=US$1.30 at project inception to US$ 1.48 at closing, an increase in SDR value of almost 14  - 6- percent. This increase in SDR value had the effect of increasing the equivalent US$ allocation to individual subprojects, and of reducing project disbursements in SDR terms. A second significant factor related to devaluation of the Chinese currency. Successive devaluations of Renminbi (RMB) from US$1=Y3.7 in 1987 to Y5.8 in 1993 and to Y8.7 in 1994 caused problems with counterpart fiund repayments from subproject implementing agencies, particularly the Audit Administration of the PRC (AAPRC), the National Resources Center for Science and Technology, and the Energy Research Institute of SPC. 17. Factors subject to government control: A significant factor subject to government control was the overall economic situation in China in the late 1980s. During 1988-91, the government undertook a series of austerity and stabilization measures. This resulted in a slowdown in sub-project preparation activities. Further, the political events of 1989 led to a hiatus in international contacts, and a resulting difficulty in arranging overseas training courses, visits by international experts, and professional exchanges with foreign government, academic and research institutes. MOF, PBC and NPTC were most seriously affected. A second factor related to government organization. The reorganization of the Ministry of Machinery and Electronics Industry in 1993 resulted in the subsequent cancellation of the proposed Key Machinery and Basic Products sub-project; and the reorganization of the State Flood Control Headquarters delayed implementation of the National Flood Control and Dispatch System sub-project. 18. Factors subject to implementing agency control: The principal factors affecting timely project implementation were problems of coordination between SPC, MOF and subproject implementing agencies, and erratic reporting. Incomplete subproject preparation or inadequate proposal presentation, and changes in the scope of projects during implementation, resulted in delays in execution of a proposed poverty study (Subproject #18) and rejection of a proposed subproject for a study on south-north water transfer. MOF World Bank Department's system of administering travel costs and expenses resulted in delays in fielding candidates for overseas training and study tours. The first closing date extension necessary, because of the slow implementation of the PBC, NPTC, CICC and AAPRC sub-projects, was attributed to inadequate management among these agencies and little noticeable higher-level management support. D. PROJECT SUSTAINABILITY 19. The sustainability of the project, defined as the commitment of the borrower to further economic development by building on institutional capacity and technical expertise, is likely to be maintained. The experience that the participating agencies acquired in the implementation of the project resulted in further borrowing for similar technical assistance. The government subsequently borrowed US$50 million equivalent from IDA in FY93 for project preparation and institution-building under the Reform, Institutional Support, and Preinvestment Project (Cr. 2447). Strengthening institutional capacity has also facilitated the implementation of subsequent investment projects. Some sub-projects have led to further operations (see Annex C) in the sectors concerned. The findings and recommendations of specific studies were particularly valuable, and also developed the analytical techniques of the relevant implementing agencies (see  - 7- para 11). The PSSSP therefore had a catalytic effect on the work programs of these agencies: they became active participants in new investment projects. E. IDA PERFORMANCE 20. IDA performance was generally satisfactory. This was an innovative project involving a large number of agencies. It was IDA's third technical assistance project in China, but its scope was considerably broader than that of the previous two projects. The project was identified in 1986 and appraised in 1987. A total of 90.3 staffweeks were spent up to and including appraisal. Implementation was constrained by the lack of a detailed implementation schedule and particularly by the failure to establish at the outset a clear institutional coordination and sub-project monitoring mechanism. 21. The project required 67.8 staffweeks of supervision, or 8.3 staffiweeks per project year. In addition to semi-annual supervision missions, IDA financial and technical staff reviewed sub- project proposals in detail. IDA attempted to remedy the problems of slow disbursement and irregular reporting by preparing new guidelines for progress reporting and proposal preparation with SPC. IDA could have provided, in the early stages of project implementation, more guidance to subproject implementing agencies on procurement and consultant hiring, given the concerns that these agencies expressed over the use of foreign consultants and preparation of terms of reference. IDA demonstrated flexibility in agreeing to project extensions and approving new sub-projects in order to allocate undisbursed funds most effectively, and was highly responsive to the government's changing priorities. F. BORROWER PERFORMANCE 22. Both SPC and MOF were responsible for project management. Their overall performance was satisfactory, but inconsistent in certain areas. This was SPC's first experience with managing a project of this complexity. In 1989 MOF established a dedicated World Bank Department and within it, a Technical Assistance and Training Division (TATD). TATD suffered from high staff turnover and under-staffing: TATD is responsible for supervision of all technical assistance projects in China, including technical assistance components of IBRD-financed operations. TATD also supervises four IDA technical assistance Special Accounts, arranges in-country IDA-financed operations training, approves all study tours, and monitors procurement under IDA and IBRD- financed projects. 23. Coordination between SPC and MOF and nineteen sub-project implementing agencies lacked consistency. Compliance with reporting requirements was erratic and the quality of reporting extremely variable. SPC did not complete a progress report for 1992 or a 1993 consolidated budget and work program. The formulation of sub-project proposals by participating agencies was inconsistent, despite the guidelines set out in the Development Credit Agreement and the establishment of new guidelines during supervision. It was not always clear how proposed studies reflected PRC's development priorities. In some cases, the emphasis in  -8- proposals on overseas training and study tours was excessive, necessitating significant modification of the proposals. SPC and MOF could have taken a more proactive role in proposal review, progress monitoring, provision of workplans, and progress reports. 24. Problems occurred with following IDA guidelines on procurement and selection of consultants. Several agencies expressed reluctance to hire foreign consultants in view of high costs, dissatisfaction with the past work of some foreign consultants and, in some cases, disagreement over the content of terms of reference. Finally, the standard of accounting and financial reporting to IDA was less than satisfactory, as was financial coordination between MOF and sub-project implementing agencies: these were often not fully informed about the availability of funds. G. ASSESSMENT OF OUTCOME 25. Overall project outcome is rated as satisfactory. The various tasks and activities (research, studies, overseas and in-country training, study tours, conferences, seminars and workshops) engendered direct and indirect benefits. The project increased the exposure of agency officials to policies, practices and procedures in other countries and international institutions, thereby increasing their knowledge, skills and capacity. The technical assistance activities fostered the development of contacts and networks of experts through overseas tours and training. Joint research programs led to the development of close working relations with foreign experts and institutions, and attracted leading high-caliber policymakers from government and the private sector to conferences and seminars. Sub-project implementing agencies gained experience in project management, consultant hiring, procurement, work planning, progress monitoring, and reporting, even if performance in some of these areas was somewhat erratic. H. FUTURE OPERATIONS 26. PSSSP was not intended as a stand-alone credit but formed part of a group of technical assistance projects. The First Technical Assistance Credit (TCCI) (Cr. 1412), was approved in 1983 and financed US$10 million of pre-investment studies for over 24 IDA-supported projects. The Second Technical Assistance Credit (TCCII) (Cr. 1664), was similar in scope to TCCI, and financed US$20 million of preparation activities for investment projects and related institutional development. Further technical assistance for institutional development for a variety of agencies and for project preparation work is being provided under the Reform, Institutional Support, and Preinvestment Project (Cr. 2447). Furthermore, several other technical assistance credits have been approved, but the emphasis has shifted towards more sectorally-focused technical assistance: US$60 million for the Financial Sector Technical Assistance project (Cr. 2423) in FY93, US$50 million for the Environment Technical Assistance project (Cr. 2522) in FY93, US$13 million for the Economic Law Reform project (Cr. 2654) in FY95, and US$10 rnillion for the Fiscal Technical Assistance project (Cr. 2709) in FY95.  - 9 - I. KEY LESSONS LEARNED 27. The experience of PSSSP provides four principal lessons for effective implementation of technical assistance projects in China. The first is the need to designate a single entity with responsibility for project implementation. In this regard, progress monitoring and accountability mechanisms and reporting requirements should be clearly defined at the outset. This would help to ensure consistency in sub-project objectives as well as maintain a balance of activities between overseas training and in-country seminars, thereby reducing the inevitable bias towards overseas training and equipment purchase. Second, a clear definition of sub-projects and an implementation schedule at the time of appraisal is more resource-efficient. While a project that provides a line of credit allows for flexibility and responsiveness to changing priorities and circumstances, it is highly staff intensive. Third, participating agencies should provide a more thorough assessment of training needs and likely staff deployment early in the implementation process. Finally, both IDA and the coordinating agency should pay greater attention to assisting sub-project implementing agencies in following IDA guidelines on procurement, particularly of international consultants.  I  STATISTICAL ANNEXES  I  -10- Table 1: SUMMARY OF ASSESSMENTS Achievement of Objectives Substantial Partial Negligible Not applicable Macroeconomic policies X Sector policies X Financial objectives X Institutional development X Physical objectives X Poverty reduction X Gender concerns X Other social objectives X Environmental objectives X Public sector management X Private sector development I_I I X I Project Sustainability Likely | Unlikely Uncertain Bank Performance Highly satisfactory Satisfactory Deficient Identification X Preparation assistance X Appraisal X Supervision X Borrower Performance Highly satisfactory Satisfactory Deficient Identification X Preparation assistance X Appraisal X Supervision I_X Assessment of Outcome Highly satisfactory Satisfactory Unsatisfactory Highly l____________________ l_____X____i_____ i___ unsatisfactory x_ ___ __  -11- Table 2: RELATED BANK LOANS/CREDITS Technical Coopration Credit Financing of preinvestment studies 1983 Ckoud (TCCI) (1412-CHA) Technical Cooperation Credit Financing of preinvestment studies 1986 Closed (TCCI[) (1664-CHA) Reform, institutional Support Support of overall economic reform and 19 Active and Preinvestment (CRISPP) modernization effort. Strengthening of key (2447-CHA) institutions reponsible for policy, research, training and implementation, and financing of preinvestment studies Financial Sector Technical Dwelopment of efficent and stable 1993 Active Assistance (2423-CHA) financial sector by strengthening key institutions. Improving efficiency of resource mobilization and allocation Economic Law Reform Assistance in preparation of economic 1994 Active (26544CA) legislation in priority areas and strengthening of key local institutions responsible for legislation and implemenation of economic law Fiscal Technical Assistance Implementation of fiscal reforms and 1995 Active (2709-CHA) design of future reforms  - 12 - Table 3: PROJECT TIMETABLE Steps in project cycle Date planned Date actual/atest estimate Identification 6/86 Preparation 2/87 2/87 Appraisal 3/87 3/30/87 Negotiations 4/87 5/22/87 Board presentation 6/87 6/30/87 Signing N/A 9/14/87 Effectiveness 9/30/87 12/11/87 Project Completion 6/30/92 12/31/94 Loan closing 12/31/92 12/31/94 Table 4: CREDIT DISBURSEMENTS-CUMULATIVE ESTIMATED AND ACTUAL ($million) FY88 FY89 FY90 FY91 FY92 FY93 FY94 FY95 Appraisal estimate 1.2 5.2 10.2 15.2 19.2 20.7 (20.7) (20.7) Actual 1.5 2.1 3.1 6.4 9.7 13.1 15.9 16.6 Actual as % of 125 40 30 40 50 63 77 89 estimate Date of Final January 26, 1995 Disbursement  - 13 - Table 5: KEY INDICATORS FOR PROJECT IMPLEMENTATION (not applicable) Table 6: KEY INDICATORS FOR PROJECT OPERATION (not applicable)  -14 - Table 7: STUDIES INCLUDED IN PROJECT (Numbers in parentheses refer to sub-projects under which the studies described were carried out) Study Purpose us defied at |Sthu Impact of study, 1. 1r_ and Stee Fonnrmtaon of an optimal sub- Dropped at request of SPC n/ sector developmt strategy to 2000, to be chluded In the 5th Five-Year Plan 2 ElctrIc Power (US) Formdlio of development CompIeed R - e _ --mwed hu 8th Five-Year Plan rateg to meet eleic power needs In E Chhi and Sidman to 2000, to be bInuded In the 8th Five-Year Plan 3. Pe_t1hmdcl (#) Formulation of an optimal sub- Completed (9 studies In Recommendation used In h8 Five-Year PIla sector development strategy to total) 2000, to be Included In the 8th _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Five-Y ear Pla _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ STUD)IES IDENTIFID D$URINGMPLEMNATO 4. Orpnizatio, and Comnipritive study of internationdl Completed (11 studles) Facilltated development of regulations and regulaio of a futures futures markets standardized procedures for Ibtd n markets. nuist (#9) 5 Develop_met of Audit Comparitve analys of Chinese Completed (2 studIes) Promoted deveopment and refinmet of audit Capabity (#11) and Intemaaonal Accounting legidsation. Stadardb and audit methodologles. 6. Formulaio and Developing srategies for Completed (7 studies) Sckene and Technolgy component of 8th Five- development of China's Improved science and technology Year Plan Implemented succesafly; case Science and Technology planning In 8th FIve-Year Plan studies particularly uselbL development pln (#12) 7. Yelow River Basin Development of a program of Completed (S sadks) Developed a water resorces utlzation model economc modelig (#13) regionl water utilization for use In long-tern resource planng and supply/denand forecastng a. Promot4ng deveopmt Development of a national Completed Strengthened the National Natl Science of bIe sdentifc scentifc research strategy Foundation's ability to tormulate scentific rearch (#14) rearch proposab. 9. Planning of Elctnes Formulation of strategies for Completed (7 studies) Raised the level of strategk, technical and lIdatry Development China's electronics Indusry economic analysb In the Minibt of ElectronIcs (#15) Industry. 10. E Sector Study Macroeconomic analysis of Completed (7 studies) Coverage of a wide range of enerV sub-ecton (#17) proposed energy price refonn enhaced SPC's understanding of energy prilcng pollcy 11. Poverty aleviation Development of long-term poverty Completed (4 studies) Recommendations adopted by local sttudes (#18) alevataon polides in low-income government, Induded In Poverty AUeviation reglows nd Identification of Fortificaton Pln laftrmctural and Institutional priorities 12. Study of ntoan food FealbUty study for developing Completed Developed bai for a flood control progma for contrl d dispac Phse 11 of Natonal Flood the 7 maJor bas in Ci, based on p_ot sysem (#19) ControlDispatch System schemes developed in the Hual river basin Soe Annex C for Sub-Project Implementation Completion Reports  -1S - Table 8a: PROJECT COSTS Item Appraisal Estimate (Sm) Actual/latest (Sm) Local Foreign Total Local Foreign Total Consultants 1.5 9.5 11.0 5.8 Training 1.3 4.2 5.5 9.1 Equipment 1.3 4.2 5.5 5.1 National Personnel 7.6 0.0 7.6 TOTAL 11.7 17.9 29.6 N/A 20.0 Table 8b: PROJECT FINANCING Source Appraisal Estimate (Sm) Actual/latest (Sm) Local Foreign Total Local Foreign Total IDA 2.8 17.9 20.7 20.0 20.0 Government 8.9 - 8.9 N/A a TOTAL 11.7 17.9 29.6 20.0 Figures for government contribution, and local/foreign cost breakdown, are not available from SPC and MOF. Table 9: ECONOMIC COSTS AND BENEFITS (not applicable)  - 16- Table 10: STATUS OF LEGAL COVENANTS Agreement Section Covenant Present Original Revised Description Comments type status fulfillment fulfillment of covenant ___________ _________ ~~date date _ _ _ _ _ _ Credit 4.01 1 CD End of Standard Delays in every fiscal financial submission of year audit reports. Table 11: COMPLIANCE WITH OPERATIONAL MANUAL STATEMENTS (not applicable) Table 12: BANK RESOURCES: STAFF INPUTS Stage of project cycle Planned Revised Actual Weeks s Weeks S Weeks S Through Appraisal 90.3 Appraisal-Board 13.6 Board-Effectiveness Supervision 70.5 98.8 67.8 Completion TOTAL 296.4  - 17- Table 13: BANK RESOURCES:MISSIONS Stage of Monthl No. of Days in Speisilzed staff sldUs Perforfnance rating Types of problenm prolect cycle . .r persons field represented Implementatlon Development status objectives Through 03/87 Economics, appraisl procurement, disbursement Appralil - Board approval Board approval - effectlveness Supervlslon 10/87 Economics, I Progress reporting 05Y8 procurement, I 1 Agreement on sub- project proposals and 02/89 disbursement, I workplans 03/39 2 technical assIstaice 1 *Dlsbursement profie 03/90 4 2 1 *Long delays In arranging overseas training 07/90 2 2 1 and advisory services after 1989 poUtical 03/91 1 2 1 crisis 03/92 1 2 1 Mlintsterlal reorganization 07/92 1 2 1 02/93 3 2 1 06193 1 2 1 03n94 1 2 1 09/94 1 S S Completlon 12/94 1 S S *Delayed submission of sub-project data and Borrower's contribution oDelayed submission otinrormatlon on project costs  Anex A - 18 - PLANNING SUPPORT AND SPECIAL STUDIES PROJECT (CR. 1835-CHA) AIDE-MEMOIRE A World Bank mission consisting of Mr. David Rix visited Beijing from December 4 to 16, 1994 for the final supervision prior to the closing of the Planning Support and Special Studies Project (Cr. 1835-CHA) on December 31, 1994. Meetings were held with representatives of the Ministry of Finance and State Planning Commission, and a one-day workshop was organized for the subproject implementing agencies. Other meetings were held with officials of the China Council for the Promotion of Quality Assurance to resolve specific subproject issues associated with the closing of the credit. Mr. Rix is very appreciative of the cooperation and assistance provided by the Ministry of Finance and the State Planning Commission during the mission's visit. Credit Closing 1. A final decision on whether the credit would close on December 31, 1994 or a further extension of the closing date would be sought, was reached by MOF on December 2, 1994, following discussions and correspondence between MOF and the Bank. It was agreed that the credit would close on December 31, 1994. Particular issues resulting from this decision are discussed in a subsequent paragraph (para. 18). The Project 2. The US$20.7 million Planning Support and Special Studies Project (PSSSP) was signed on September 14, 1987 and was originally to close on December 31, 1992. Two one-year extensions were approved, establishing December 31, 1994 as the final closing date. In the course of its implementation, this 'umbrella-type' technical assistance credit provided financing for 20 subprojects, implemented by almost as many separate ministries and agencies. The subprojects were designed to support planning studies, inter-sectoral and innovative technical assistance, and governmental economic, financial and institutional reforms. 3. Of the 20 subprojects, six have been completed and a further nine are in the final stages of implementation and are expected to be completed by the closing date. Four will not be completed. One subproject was cancelled. As of the end of November, about 75 percent of the credit had been disbursed. Expenditures and reimbursement claims in December are estimated to increase the overall disbursements at credit closing to about 85 percent of the credit amount. An estimated US$2 million is expected to remain undisbursed, and several subprojects are expected to carry large (over $200,000) undisbursed balances.  Annex A -19- World Bank View of Project Implementation 4. The Bank considers that overall project implementation has been satisfactory, with some variation in degree among the different subprojects. The project's objectives, as stated in the Development Credit Agreement, were to assist the Government in: (a) strengthening its development policy and planning capability through studies for preparation of the eighth five-year plan; (b) preparing and implementing intersectoral and innovative technical assistance projects; (c) strengthening key institutions responsible for economic and financial reform. The project has achieved these objectives. Moreover, it has maintained a good balance of activities with a fairly even distribution of subprojects among the three objectives: seven under (a) (subproject nos. 5, 6, 9, 10, 12, 15, 17), five under (b) (nos. 13, 14, 18, 19, 20), and seven under (c) (nos. 1, 2, 3, 4, 7, 8, 11). During project implementation, extensions to activities under eight subprojects that had been implemented particularly well were approved, and additional allocations of credit resources were made. 5. The tasks and activities undertaken through the various subprojects -- a combination of research, studies, overseas and local training, study tours, conferences, seminars and workshops -- have engendered a number of indirect benefits as well as the more obvious ones of increasing knowledge, skills and capacities. Through these activities, agency officials have had the opportunity to gain exposure to, and experience in, polices, practices and procedures in other countries and international institutions. Through study tours and overseas training, they have been able to develop contacts and networks of experts in their particular areas of interest in several overseas institutions. They have been able to develop close working relationships with foreign experts through joint research. And through international conferences organized in China, they have been able to attract leading policy makers and high-calibre professionals from government and the private sector around the world. Subproject agencies have also gained experience in project management, including such aspects as consultant recruitment, equipment procurement, work planning, and progress monitoring and reporting. 6, From the Bank's perspective, there were also a number of problems in the implementation of the project, some of which were not under the control of either SPC, MOF, the agencies, or the Bank. First, not all of the project activities were able to be completed. The political uncertainties in 1989 had the effect of slowing overall progress on the project, eventually necessitating an extension of the closing date. Further, some subprojects were approved quite late in the project implementation period, which eventually necessitated a further closing date extension. Even then, despite considerable 'bunching' of activities in the final year, the additional time provided was inadequate to enable fuli completion of all the subprojects.  Annex A - 20- 7. Second, a significant undisbursed credit balance will remain at credit closing. Part of the reason for this is that the SDRILUS$ exchange rate trend, in which the dollar equivalent of the SDR moved from US$1.30 at the time of project inception to about US$1.48 today, resulted in a slower SDR disbursement rate over the course of the project, and lower SDR utilization overall. This result was compounded by the cancellation, at the Government's request, of one subproject (no. 16) which released about a further US$1.3 million into the unutilized balance. 8. Third, annual work plans and project progress reports were not always provided on a consistent and timely basis. This made progress monitoring difficult. In retrospect, a more proactive role could have been taken by SPC and MOF in ensuring that the requirements were fully met. There is a need to strengthen these aspects of project management at both the central and agency level. 9. Fourth, there was some lack of continuity in project management -- from both the Government's and the Bank's side -- over the course of project implementation. This made monitoring and supervision of this complex project (20 subprojects, 19 agencies) a difficult task. 10. Fifth, there appeared in some cases to be some reluctance on the part of the agencies to the hiring of foreign consultants. In part, this may be due to the focus on the high cost of foreign consultant services, compared to that of local consultants, rather than on value added; it may also result from dissatisfaction with consultant's past work, which may in turn have resulted from inadequate definitions (terms of reference) for the consulting assignments. State Planning Commission and Ministry of Finance View 11. The SPC and MOF provided few comments on their views of the implementation of the project, preferring to reflect them in more detail in their Project Evaluation Report which has yet to be prepared. Nevertheless, both agencies expressed satisfaction with the project, and felt that it had been very successful. They also felt that the project's objectives had been achieved. Subproject agencies for the most part had been successfuil in implementing their respective programs. These agencies had benefitted greatly from the technical assistance, research, training, and other activities under their respective subprojects and important contributions to strengthening planning and policy-making in Government institutions have been made. Indeed, SPC and MOF believe that this type of 'umbrella' TA project, involving a number of separate subprojects, is extremely beneficial to China's development agenda. They expressed interest in future TA projects of this type. 12. SPC and MOF felt that there were very few significant issues. The SDRIUS$ rate trend had indeed caused difficulties in the utilization of credit proceeds, and the cancellation of one large subproject had exacerbated the problem (para. 7). In addition,  Annex A - 21- some agencies had over-estimated their funding requirements in their initial subproject proposals, further contributing to under-utilization of the credit. SPC and MOF also recognized that work planning and progress reporting had been a general problem. A major concern mentioned by SPC and MOF (also raised by some subproject agencies - see para. 15) was the ability of the agencies -- more specifically, the non-revenue-earning ones -- to repay their loans to MOF, particularly since the 3 5 percent reduction in January, 1994 in the value of the RMB vis-a-vis the US$. This situation had tended to cause subproject agencies to be extremely cautious in utilizing their credit allocations, and in some cases, to put some activities on hold. This could continue to be a potential risk in future TA projects of this nature. Subproject Implementing Agencies' View 13. A one-day project completion workshop was organized during the mission's visit to bring together representatives of the subproject implementing agencies for discussions on the project. Twenty-one officials representing 15 of the agencies participated. The workshop was designed to (a) apprise participating agencies of the requirements for the closing of the credit, and the responsibilities of these agencies in the preparation of subproject implementation reports; and (b) to ascertain informally the agencies' views on the implementation of the project and their respective subprojects. A more formal perspective on project implementation will be provided in the agencies' subproject implementation reports, which will be provided to MOF by the end of January, 1995 and to the Bank by mid-February, 1995. 14. The response from the agencies was very positive. About half of the agencies represented indicated specifically that their subprojects had been very successful or successful, and that they were very satisfied with the results. A similar number indicated that their organizations had benefitted significantly -- through organizational restructuring, the development of skills of managers and other staff through training and study tours, increases in working capacity, expansion of training capabilities and capacity, and the introduction of new systems. Important contributions had also been made by the subprojects in the areas of economic planning, flood control, energy policy, poverty alleviation, and understanding market economies. For the most part, subproject objectives were achieved, and valuable contributions made. 15. Few problem areas were specifically identified. The major problem appeared to be the ability of the agencies to repay their loans to MOF. With the devaluation of the RMB in January 1994 from a rate of 5.3 RMB to 8.7 RMB to the US dollar, agencies had found it difficult to service their debts. As a result, some agencies had held back from fully utilizing their allocated funds. A second problem related to the over-estimation of costs in the preparation of proposals, resulting in some cases to surplus funds remaining at subproject completion.  Annex A - 22 - Preparation of Implementation Completion Report 16. The mission discussed in some detail with SPC and MOF the information required for project completion. In particular: (a) the information required from SPC, MOF and the subproject agencies for inclusion in the mission's Aide-Memoire; (b) informnation (Subproject Implementation Reports, etc.) to assist the Bank in its preparation of the ICR; and (c) information (Project Evaluation Report, etc.) required from SPC and MOF as their contribution to the ICR. A document was prepared by the mission outlining these requirements, and in particular providing details about the content of these two reports. In addition, a schedule was prepared and agreed by SPC, MOF and the mission for the preparation of the various documents under the ICR process. A copy of the schedule is attached. 17. Subsequently, a one-day workshop was organized for subproject agencies (see para. 13). This workshop was provided in part to apprise the subproject agencies of their responsibilities in the preparation of their Subproject Implementation Reports, and of the procedures involved. The workshop was successful, and several agencies' representatives expressed appreciation for the guidance provided. In addition, charts were designed collaboratively during the workshop to assist the agencies in report preparation. Subproject on Promotion of Quality Assurance 18. This subproject (no. 20) was approved in the second half of 1994. Once the decision not to extend the credit closing date had been taken, it became clear that a significant part of the subproject would remain uncompleted at the time of credit closing on December 31, 1994. Some items of equipment and some training courses would be unable to be completed because of the limited time available to meet the requirements of the procurement process, and because of the duration of the courses. Meetings were held with MOF and representatives of the China Council for the Promotion of Quality Assurance (CCPQA) to explain in detail the Bank's procurement procedures and reimbursement eligibility at credit closing, to enable the agency to determine which components of the subproject could reasonably be completed by the closing date. On the basis of consultation with the Bank while the mission was en route to China, it was agreed that CCPQA would complete as much of the existing subproject as possible under PSSSP, consistent with the Bank's guidelines. CCPQA would also prepare a new subproject proposal for consideration for financing under the Reform, Institutional Support and Preinvestment Project (CRISPP), an ongoing TA project similar to PSSSP. The objectives of the CCPQA subproject are entirely compatible with subproject eligibility criteria under CRISPP. MOF and CCPQA agreed that the new subproject proposal for CRISPP would be submitted to the Bank by the end of December. Beijing, December 16. 1994.  Annex B - 23 - Evaluation Report from the Borrowers of the Credit for the Planning Support and Special Studies Project (CR. 1835-Cha) A. Contents of Assessment A-1. Project Objectives In 1986, the top official of the Chinese government and the World Bank authorities agreed, after China fulfilled its Seventh Five-Year Plan for National Economic and Social Development, the World Bank would be involved in the preparation work for the Eighth Five-Year Plan. Later, the World Bank provided a special credit in the fiscal year of 1987 and prescribed the use of the credit in a summary: (a) help China stipulate moderate- and long-term plans and the relevant departments draw up development strategies, carry out research of investment and feasibility studies in order to increase the ability of the Chinese government to stipulate its development policies and plans; (b) train personnel for the central and local governments in planning, administration, banking, taxation for China's reform of economic and financial system; (c) provide technical aids and symposiums for trans-trade businesses, such as consulting, engineering construction and contracting businesses. The Chinese departments which are responsible for the project would provide trades and departments the credit goes and the World Bank would examine and approve the plans and work plans and supervise their implementation and the progress of the project. Following is the assessment of the achieved objectives made according to the implementation of this special credit project in the last six years and the progress of the Chinese economic development during the Eighth Five-Year Plan period and the reform of the systems: A-l.1. After the reform of the economic system during the Eighth Five-Year Plan period, China has made the establishment of the socialist market economic system the target of the reform and has carried out the reform of the investment, financial, banking, foreign trade, foreign exchange and enterprise systems. As a result, the reform and opening, and modernization construction have entered a new stage of development. The reform of economic system has shifted its focus from deconcentrating the central power and profit with an aim to break traditional planned economy to the establishment of the socialist market economic system. The objectives of this special credit meet the demands of the reform during the Eighth Five-Year Plan period. (a) Progress achieved in the research of some special subjects concerned economic restructuring, such as multi-level administration, reform of taxation system and the studies of financial systems in foreign countries, has promoted the design and implementation of China's reform; (b) Training of planning, financial and banking personnel has helped increase their knowledge on market economy. Such training courses have provided personnel for China's reform. A-1.2. During the Eighth Five-Year Plan period, it is urgent to study the basic conditions of such industries as iron and still, petrochemicals, electronics, transportation and machinery and draw up relative development plans according to the needs of industrial development and readjustment of industrial structure. The special credit project has provided necessary help  Annex B - 24 - in time. It is correct to establish these three sub-projects - petrochemicals, electronics and electricity and their expected results have been reached. All these facilitate the drawing of the plan for national economic development during the Eighth Five-Year Plan period and its implementation. Unfortunately, some industries could not be listed as sub-projects, such as iron and steel, and transportation. The plan on the development of machinery basic units could not be implemented (caused will be explained later). It is very pity. A-1.3. Great achievements have gained in consulting services and the study of feasibility of investment. The executive departments of sub-projects have written such documents as ''Guidelines on Consulting Services Providing for Construction Projects,' ''Samples for Bids and Inviting Bids of Construction Projects'' and '"Administration on Standards Quotations of Construction Projects'' according to the Chinese concrete conditions and international practice. All these documents have received the state approval and are being implemented in the practical work. Their implementation will give impetus to the reform of investment system and the entering of investment behaviors into market. A-1.4. Several sub-projects of training are going smoothly. The training in banking, financial, consulting service and planning fields has facilitated the reform of China's economic system and the implementation of the Eighth Five-Year Plan. After receiving training, great numbers of young and middle-aged people benefit the fulfillment of the project they work for and the economic restructuring and macroeconomic management. A-2. Project Design A-2.1. The project has reached its subjects as expected. Good design is demonstrated in some fields as follows: (a) The establishment of sub-projects on structural construction and studies of special items is reasonable and the departments to implement them are suitable too. Many important research subjects concerning national economic development and economic restructuring are decided after selections for several times. All these subjects meet the demands of the Eighth Five- Year Plan for development and the reform of system. Then the State Planning Commission, the Ministry of Finance, the People's Bank and the Development Research Center under the State Council have been entrusted with the research of these subjects, thus closely combining the research with the Chinese concrete conditions. The research achievements will be used to serve directly the reform and development. (b) The training is given to personnel from reasonable fields. The subjects of training are young and middle-aged people and the contents of training are Western market economy. Training courses are given to the people as more as possible. (c) The studies on some important issues and on the feasibility of the project have given solutions to the problems which China has met and will meet in economic development during the Eighth Five-Year Plan period. Great progress has achieved in the research of the policies on science and technology, the energy price, the national flood-prevention system and futures  Annex B -25- market. The studies on the water resources of the Yellow River have provided theory and some data for the construction of the Xiaolangdi Project with the funds from the World Bank. (d) The studies of software of some projects have emphasized on the fields concerning methods and future. While emphasizing the reform of structure and update of the rules, efforts will focus on the methods and application. The establishment of the decision-making macro-supporting system by the Development Research Center under the State Council and the decision-making supporting system by the State Planning Commission, the national energy power system and data base on scientific and technological research projects has improved China's policy-making level and working efficiency and will play an important role in future work. A-2.2. The Problems Existed The planning projects in some industries have not been implemented as planned, such as the plans in iron and steel, communication and transportation and chemical fertilizer industries. The project of machinery basic units has been established but failed to be implemented. All these projects are key research items during the Eighth Five-Year Plan period. The main causes are: the problem how to pay back the investment did not solved. The change of exchange rate between Chinese currency with foreign currencies has increased the cost of the project. the State Planning Commission did a lot of work and the two sides involved discussed the suggestion and agreed on the contents and the process of implementation of the project. But the responsible authorities were afraid to use the special credit. A-3. Assessment of Process and Contents of the Projects A-3.1. The total investment and the percentage of investment used: US$20,006,643.17 or 96.7 Dercent of the total approved have been put into use, up to the requirement. Of which those used for structural construction and training of personnel totaled US$6,649,866.9, or 33.2 percent of the total. Those for research of special subjects reached US$8,092,787.2, or 40.45 percent of the total. The use of money is reasonable. There are only three planning projects which demand for less funds, accounting for 26.2 percent of the total investment. A-3.2. Time: All the project has been fulfilled two years later than planned. The reasons are rational. First reason is the political incident in 1989. Second is the changes of environment for economic and structural reform caused by economic readjustment in China. Third is longer time for Chinese side and the World Bank to exchange opinions and reach a census on some subjects. These three causes demand for necessary adjustment in the contents of research, the date for implementation and use of funds. The reasonable delay is necessary in order to guarantee the quality of the project. But it does not mean there are some problems in the implementation of the project. A-3.3. The organization of the activities aiming for attaining the plan targets and the money spent are done strictly according to the suggestions and year plans approved and examined by the two sides. In general, they are up to the management demands of the World Bank. Incomplete statistics show they include:  Annex B - 26 - (a) A total of 120 foreign experts have been invited. Their comments have facilitated the development of the project and they have brought the latest know-how and methods to China. At the same time, these experts have gained better understanding of China. All these activities reached the targets as expected. (b) Some five consulting companies have been invited. The Chinese side, according to the' suggestions of the World Bank officials, has invited bids based on the World Bank's guidelines on the work. The consulting services are up to the demands of all sub-projects in quality. (c) A total of 24 international meetings have been held attended by 900 foreign experts and 4,000 Chinese experts. All these meetings have promoted the implementation of the project in various fields. (d) Some 700 personnel have been trained. These young and middle-aged personnel will play their great role in their future work. In future, China will increase inputs in this field. Owing to a financial problem at home, the training in some fields found a shortage of funds. (e) A total of 32 inspection visits to foreign countries have been organized. They are necessary. On one side, they are beneficial to the cooperation between China and other countries and to the smooth progress of the project. On the other these visits are better for a deep research of the special subjects. In the later stage of the project, the Chinese side, according to the suggestions of the World Bank, has decreased the inspection visit abroad. Although money has saved, the progress of the project has been affected. (f) Great amounts of computer equipment and official apparatuses have been purchased. Also in the process of the implementation of the project, the proportion of the money spent for the purchase of software and related reference materials and patented technologies has been increased. The proportion is reasonable and up to the requirement of the project. The purchase is carried out according to the World Bank's guideline on the purchase of equipment and the demand of the project official from the World Bank. The initial examination of these equipment by the project %!r_rking group of the State Planning Commission and the Ministry ..f Finance proved that the equipment has been put into use already and are satisfied according to the users. The proportion of the money put in this field can be increased in the future. At the same time, the Chinese side put aside sums of funds to purchase auxiliary equipment to guarantee smooth operation of the equipment. (g) The funds in Chinese currency have been put into use as expected. For details of the expenditure of funds, see the report handed in by the Ministry of Finance. B. Assessment of the Work of the State Planning Comission and the Ministry of Finance, the Borrowers of the Special Funds B-1.1. The State Planning Commission and the Ministry of Finance are entrusted with the management of the project. In the initial stage of the project, the State Planning Commission did a lot of investigation and scientific research work and organized  Annex B - 27 - several discussions on suggestions of sub-projects by the authorities of various trades and decided the reasonable research targets, thus increasing the quality of project work. The commission, together with the Ministry of Finance, stipulated the Methods on the Management of the Special Credit Project which was informed to various departments. The Ministry of Finance has stipulated the related rules on the financial management of the project. The stipulation of these documents put the project into a normal operation and under a standard management from the beginning. B-1.2. The State Planning Commission has checked the implementation of the sub-projects regularly and examined and approved the plans for the year followed. It also proposed the demands 'on the work and timely exchanged views with the World Bank on Ithe problems appeared during its work. It has brought into full play its role of coordination. B-1.3. The Ministry of Finance has examined the expenditure of every item of funds and make them up to the demand of the World Bank. It has done a lot of work. B-1.4. The project leading group has been established, participated by high-ranking leading members. This group has helped solve the problems and guide the work. B-1.5. But it is pity, the project management units found a shortage of personnel who know quite well both English and professions. Also the project work was affected by frequent changes of some project officials. Because China is summing the work during the Eighth Five- Year Plan period. The summary of the project has to be done based on that of the plan period. This is the reason why the report on the work of the project was delayed to be handed in. It can be understood by the World Bank. B-2. Lessons for the Future The loans should be used according to China's strength and the projects should be chosen according to its concrete conditions. Also it is necessary to better understand all the articles added to the technical aids to avoid some problems which are really difficult to solve during their implementation. Everything should be done according to the process strictly. In addition, it is necessary to train more managerial personnel of technical aids and credits. C. The Role of the World Bank C-1. The World Bank offered good suggestions on the selection of the project and proposed reasonable methods for solving the problems according to the Chinese concrete conditions. The World Bank is positive towards the Chinese demands and is patient to explain some of its articles. The World Bank has done a lot of liaison work and is responsible and serious in its examination and check work on the project, thus pushing ahead with the implementation of the project in China. What should be mentioned here is the positive role the Representative Agency of the World Bank in the process of the implementation of the project. Here we like to express our thanks to Mr. Petter Harrod, Mr. Cardro and Mr. David Rix for their warm enthusiasm and serious attitude to the work.  Annex B - 28 - C-2. Cooperation Cooperation between the two sides is happy and effective. Because the two sides could inform each other with the progress of the project in time, made full preparations for the annual examinations and joined efforts for the solution of the problems appeared. It is true the two sides have different viewpoints in some research items and found difficult to reach agreement on such projects as the project to lead water from south China to north China. But disagreement does not affect the quality of the whole project. The State Planning Commission, China's macroeconomic management unit, will strengthen the cooperation with the World Bank and the other international financial institutions. The cooperation scope will be wide.  Annex-C -29 - Plannine, SuPOort and Svecial Studies Credit: Subproiect ImWlementation Summaries 1. Reinforcing the Planning Commission and Strengthening Planning Tools 2. Management of Government Finance* 3. Institutional Development of the People's Bank of China 4. Training of Planning Officials 5. Planning of Electrical Power in Eastern China and Sichuan* 6. Petrochemical Development Plan 7. Promotion of China's Consulting Industry 8. Development Strategy for China Investment Consulting Corporation 9. Organization and Regulation of a Futures Market 10. Price Planning Program and Anti-Inflation Decision Support System* 11. Development of Audit Capability 12. Research on the Formulation and Development of China's Science and Technology Development Plan 13. Yellow River Basin Economic Modelling Study 14. Improving the Science Funding System and Promoting the Development of Basic Scientific Research 15. Planning of Electronics Industry Development 16. Key Machinery and Basic Products (dropped) 17. Energy Price Research 18. Poverty Alleviation Studies 19. Study of National Flood Control and Dispatch System, Phase I 20. International Quality Assurance in China Note: All of these reports are based on Subproject Implementation Completion Reports submitted by the Borrower, and on information in the project files. An asterisk (*) indicates that the requested Subproject Implementation Completion Report was not submitted by the Borrower.  Annex C - 30 - SUBPROJECT DESCRIPTION AND PERFORMANCE Subproject No. 1: Reinforcinf the Planninf Commission and Strengthening Planning Tools Government implementing agency: State Planning Commission Date of IDA approval: May 1988 Date of project completion: December 1994 Allocation: SDR 1,295,000 (originally SDR 935,000; additional SDR 360,000 approved in 1993) Final disbursement: SDR 1,007,117 (78%) Description The objective was to increase the capacity of SPC in economic planning though the introduction of modem planning methods. In particular, the subproject would focus on medium and long-term macroeconomic policy formulation rather than detailed annual approval of national investment programs. A further objective was to establish an information network to link planning departments and improve information gathering. Implementation Overseas training. Thirty-seven SPC staff attended a total of 16 training courses, ranging from 1-12 months, in macroeconomic policy, foreign aid management, economic forecasting, national accounting and agro-technology. A further 67 staff participated in delegations to economic research institutes or relevant ministries in the US, UK, Austria, Germany, Sweden, Australia and Thailand. Advisors. In the period 1988- 94, 8 short-term advisors provided support to SPC in the fields of project appraisal, national income, fixed asset investment, macroeconomic policy and science and technology development. In-country seminars. SPC organized 5 international seminars on macroeconomic policy management and utilization of external assistance in Beijing, Guangzhou, Hainan and Qingdao. Equipment. The subproject financed the purchase of computer and other communications equipment and decision support software. Evaluation SPC staff benefited considerably from exposure to international macroeconomic planning and policy methods. The establishment of a computer network linking relevant planning departments across the country has facilitated information gathering, forecasting and decision-making. With regard to project management, some problems were experienced with staff continuity and availability of interpreters. Twenty-two percent of project funds were unutilized as a result of the implementation unit's concerns about Credit repayment.  Annex C - 31 - SUBPROJECT DESCRIPTION AND PERFORMANCE Subproject No. 2: Manavement of Government Finance (Training of Financial System Officials) Govemment implementing agency: Ministry of Finance Date of IDA approval: May 1988 Date of project completion: Expected December 1993; extension requested, July 1993 Allocation: SDR 1,303,000 (originally SDR 943,000; additional SDR 360,000 approved in 1993) Final disbursement: SDR 1,191,791 (91%) Description The objectives of the subproject were to develop the capacity of MOF staff in the fields of economic and financial management, accounting, budget management and public finance, and in resource allocation to social, urban and administrative sectors. Implementation MOF established working groups on: (a) resource mobilization for urban investment and management, (b) social security, (c) accounting management to prepare new accounting regulations for enterprises and agricultural concerns, (d) tax management and reform, (e) fiscal legislation, and (f) a computer network. Overseas training. Staff of MOF participated in a series of overseas study tours related to public finance: economic policy and regulations, debt policy, financial and fiscal policy, macro-financial policy and personnel training. In-country training. Seminars were arranged on the design of reform programs in fiscal policy and macroeconomic management, and housing policy. Equipment. The subproject financed the procurement of computer equipment, including network systems and software. Evaluation The subproject was felt to have increased the knowledge of specialist staff, and to have developed contacts with international organizations. Senior staff were actively involved in many of the programs. Some reservations were expressed about the effectiveness of some study tours.  Annex C - 32 - SUBPROJECT DESCRIPTION AND PERFORMANCE Subproject No. 3: Institutional Development of the People's Bank of China Government implementing agency: People's Bank of China, Human Resources Development Center Date of IDA approval: May 1988 Date of project completion: December 1994 (expected June 1990) Allocation: SDR 945,000 (originally SDR 725,000; additional SDR220,000 allocated in 1993) Final disbursement: SDR 970,787 (103%) Description The subproject objectives were: (a) to increase the capacity of PBC for carrying out its role in financial sector reform through training senior and mid-level staff, and thereby (b) to establish a financial macro-control system appropriate for the development of a market-oriented economy, credit system, financial organization system, and modernized system of financial institution regulation. Implementation Overseas training. Fifty PBC staff attended a total of 29 overseas courses and seminars in central and commercial bank operation and visited a number of central banks and financial research institutes. 116 staff participated in delegations to 18 short overseas study tours on the following subjects: clearing systems, banking laws and regulation, bank examination, central bank operation, trust operations, securities markets, commercial bank management, bank accounting, internation banking supervision, monetary policy and tools, computerization of banking systems, statistical analysis, gold markets, fund markets, open market operation and personnel management. A further 59 staff took part in 14 study tours to central banks and monetary authorities. In-country seminars. PBC organized 14 seminars on central bank operation, financial management, macro-economic management, accounting, insurance operations and banking regulations. Equipment. The subproject financed the purchase of computers and other office equipment. Follow-up activities PBC envisages further external assistance, particularly in overseas training for mid-level and junior staff. Evaluation The implementation of the subproject substantially enhanced the skills of PBC policymakers, senior and mid-level staff in the fields of modern financial organization and management systems. The training activities and seminars exposed PBC to modern banking systems and paved the way for the introduction of new banking legislation. A total of 1026 staff benefited from the various activities. Training activities, study tours and seminars could have been co-ordinated more closely, in light of the extent of course duplication.  Annex C - 33 - SUBPROJECT DESCRIPTION AND PERFORMANCE Subproject No. 4: Traininif of Plannine Officials Government implementing agency: State Planning Commission Date of IDA approval: Phase I-May 1988, Phase II-January 1993 Date of project completion: Phase I-March 1994, Phase II-December 1994 Allocation: SDR 875,000 (originally SDR 725,000; additional SDR 150,000 approved in 1993) Final disbursement: SDR 892,916 (100%) Description The principal objectives were: (a) to improve the regional macroeconomic policymaking and planning capacity of SPC, particularly in the areas of macroeconomic management and analysis and formulation of economic and social development plans; and (b) to strengthen the training system for national planners. Implementation Overseas Training. A total of 92 staff took part in 8 overseas workshops on the following subjects: (a) macroeconomic management (France, US), (b) macroeconomic policy co-ordination (US, Canada, Australia, Thailand, Netherlands, Sweden), (c) system for national accounts (US), (d) social security systems (US), (e) social development and environment (US, Canada). A further 32 staff attended long-term training courses in economic theory, macroeconomics, quantitative methods, finance, banking and sectoral economic issues in the UK, Australia and the US. In-country seminars. Conferences were held on economic forecasting, national accounts and state-owned enterprise management. Equipment. The subproject financed audio-visual teaching equipment and desktop computers for the National Planners' Training Center. Evaluation Subproject implementation has greatly enhanced macroeconomic skills of SPC staff and will play a positive role in the formulation of the Ninth Five-Year Plan. Participation in overseas training courses or study tours strengthened links with international research institutes. The establishment of a training center has allowed SPC to hold over 37 classes for over 1000 participants.  Annex C - 34 - SUBPROJECT DESCRIPTION AND PERFORMANCE Subproject No. 5: Plannin! of Electrical Power in Eastern China and Sichuan Government implementing agency: Ministry of Water Resources and Electric Power Date of IDA approval: May 1988 Date of project completion: Expected June 1989 Allocation: SDR 563,137 (originally SDR 1,900,000; reduced by SDR 1,336,863 in 1993) Final disbursement: SDR 563,137 (100%) Description The objective was the formulation of a development strategy to meet electric power needs in Eastern China and Sichuan to the year 2000. Implementation Research. The following reports were prepared as part of the subproject: (a) Medium-term (1990- 2000) planning for electric power development in Eastern China; (b) Medium-term load forecasting for electric power development in Eastern China; (c) Medium-term electric power development planning for Eastern China; (d) Planning of electric power development for Sichuan; (e) Load forecasting for Sichuan. Overseas Training. Staff of MWR undertook training courses in France (Electricite de France), Japan (Tokyo Electric Power Company), and in Norway and Sweden (hydropower, thermal, power and tariffs). In-country training. Seminars were arranged on the following topics: Power Sector Development Planning (Shanghai); Load Forecasting in the Sichuan Network; Local Forecasting (Chengdu); Power Source Planning and Network Planning ill Eastern China (Shanghai); Power Sources and Network Planning in the Sichuan Power Network (Chengdu); Load Forecasting, Power Sources, and Network Planning in the Eastern China Network (Beijing). A final seminar on Power Sector Development and Planning of the Sichuan Power Network was held in Beijing. Evaluation Participation in seminars and study tours familiarized staff with a range of techniques used internationally in electric power planning.  Annex C - 35 - SUBPROJECT DESCRIPTION AND PERFORMANCE Subproject No. 6: Petrochemical Development Plan (Petrochemical Subsector Strategv Study) Government implementing agency: China Petrochemical Corporation (SINOPEC) Date of IDA approval: May 1988 Date of project completion: December 1994 (Expected June 1989) Allocation: SDR 1,812,000 Final disbursement: SDR 1,803,356 (99.5%) Description The objective of this subproject was to formulate a development strategy for the petrochemical sub- sector up the the year 2000, to be included in the Eighth Five-Year Plan (1991-95). Implementation Overseas training. The subproject financed study tours to the USA and Japan to investigate production technologies and seek longer-term co-operation opportunities through technology transfer or joint ventures. A total of 11 staff were sent to the US for long-term training in petrochemical demand, supply and price forecasting and computer operation. Advisors. SINOPEC worked closely with International Development Planner (IDP) cons-ulting firm both within China and in the USA on economic and financial analysis of projects, including Bank petrochemical projects. IDP prepared nine special reports in collaboration with SINOPEC on: (a) International Petrochemical Products Forecast, (b) Survey of International Sources and Prices of Petrochemical Feedstock, (c) Relationship of GNP to Petrochemicals Consumption, (d) Proposed Development Strategy of China's Petrochemical Industry during the 1990s, (e) Proposed Plan for Development of Resins and Plastics in China during the 1990s, (f) Evaluation of Lanzhou Petrochemical Expansion Project, (g) Evaluation of Maoming Ethylene, Yangtzi Ethylene and Liaoyang Polyester Project, (h) Evaluation of the SINOPEC Eighth Five-Year Plan, and (i) Comparitive Analysis of Petrochemical Plant Construction Costs in China and on the US Gulf Coast. The recommendations of these reports were incorporated into the Eighth Five-Year Plan. Equipment. The subproject financed the purchase of computer equipment and network software to facilitate access to reference materials and information on international petrochemical markets. Evaluation The principal benefits of the subproject were developing the capacity of SINOPEC in the areas of demand and price forecasting, planning and project evaluation. The acquisition of data management and decision support systems will facilitate short and longer-term planning and evaluation work. SINOPEC has been able to develop a petrochemicals industry database for planning and consulting purposes.  Annex C -36 - SUBPROJECT DESCRIPTION AND PERFORMANCE Subproject No. 7: Promotion of China's Consultinz Industrv Government implementing agency: China International Engineering Consulting Corporation (CIECC) Date of IDA approval: May 1988 Date of project completion: December 1994 (Expected June 1990) Allocation: SDR 513,000 (originally SDR 363,000; additional SDR150,000 allocated in 1993) Final disbursement: SDR 453,372 (88%) Description The objective was to increase the capacity of CIECC to carry out and review feasibility studies and project design and supervise construction projects. Implementation CIECC established a dedicated implementation team drawn from senior management in order to draw up an appropriate training program. The program was weighted heavily towards overseas study tours and training. Activities planned for 1994 were not fully implemented as a result of communication delays between CIECC and IDA. Overseas training. A total of 35 staff participated in long-term (6-12 month) training programs in Engineering, Accounting and International Law in Australia, USA. Hong Kong, Japan, Germany, UK and Canada. A further 32 staff visited consulting firms and utilities in the USA, Thailand, India and Australia. In-country training. A seminar on Project Management in Engineering Projects was conducted in Tianjin in 1989 for 50 participants. Equipment: Audio-visual equipment was acquired for CIECC's training center. Evaluation The professional staff of CIECC gained considerable expertise in international engineering consulting procedures, methods and management skills as well as knowledge of international financial systems and legislation. By working with international consulting firms, particularly through on-the-job training, CIECC strengthened its technical capabilities. The procurement of audio-visual equipment enabled CIECC to establish a training centre to facilitate further internal and external training in new disciplines. Co-ordination between CIECC, SPC and MOF was considered effective.  Annex C - 37 - SUBPROJECT DESCRIPTION AND PERFORMANCE Subproject No. 8: Develooment Strateev for China Investment Consulting Corporation Government implementing agency: China Investment Consulting Corporation (CICC) Date of IDA approval: December 1988 Date of project completion: August 1994 Allocation: SDR 220,000 Final disbursement: SDR 206,388 (94%) Description Developing the capacity of the China Investment Consulting Corporation in financial analysis, project evaluation, and investment advisory services through training and development of contacts with international consulting firms. Implementation Overseas traininz. A total of 15 CICC staff attended 1-3 month training courses in investment banking and financial and banking consultancy at branches of Banque Indosuez in Singapore, Hong Kong, UK and Belgium. A further 20 staff took part in study tours to Japan, Singapore, USA, Canada, France and Italy organized training by selected consulting firms and commercial banks in the following subjects: Securities, Mergers and Acquisitions, Investment Banking, Financial Consulting and General Finance. Evaluation The development of new skills has resulted in notable organizational benefits for CICC, allowing internal restructuring, establishment of new departments and development of new initiatives in line with China's changing economic conditions. CICC has established departments for asset evaluation, accountancy and investment advisory services as well as 14 branches throughout the country to handle local business. The Asset Evaluation Department offered its services to companies to be publicly listed, such as the Wuhan Iron and Steel Complex. It is recognized by the Administration of State Assets of the PRC and the China Securities Regulatory Commission. The Accounting Department has offered its services to several enterprises including the Huaneng Group's Dezhou Power Station and the Weihai Power Station. Furthermore, the development of contacts with international consulting firms has enabled CICC to establish wider business relations.  Annex C - 38 - SUBPROJECT DESCRIPTION AND PERFORMANCE Subproject No. 9: Organization and Regulation of a Futures Market Government implementing agency: Department of Market and Price, Development Research Center Date of IDA approval: December 1988 Project initiated in February 1994. Date of project completion: December 1994 Allocation: SDR SDR 630,000 (originally SDR 370,000; a further SDR 80,000 approved in 1993 and SDR 180,000 in 1994) Final disbursement: SDR 574,621 (91%) Description The objectives of the subproject were to learn from the experience and management of futures markets of other countries, to standardize the development of China's futures market, including futures exchanges and brokerage companies, and to facilitate effective government administration of the futures market. Implementation Research A total of eleven research reports were produced in the period February-December 1994, on the organization and regulation of futures markets. Overseas training. Two DRC staff attended overseas training programs in settlement systems of futures transactions and risk management of the futures market and financial futures respectively. A further six staff took part in study tours to the US and Japan, visiting commodity, mercantile and securities exchanges. In-country seminars. A large-scale conference on Control of Risk in Futures Markets was held in December 1994. Small-scale conferences were held on futures market regulation in May and September 1994. Evaluation The implementation of the project has facilitated the development of policy to standardize China's futures market and develop appropriate regulations. DRC experienced difficulties with counterpart fund repayments.  Annex C - 39 - SUBPROJECT DESCRIPTION AND PERFORMANCE Subproject No. 10: Price Planning Proeram and Anti-Inflation Decision Support System Government implementing agency: State Price Bureau, State Planning Commission Date of IDA approval: August 1989 Date of project completion: December 1994 Allocation: SDR 395,000 Final disbursement: SDR 339,965 (86%) Description The objectives of the subproject were to develop expertise in pricing and marketing, and inflation control, and to understand the mechanisms of international markets, including GATT, as well as domestic pricing. Implementation Research. A model of anti-inflationary measures was developed and the initial results were incorporated in the price policy section of the Eighth Five-Year Plan. Overseas Training. Staffof the SPB took part in overseas training, including study tours on inflation policy, futures markets mechanisms, regulations and institutions, and price and wage control institutions. Equipment. The subproject financed the installation of a computerized decision support system. Evaluation Participation in study tours and overseas training in particular exposed agency staff to international practices, and substantially strengthened analytical capacity in price planning. This was appropriate at a time when the move away from price controls was being discussed more widely.  - 40- SUBPROJECT DESCRIPTION AND PERFORMANCE Subproject No. 11: Development of Audit Ca2ability Government implementing agency: Audit Administration of the PRC Date of IDA approval: August 1989 Date of project completion: December 1994 Allocation: SDR 539,000 (originally SDR 395,000; additional SDR144,000 approved in 1994). Final disbursement: SDR 485,212 (90%) Description The objectives of this subproje.t were: (a) to improve and standardize audit legislation and regulation; (b) to conduct comparative studies of Chinese and international accounting systems and audit methodologies to carry out effective audit supervision of government expenditures; and (c) to develop a computerized auditing system to increase audit quality and efficiency. Implementation Research. Two major studies were completed by the Foreign Capital Utilization Audit Department of AAPRC: (a) an analysis of accounting and audit computerization, and (b) a comparitive study of accounting systems and audit methodologies of China and Western countries. A short-term advisor provided assistance with computerization. Eleven AAPRC staff participated in related study tours to Australia, UK and France in 1992. An in-country semrinar was held on comparitive auditing and accounting in 1990. Overseas training. Since 1991, 52 AAPRC staff have attended training courses in auditing theory and practice in the US, France, Singapore and Australia; many of these individuals are now providing on-the-job training at AAPRC. Seven study tours were organized for larger delegations to state audit bodies in the UK, Italy, Japan, Korea, Thailand, Canada and France on audit legislation, audit management, public finance audit, and audits of all government expenditure. These tours resulted in increased co-operation between Chinese and international audit institutions. In-countrv training. A total of 850 audit staff participated in 9 in-country workshops during the implementation period on the following subjects: new accounting systems, project performance audits, and audits of Bank-financed projects, as well as Chinese-foreign joint ventures, industry, communications, finance, joint-stock enterprises, commercial enterprises and foreign capital ventures. A further four international conferences were held in this period on audit legislation, public works, public audits and China-British audit planning. Equipment. The subproject financed the purchase of computers and basic office equipment. Evaluation The subproject is considered to have achieved all of its major objectives. Participation in intemational seminars, overseas training and study tours enabled AAPRC staff to develop closer contacts with international institutions. Seventy percent of staff who attended overseas courses now hold high-level decision-making positions at AAPRC. The acquisition of skills and information on international auditing practices has facilitated the development of audit legislation. Some difficulties were experienced during subproject implementation: delayed communications between implementing agencies and executive units, problems with overseas communications, and difficulties with counterpart fund repayments.  Annex C - 41 - SUBPROJECT DESCRIPTION AND PERFORMANCE Subproject No. 12: Research on the Formulation and Develooment of China's Science and Technolorv Develooment Plan Government implementing agency: National Research Center for Science and Technology for Development Date of IDA approval: September 1989 Date of project completion: December 1994 Allocation: SDR 617,000 (originally SDR 403,000; additional SDR 214,000 approved in 1994) Final disbWvement: SDR 578,332 (94%) Description The objectives were to increase China's capability in formulating its science and technology policies, as presented in the Eighth Five-Year Plan, and to improve planning methodologies. Implementation Research. Studies were completed in the following areas: (a) Formulation and Implementation of a Science and Technology Plan, (b) China's Science and Technology Indicators, (c) Empirical Study on China's Technological Innovation, (d) Development of China's Science and Technology Human Resources, (e) Promotion of Development Zones for High and New Technology Industries and on Establishing a Decision Support System, (f) Evaluation of Key National Science and Technology Programs during the Eighth Five-Year Plan, and (g) two case studies on Industrial Science and Technology Planning: High-Speed Railway Development, and Development Strategy for the Lower Reaches of the Lanchang River. Overseas training. A total of 26 NRCSTD staff attended courses in science and technology indicators, statistics, human resources issues, and program evaluation and technology transfer at universities in the US, Netherlands, Canada, UK, Japan, Australia and Hong Kong. A further 60 staff participated in a total of 15 study tours to science and technology and research institutes in Japan, France, Canada, Brazil, USA, Japan, Austria, Italy, Netherlands, Switzerland, Belgium, Thailand, Singapore, Germany, UK, Mexico and Korea. In-country training. Two training courses were held, on science and technology planning methods (1991), and science and technology indicators (1992), for a total of 60 participants. A further three workshops were held in 1994 on science and technology indicators, information industries and science and technology program evaluation. International experts participated in all in-country training courses and workshops. Equipment. NRCSTD purchased computer equipment as well as software on statistical analysis, database management, and systems analysis, and received training in software and program evaluation. The High-Tech Development Zone Database and Support System has provided services for SSTC, the Chinese Academy of Sciences, and the State Foreign Trade and Co-operation Commission. Some delays occured in equipment procurement.  Annex C -42 - Evaluation The objectives were achieved highly satisfactorily. The subproject brought about a remarkable improvement in the capacity of central and some local governments in formulating science and technology development plans, ensured the successful formulation and implementation of the Eighth Five-Year Plan science and technology component and also contributed to the development of the Ninth Five-Year Plan. Working relations between NRCSTD, SPC and MOF were satisfactory; NRCSTD maintained staff continuity in the implementation unit. However, NRCSTD experienced some problems with counterpart fund repayment as a result of the devaluation of the RMB.  Annex C - 43 - SUBPROJECT DESCRIPTION AND PERFORMANCE Subproject No. 13: Yellow River Basin Economic Modelling Study Government implementing agency: Reconnaissance, Planning and Research Institute, Yellow River Conservation Commission, Ministry of Water Resurces Date of IDA approval: February 1990 Date of project completion: May 1993 Allocation: SDR 735,000 Final disbursement: SDR 724,823 (99%) Description The objective of the subproject was to establish a water resources economic modelling system for the Yellow River basin. This system would be used to develop policies for rational water resources utilization. Implementation Research. Five research reports were produced with the assistance of international consultants on the following subjects: agricultural production and the economics of irrigated agriculture; costs of water delivery; water quality and problems of sedimentation; and agricultural policy and market changes in the Yellow River basin. In addition, YRCC produced model system studies and computer codes and manuals. The consulting firm, American Water Resources Management Inc., assisted YRCC in developing an economic modelling system from 1990-92. Overseas training. Four staff of YRCC attended a training course in water resources modelling techniques in the US. Six staff took part in a study tour to the US Department of Agriculture, Census Center, Geological Survey, Potomac Basin Committee and the Corps of Engineers. In-country training. Eleven conferences on modelling techniques, including subproject supervision, were held in the period 1990-93. Two workshops on water resources management methodologies were held in 1989-92 for a total of 30 participants. Equipment. The subproject financed the purchase of computer equipment, including portables. Follow-up activities Proposed Yellow River Water Resources Utilization and Allocation Study. Study on water allocation in drought years. Evaluation The subproject successfully developed the Yellow River water resource model system: a simulation model, an optimization model and a graphics system. A full set of data has been collected on hydrology, meteorology, hydraulic works and economic development of the Yellow River basin. Participation in training and the acquisition of equipment have greatly developed the analytical capability of YRCC. The model has been used to determine water resources utilization for the Jing and Datonghe rivers, and for developing a medium and long-term plan for water supply and demand in the Yellow River basin. Some implementation difficulties were experienced. In particular, the accumulation and processing of data was highly labor-intensive; some staff lacked proficiency in scientific English.  Annex C - 44 - SUBPROJECT DESCRIPTION AND PERFORMANCE Subproject No. 14: ImDrovine the Science Fundins System and Promoting the Development of Basic Scientific Research Government implementing agency: National Natural Science Foundation of China Date of IDA approval: July 1990 Date of project completion: December 1993 Allocation: SDR 300,000 Final disbursement: SDR 296,121 (99%) Description The objectives of the subproject were: (a) to study strategies for the development of scientific disciplines, (b) establish a computer information system, and (c) to enhance the flow of science funding by promoting international co-operation and exchange. Implementation Research. A 56-volume study on Strategies of Scientific Discipline Development was completed. Overseas training. Six staff participated in study tours on funding for scientific projects in the UK, Norway, France and Germany; a further six visited the US and Japan to participate in seminars on scientific discipline development. In-country training. An international seminar on Improvement and Development of Science Funding was held in Beijing in 1992 and brought together representatives of scientific research institutes from 24 countries. Equipment. The subproject financed the purchase of computing equipment and database and management information system software, as well as training for computer operators in the US and Hong Kong. Evaluation The subproject achieved all of its major objectives. Furthermore, NSFC staff were able to develop contacts with international research institutes, for example through Internet, and establish core research groups on specialized subjects.  Annex C - 45 - SUBPROJECT DESCRIPTION AND PERFORMANCE Subproject No. 15: Planning of Electronics Industry DeveloDment Government implementing agency: Ministry of Electronics Industry Date of IDA approval: October 1990 Date of project completion: July 1994 Allocation: SDR 1,800,000 Final disbursement: SDR 1,479,671 (82%) Description The objectives were: (a) to analyze and develop practical proposals for medium and long-tern development strategies and policies for China's electronics industry and forecast developments in the global electronics industry; (b) to raise the level of strategic, technical and economic analysis and planning; and (c) to improve the technical facilities and research software of the China Academy of Electronics Industry Development (CAEID), which is responsible for strategic planning and analysis. Implementation Research. Seven research projects were undertaken in collaboration with IDI Consultants (Ireland), resulting in the preparation of the following reports: (a) Strategies for Electronics Industry Development in the 1990s, (b) Scientific Procedures and Lead Time of China's Electronics Industry Planning, (c) Strategies for Microelectronics Industry Development, (d) Strategies to Develop an Internationally Competitive Computer Industry, (e) Export Strategies for China's Consumer Electronics Products, (f) Strategies for Developing Communications Products, and (g) Strategies for Electronic Components, Instruments and Special Equipment. Overseas training. Fourteen Ministry staff attended training courses in Ireland in 1993 on the following subjects: industrial policy, strategic planning and implementation, computer-aided technologies, techniques and methods of enterprise management, and industrial development trends. Thirty-three staff took part in study tours to electronics enterprises in Japan, US, Singapore, Malaysia, Korea, France and Ireland. In-country training. Three seminars were held in 1993 and 1994 in connection with subproject preparation. IDI consultants designed and implemented specialized training courses for Ministry staff in formuiation of industrial strategies, marketing and computer system integration. Equipment. The subproject financed the purchase of computing equipment and network software. Evaluation The objectives of the subproject were achieved satisfactorily. Both Ministry staff and Chinese consultants developed expertise in strategic planning and deepened their knowledge of domestic and international trends in the development of the electronics industry.  Annex C - 46 - SUBPROJECT DESCRIPTION AND PERFORMANCE Subproject No. 16: Key Machinery and Basic Products (Machine Tool Sector Study) Government implementing agency: Ministry of Machinery and Electronics Industry Date of IDA approval: September 1991 Date of project completion: Subproject cancelled at the request of SPC. Allocation: SDR 0 (originally SDR 841,000, reduced by SDR 841,000 in 1994) Final disbursement: SDR 0  Annex C -47- SUBPROJECT DESCRIPTION AND PERFORMANCE Subproject No. 17: Energy Price Research Government implementing agency Department of Market and Price, SPC Date of IDA approval: June 1992 Date of project completion: December 1994 Allocation: SDR 425,000 Final disbursement: SDR 240,468 (57%) Description The objective of the subproject was to carry out a macroeconomic analysis of energy pricing reform, including energy supply and demand forecasts, and the position of energy pricing reform vis-a-vis the overall pricing reform process in the Eighth and Ninth Five-Year Plan periods. Implementation Research. Seven reports were completed, on the following subjects: (a) problems and prospects for energy prices in China, (b) impact of western market price policies on energy prices, (c) coal prices, (d) electric power prices, (e) oil and gas price policy, (f) petroleum products price and circulation policy, and (g) influence of energy price reform on macroeconomic policy. Overseas training. Sixty-two staff took part in study tours to the US, Japan, Korea, UK, Germany, Canada, France and Australia, visiting universities, energy corporations and utilities and energy ministries. In-country seminars. Two conferences were held, on energy pricing reform and on oil price and distribution systems. Evaluation Completion of research reports and participation in study tours developed the expertise of SPC staff in managing the energy sector under a market economic system. The subproject covered a wide range of energy sub-sectors. Some problems were experienced in developing relations with overseas institutions and with repayment of counterpart funds.  Annex C - 48 - SUBPROJECT DESCRIPTION AND PERFORMANCE Subproject No. 18: Poverty Alleviation Studies Government implementing agency: SPC, in conjunction with the Ministries of Finance, Water Conservancy, and Communication, and the China Agricultural Development Bank, People's Bank, State Statistical Bureau, and the Leading Group of Economic Development in Poverty- Stricken Areas under the State Council. Date of IDA approval: October 1992 Date of project completion: December 1994 Allocation: SDR 404,000 Final disbursement: SDR 300,915 (75%) Description The objectives were to study and develop long-term poverty alleviation policies in low-income regions. In particular, the subproject sought to identify priorities for infrastructual investment and options for establishing special poverty alleviation funds. The subproject also aimed to develop a Workfare Program and establish a database for ongoing poverty monitoring and assessment. Implementation Research. The subproject financed the following policy studies: (a) infrastructure development in poverty- stricken areas, (b) anti-poverty credit policy measures and development and utilization of special poverty alleviation funds, (c) statistical poverty assessment, and (d) project management and information systems for the Workfare Program in Shanxi Province. Overseas Training. A total of 36 staff from the implementing agencies attended training courses in economic policy, statistical analysis and finance/credit in the US, France and Germany. A furthe 104 staff participated in study tours to the US and Australia to investigate social security systems, poverty alleviation strategies and regional planning. In-country training. 170 staff attended courses on statistical analysis fo poverty assessment and relief work. In-country seminars. Six seminars were organized in the period 1992-94, on statistical analysis and comparitive poverty alleviation strategies. Equipment. The project financed the purchase of computers and database software, used for project management in 23 provinces and autonomous regions. Follow-up activities The results of the studies, together with the "8-7 Poverty Alleviation Fortification Plan", were used in designing the Southwest Poverty Alleviation Project for Yunnan, Guizhou and Sichuan Provinces. Evaluation Basic project objectives were achieved. Research recommendations for improving the Workfare Program, establishing poverty alleviation credits as well as monitoring systems, were adopted by relevant government departments. The findings of the study on a poverty allevation fund were incorporated into the official "8-7 Poverty Alleviation Fortification Plan". SPC and the Shanxi Provincial Planning Commission carried out follow- up research into Workfare systems. The China State Statistical Bureau has built on the database work to establish a comprehensive Chinese Poverty Monitoring Data Base covering 592 counties. Some difficulties were experienced in selection of overseas training institutes.  Annex C - 49 - SUBPROJECT DESCRIPTION AND PERFORMANCE Subproject No. 19: Study of National Flood Control and Disaatch System. Phase I Government implementing agency: State Flood Control Headquarters General Office Date of IDA approval: November, 1992 Date of project completion: December 1994 Allocation: SDR 1,100,000 Final disbursement: SDR 1,007,126 (92%) Description The objectives of the subproject were: (a) to establish a local computer network for a National Flood Control System at the State Flood Control Headquarter's General Office, (b) to develop an integrated database and an interactive forecasting program, and (c) to provide advanced tools and facilities for collecting and processing flood information, flood forecasting and dispatching. Phase I consisted of the establishment of a pilot flood control and dispatch system on the Huai river above Zhengyangguan as this area had experienced catastrophic flooding in 1991. The pilot scheme would form the basis for a system which could be extended to all seven major rivers in China. Implementation Research: The subproject financed a feasibility study for developing Phase II of the National Flood Control and Dispatch Systems. Overseas training: Staff of the State Flood Control Headquarters visited the US and Singapore for training in flood forecasting methods, and in development of information and computer operating systems. In-country training: Seminars were arranged in China in the application of new technologies in flood control and forecasting, network engineering and decision support systems. Equipment: The subproject financed computer equipment and interactive flood forecasting, hydro- meteorological and database software. As a result of these activities, the implementing agency was able to establish an integrated network which provides information on hydrometeorological data and hydraulic works in the Huai basin, as well as a decision support capability. The system is linked with the National Weather Services. Follow-up activities In Phase II this pilot system will be expanded to a national flood cortrol decision-making system. Evaluation The implementation of the subproject has had considerable practical benefits and has also laid the foundation for a broader flood control program. Study tours allowed State Flood Control staff to broaden and deepen their technical expertise. This has resulted in the development of a core group of skilled personnel. The acquisition of computer equipment has enabled standardization of data, and of interface and transmission protocols.  Annex SUBPROJECT DESCRIPTION AND PERFORMANCE Subproject No. 20: International Ouality Assurance in China Gvvernment implementing agency: China Council for the Promotion of International Quality Assurance, State Bureau for Technological Supervision. Date of IDA approval: September, 1994 Date of project completion: December, 1994 (incomplete) Allocation: SDR 1,910,000 Final disbursement: SDR 1,258,546 (66%) Description The objectives were to establish a China Quality Assurance Training Center, compile a series of quality assurance textbooks, train personnel in quality assurance and integrate China with the ISO 9000 system. Implementation Overseas training. A total of 105 staff attended 30-60 day courses in quality management training, international quality assurance, training coordination and ISO 9000. Equipment. The subproject financed computer and network equipment as well as database software and training manuals. Evaluation A well-equipped training centre was established, enabling the training of quality assurance professionals and enterprise managers. CCPQA has also built up a Quality Information Center. In light of the late approval of this subproject, not all components could be completed before Credit closing. A follow- up subproject is being implemented under the Reform, Institutional Support and Preinvestment Project (Cr.2447).  I~~~~    I