China - Provincial Universities Project

Documt of The World Bank FOR oMricL USE ONLY c //6 ,/CA? Rlet No. P-4243-CA REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT OF SDR 108 MILLION (t120.0 MILLION EQUIVALENT) TO THE PEOPLE'S REPUBLIC OF CHINA FOR A PROVINCIAL UNIVERSITIES PROJECT February 25, 1986 d etd sta ha a rmsfided dItrbSie. ad my he ad by ecpems ony in the pednaomcef tLeffid dud. lb ceuteu my ne othrwise he discoed witbes Wodd Ran atbhoato..  CURRENCY EQUIVALENTS Currency Unit = Yuan (Y) 1985 January 1986 $1.00 = Y 2.80 Y 3.20 Y 1.00 = $ 0.36 $ 0.31 (Project cost estimates are based on the January 1986 exchange rate of Y 3.20 per $1.00.) FISCAL YEAR January 1 - December 31 ACADEMIC YEAR September 1 - August 31 ABBREVIATIONS AND ACRONiMS AAPRC - Audit Administration of the People's Republic of China CNTIC - China National Technical Import Corporation CRC - Chinese Review Commission FILO - Foreign Investment and Loan Office IAP - International Advisory Panel ITC - International Tendering Company PHEB - Provincial Higher Education Bureau. (Throughout the report the terms "provincial" and "provinces" are used to refer to provinces, autonomous regions, and the three municipalities of Beijing, Shanghai and Tianjin which are considered equivalent to provinces.) SEdC - State Education Commission SOE - Statement of Expenditure SPC - State Planning Commission  FOR OFFICIL USE ONLY CHINA PROVINCIAL UNIVERSITIES PROJECT Credit and Project Suumnar- Borrower: People's Republic of China Amount: SDR 108 milLion (US$120 million equivalent) Terms: Standard Project Description: The project objective is to assist provincial universi- ties and the State Education Commission (SEdC) to expand enrollment as well as improve the quality and management of higher education programs. The project will have two components: (a) Assistance to Provincial Universities; and (b) Assistance to Higher Education Development. The first component will assist 60 universities by providing for civil works, equipment for teaching and research, curricula reorganization and staff development oppor- tunities such as fellowships, study tours and specialist services. Emphasis will be given to teacher education programs. The second component will assist SEdC and the Provincial Higher Education Bureaux to strengthen their planning and management capacities mainly through provision of technical assistance. Two planning activities to be executed by SEdC with the assistance of the provinces will be supported. The higher education masterplan will: assess the requirements of industry, agriculture, comerce and government; set enrollment targets; and locate areas where new institutions are needed to meet requirements for educated manpower. Teacher demand and supply plans will examine enrollment at each level of education, assess size and quality of the existing teacher stock and set targets accordingly for pre- and in-service teacher training. As in previous education projects, an International Advisory Panel (IAP) has been established for the purpose of the project, and will be maintained to advise the Government on project implementation. The principal risk of the project would lie in the variation of implementation ability among the 28 pro- vinces. This risk is reduced by: (a) excellent perfor- mance in SEdC's project implementation in previous projects; (b) active involvement of the SEdC Planning Bureau in the two planning activities; (c) strong comfitment shown during appraisal by the provinces to meet criteria for inclusion in the project; and (d) the contribution of the IAP. Thi docmenth restricted distribution and may be used by recipients only in the performance I of thoir officil duties Its contents may not otherwe be disclosed without World lank authozmtion.  Estimated Costs Local Foreign Total - miiiionT A. Assistance to Provincial Universities Normal universities 78.1 96.9 175.0 Comprehensive universities 49.6 67.2 116.8 Technical universities 24.9 24.6 49.5 Medical universities 7.3 13.2 20.5 Agricultural universities 4.0 6.4 10.4 Subtotal 163.9 208.3 372.2 B. Assistance to Sigher Education Development 3.6 1.7 5.3 Base Cost 167.5 210.0 377.5 Physical contingencies 16.8 21.0 37.8 Price contingencies 17.6 44.1 61.7 Total Cost /a 201.9 275.1 477.0 /a Imported equipment, books and journals will be exempt from duties. Financing Plan: Local Foreign Total ($ million) Government 202 155 357 IDA 0 120 120 Total 202 275 477 Estimated Disbursements: Association Fiscal Year 1987 1988 1989 1990 1991 1992 $ million --__-____ Annual 6.0 26.0 49.0 25.0 11.0 3.0 Cumulative 6.0 32.0 81.0 106.0 117.0 120.0 Rate of Return: N.A. Staff Appraisal Report: No. 5673-CHA, dated February 25, 1986 Map: IBRD 19054  REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE PEOPLE'S REPUBLIC OF CHINA FOR A PROVINCIAL UNIVERSITIES PROJECT 1. I submit the following report and reco,uendation on a proposed credit to the People's Republic of China to help finance a Provincial Universities Project. The credit, for an amount of SDR 108 million ($120 million equivalent), would be on standard IDA terms. PART I - THE ECONOHY 2. A country economic report entitled "China: Long-Term Issues and Options" (No. 5206-CHA) was distributed to the Executive Directors on May 22, 1985. Basic data on the economy are given in Annex I. Background 3. Since 1978, China has initiated economic reforms in both rural and urban areas and in the external sector. Reforms have been greatest in rural areas. Following some experiments with the abolition of collective farming in impoverished areas, the Government implemented a comprehensive restructuring of rural institutions based on various forms of the "production responsibility systen". By 1983 the farm household had become the fundamental unit of management and production in agriculture, within a framework of collective or state ownership of land and major fixed assets. Reforms have not yet proceed- ed as far in the urban economy, but there have been significant changes in enterprise management and finance. The scope for collective and individual economic activities has been enlarged and state enterprises have been allowed greater freedom in production, pricing and marketing above their mandatory plan targets. State enterprises have also been allowed to retain some profits and investment projects have increasingly been financed on a loan rather than a grant basis. 4. In international trade and investment, China has promoted opening up to the rest of the world in recent years. Between 1978 and 1984, the share of exports to GDP nearly doubled to about 10%, a ratio similar to other large economies such as the U.S. and Brazil. Foreign investment has been encour- aged, first through establishment of four Special Economic Zones and signing of joint venture contracts for off-shore oil exploration, and more recently through opening of several coastal cities to foreign investment.  -2- Growth and Stabilization 5. Reforms have helped stimulate rapid development of the whole economy. Real GDP growth averaged 5% p.a. between 1978 and 1981 and 1OX p.a. between 1981 and 1984. During these six years, per capita incomes in real terms more than doubled in rural areas and increased by more than 50S in urban areas. Agriculture has continued its remarkably strong performance, with gross agricultural output value (excluding rural industry and commerce) rising at nearly 11% p.a. between 1981 and 1984 and grain output at 8S p.a. (reaching over 400 million tons in 1984). Cash crops and animal husbandry, stimulated by rising demand and attractive prices, have also grown rapidly. Gross indus- trial output value grew at over 10% p.a. over the same period, with heavy industry growing somewhat faster than light industry (12Z p.a. vs. 9% p.a.). If rural industrial output is included, total industrial output value grew at close to 12% p.a. in real terms between 1981 and 1984. The energy constraint on industrial growth was eased by rising coal output (8% p.a. between 1981 and 1984), renewed increases in crude oil production (4Z p.a. between 1981 and 1984) and improvements in the efficiency of energy utilization (primary commercial energy consumption grew only 60% as fast as GDP between 1981 and 1984). Manufactured exports growth at 8% p.a. between 1981 and 1984 was slower than during the 1978-81 period but it started from a much higher base and in the face of worsening world market conditions. 6. The Government continues to face difficulties in combining system reform and rapid overall growth with maintenance of economic stability. During 1979 and 1980, China experienced large budget and current account deficits combined with excessive investment and inflationary pressures. In response, a strict stabilization program was introduced in 1981 relying mainly on administrative controls on investment spending. The program slowed growth but also helped lower the budget deficit from about 5Z of GDP in 1979 to less than 1% in 1981, reduce inflation to around 2% p.a., and change China's external position to one of current account surpluses averaging nearly $4 billion during 1982-84. As a result, foreign debt and debt service ratios remained at low levels ($6.4 billion and 5.5% respectively in 1983) and China's foreign currency reserves (excluding gold) rose to $17 billion (over 7 months' imports) by mid-1984. 7. This comfortable balance of payments position, achieved at the cost of drastic reductions in investment spending and some recentralization of investment decisionmaking, disappeared rapidly during the course of 1984 and early 1985. Partly as a result of decentralization of decisionmaking and the lack of effective indirect levers, there was a rapid acceleration of invest- ment and consumption during 1984 and the first half of 1985 causing the economy to overheat. Real GDP grew by 14% during 1984, while average wages in state-owned enterprises rose by 20% and domestic credit grew by 36%. The retail price index rose by only 3% in 1984, but preliminary figures show an inflation rate of 9% for 1985. Imports of capital goods increased from $4 billion in 1983 to over $7 billion in 1984, with most of the increase occurring in the second half of the year. There was also a rapid expansion in consumer goods imports. These trends continued during early 1985. As a result, foreign exchange reserves (excluding gold) had fallen to about $10 billion by July 1985 (equivalent to 3.1 months of imports), and the  - 3 - current account deficit for the year is likely to be in the range of $10 billion. The Government has responded quickly by launching a strict stabilization program that includes further increases in interest rates as well as a series of administrative directives governing bank credit and project approval. As a result, aggregate credit and demand as well as new import orders have begun to slow, though total imports will continue to rise as past orders are filled. Recent Reforms 8. The Central Committee of the Chinese Communist Party issued a major document on "reform of the economic structure" in October 1984. Recent reform developments have been fully in accordance with the directions indicated in the October decision: (a) state enterprises should be made fully independent units which pursue profits and are responsible for losses; (b) the scope of mandatory planning should be reduced and replaced by indicative planning while the focus of planning should shift from annual to medium- and long-term guidance planning; (c) a more rational price system should be introduced by reducing the role of state-controlled prices and increasing the role of "floating" and free market prices; and td) the tax system should be improved, finance and banking should be reformed and a larger role should be given to indirect macroeconomic regulation through instruments such as tax, credit and pricing policy. 9. Rural reforms have continued to progress more rapidly than reforms elsewhere in the economy. There has been a remarkable spread of nonagri- cultural activities like processing, transport, and commerce. "Specialized households" (which concentrate on cash crops, animal husbandry, or nonagri- cultural activities) and pooling of capital by small groups of households in various types of ventures are becoming increasingly common forms of economic organization in China's rural areas. Wholesale markets for some agricultural products have emerged. To encourage investment in land improvement and devel- opment, farming contracts between collective and peasant households for the use of land (which typicalLy had been fixed for no more than 3-5 years) can now be extended to as long as 15-20 years. In early 1985, the system of agricultural procurement was changed. Previously the Government purchased quota output of grain and other crops at relatively low prices and stood ready to purchase all above-quota output at a higher price. Under the new system, procurement up to a certain amount (below former quota procurement) is based on contracts concluded voluntarily between peasants and procurement agencies. Prices for these purchases are based on the relatively high average price of past years. Output above the contracted amount must be sold by peasants directly on the free market, but the Government will intervene to purchase grain if the price falls to the original low quota procurement price. Thus a considerably larger portion of basic crop production will be produced for and traded on markets with flexible prices. 10. The momentum of urban reforms has revived, with significant progress on several fronts. In enterprise management, the focus has been on broadening and delineating the decisionmaking authority of urban enterprises. Profit retention now extends to virtually all state-owned industrial enterprises and to nonindustrial sectors like transport, commerce, construction, and other  - 4 - services. Urban collectives and individual enterprises, as well as a variety of joint ventures between them and state enterprises, have grown rapidly (the number employed in urban individual enterprises rose from 150,000 in 1978 to 2.31 million in 1983). 11. In financial reforms, the most important new development has been the implementation of a profit tax system to replace profit remittances by state enterprises to the government budget. Though most enterprises have switched to this system, the benefits have been limited because of the application of a different effective tax rate for each enterprise, to offset the impact of distorted relative prices and other factors. Similar problems have resulted in the abandonment of an attempt to impose a fee or charge on the fixed capital provided to state enterprises by the Government, and they have hindered the shift from grant to loan financing of new fixed investment. Financial discipline at the enterprise level remains weak, in spite of efforts to strengthen accounting and auditing systems and more strictly enforce existing financial regulations. 12. Some progress has been made with price reform. The majority of agriculture commodity prices were decontrolled even before the recent change in pricing and procurement of grain. Prices of many minor consumer goods are also set by negotiations between producers and commercial units. "Floating prices" (up to 20Z above or below official prices) are now allowed for many industrial producer goods (either for all output or for output above the mandatory plan target). Price adjustments for key energy products and raw materials (which in ma-y cases are severely underpriced) and for subsidized basic consumer goods like grain and edible oil have proven more difficult to implement, hindered by the potential impact of price changes on urban living standards and on the finances of energy-using enterprises. Nevertheless, some price rises have occurred (e.g., for coal and petroleum), and moreover the share of free market transactions, at largely uncontrolled prices, has increased in recent years. Gradually over time, and only partly as a result of conscious policy, a two-tier system is emerging; a large but shrinking share of the total supply of most important goods is subject to mandatory plan allocation and administratively set prices, while at the margin a substantial and growing share is allocated by the market mechanism, largely at flexible prices. This pattern may permit China to "grow out of the plan" in a rela- tively smooth transition, though there are obvious threats to this strategy arising from the strong incentive for arbitrage between planned and unplanned realms. 13. The Government recognizes the need to develop new tools of indirect macroeconomic management and has taken some steps to do so. The People's Bank of China was established as a separate central bank at the beginning of 1984, with its commercial banking functions taken on by the newly created Industrial and Commercial Bank of China. In 1985, new methods of credit planning and control were introduced and lower-level and specialized banks were given significant redeposit requirements. Interest rates (including deposit rates) were also raised in 1985, with some move toward unification of rates and development of a term structure resembling that in other countries. Technical transformation loans with a maturity less than one year and loans for working capital now carry the same 7.9% interest rate while loans of longer maturity  carry higher rates, up to 10.8% for 10-year loans. However, interest rates on budgetary capital construction loans (formerly grants) remain low and there are a variety of directed credit schemes. On the external side greater use is now being made of the exchange rate. The old internal settlement rate was abolished at the beginning of 1985 and between January and end-October 1985 the rate against the U.S. dollar declined by over 13%. Despite these changes progress in developing new indirect levers of control has been slow. Recent difficulties in securing macroeconomic balance highlight the need to strengthen institutions and macroeconomic management tools (including monetary, fiscal, and exchange rate instruments) for a decentralized and more market-oriented economy. Long-Term Issues and Prospects 14. In September 1985 a national party conference adopted a proposal which will be the basis for drafting a new Seventh Five Year Plan covering the period 1986-90. The proposal reaffirms a political commitment to economic reform and provides guidelines for future reform and development. One of the main objectives of the plan will be to create a favorable environment for reform which, in turn, will set the stage for future development. Target growth rates (7% p.a. for industry, 6Z for agriculture, a little over 7% for CNP) are below rates of growth achieved with the Sixth Five Year Plan, invest- ment is to be restrained in the next few years, and emphasis is to be placed upon quality rather than quantity of output. It is felt that slower growth will facilitate reform. 15. The plan proposal identifies three main areas of reform. First, enterprise management and incentives are to be improved by: giving enterprises greater autonomy in production, pricing, and employment decisions; lowering and equalizing taxes; increasing competition, increasing accountability for performance; and reforming personnel procedures. In addition, some small state enterprises will be turned over to collective or individual management through contract or lease. Second, the role of the market is to be extended and market networks strengthened. The scope of mandatory planning will be further reduced and markets for capital, technology, and labor will gradually be developed. Third, the emphasis of planning will shift from detailed admin- istrative control to indirect macroeconomic control through economic policy. To this end a series of mutually reinforcing reforms in the planning, pricing, fiscal, banking, and labor and wage systems will be introduced during t.ie plan period. 16. Implementation of the plan proposal will help foster an environment in which fundamental reforms can be gradually implemented in a coordinated way. But specific policy measures will take time to design and then to imple- ment. Many of the reforms required will be difficult, particularly since reforms in different areas are closely interrelated, and thus appropriate sequencing and coordination are essential. Fcr example, price reform in the absence of improvements in enterprise financial discipline will have limited benefits, yet the more profit-oriented behavior that would result from tighter financial discipline would exacerbate the adverse impact of distorted prices. Similarly, reform of the labor allocation system will be incomplete without eliminating many of the "social responsibilities" of enterprises  -6- (which now provide housing, medical care, and pensions for their workers and in many cases education and jobs for workers' children) and replacing them with Government-supported social service programs. The plan proposal suggests moving in this direction by commercializing housing. 17. China's objective of quadrupling the gross output value of industry and agriculture between 1980 and 2000 (which means GDP growth of well over 6% p.a.) will require significant improvements in efficiency as well as continued high saving and investment rates. The plan proposal recognizes there must be major structural changes in the economy over the next two decades, including a reduction in the share of agriculture, a rise in the share of industry and services (which at present is unusually low), and substantial urbanization. There will also be a shift within agriculture, away from grain and basic crops and into cash crops and animal husbandry. The new plan will emphasize development of the service sector, mainly through removing restrictions on collective and individual activity. Urban development will focus on small and medium sized cities and towns while restrictions on growth of large urban areas will continue. 18. Certain physical/technical constraints will hinder the attempt to achieve China's targets for the year 2000 and its longer-term goal of catching up with developed countries. Despite rapid growth and substantial improve- ments in efficiency in recent years, agriculture may again become a constraint on overall growth, since land in China is severely limited. In energy, short- ages of fuel (primarily coal) and electricity may continue to constrain growth in transport and commercial infrastructure. Without large new investments and improved efficiency, economic growth will lag. In mobilizing resources in all these areas, China could profitably make use of foreign borrowing. Finally, the rising share of the elderly in China's population (related to the slowdown in population growth) means that more resources will have to be devoted to maintaining their consumption levels, especially in the decades after 2000. 19. Poor motivation and inefficient utilization of labor in the state sector of the economy are major problems which can be solved only by coor- dinated reforms in labor allocation, the wage system, enterprise management, and social services, among other things. Reforms in the system of education and training to develop China's "human capital" potential also ore crucial. Backward technology and inefficient use of existing technology rust be addressed by a combination of reforms, appropriately directed investment, and transfer of advanced foreign technology. Irrational location of factories, suboptimal scale of many plants, and poor utilization of physical capital in general are related problems. 20. If reforms successfully transform the economic system, with a bene- ficial impact on growth and efficiency, a new set of issues will come to the fore, as the plan proposal recognizes. Management of a reformed economy with indirect fiscal, monetary, and other instruments is a major issue (see para. 13 above). In this context, maintaining an adequate saving rate (if the Government no longer accounts for the bulk of aggregate saving) and avoiding inflation (as Tell as deep cyclical downturns) will be major goals. Assuring an adequate minimum standard of living for the population and an appropriate level of social services will become a major challenge as enterprise and rural  -7- communal responsibilities in these areas are reduced. The problem of poor, backward rural areas in various parts of the country will continue to require attention. Redistributing financial resources to these areas through the fiscal system, easing restrictions on migration out of the poorest areas, and lowering nonagricultural wages to make investment in them more attractive are some options for alleviating poverty. 21. In order to mobilize the external resources needed for rapid, sustained growth the plan proposal calls for export growth of 40-50% over the next five years, greater efforts to attract foreign investment, and increased commercial borrowing. If exports grow at 8X p.a. between 1984 and 1990 and imports grow at 9% p.a., China would have a relatively modest current account deficit of around $4-5 billion p.a. (except in 1985) during the remainder of this decade, equivalent to about 1X of GNP. This implies that the present debt service ratio would increase only moderately by 1990. If China's exports grow more slowly imports will probably have to be cut back because a higher borrowing target, though feasible in terms of debt service indicators, would probably run into supply constraints as China would become one of the largest developing country borrowers. This highlights the need for continued export growth in order to meet other plan objectives and service greater commercial borrowing. The plan proposal recognizes that greater use of exchange rate and pricing policies will be needed to encourage export growth. 22. Even with continued good export performance, China will have substantial external capital requirements during the remainder of the decade. Under the trade growth assumptions outlined above (exports growing at 8Z p.a. and imports at 9Z p.a. during 1984-90), the current account deficit would be over $5 billion in 1990 and the gross borrowing requirement would be about $6.5 billion. If export growth fell to 6Z p.a. during this period and imports continued to grow at 9% p.a., the current account deficit would reach $14 bil- lion by 1990. Although the plan proposal calls for increased borrowing at commercial rates, access to concessionary capital will play an important role in sustaining China's growth. China also has a claim to concessionary lending t-cause it is still one of the poorer countries of the world. But China's access to concessionary capital to finance development and modernization is limited; apart from Bank Group funds, a significant amount of concessionary capital is likely to come only from Japan and a few other bilateral donors and will probably average no more than $500-600 million p.a. during the rest of the 1980s. PART II - BANK GROUP OPERATIONS 23. To achieve the target growth rates envisioned in proposals for the Seventh Five-Year Plan, to increase efficiency and innovation, and to maintain equity in distribution, China will need continuing and fundamental reforms. Large investment will be required and China will need to import more technol- ogy and increase trade. In the next few years, therefore, the Bank can best assist China by increasing its access to foreign technology and practices and supporting the development and implementation of reforms that will help to increase the efficiency of resource use and reduce poverty.  - 8 - 24. To address China's objective to update technology, the Bank will play the role of intermediary. In transportation, energy, industry, agri- culture and the social sectors, the Bank will contribute to technology transfer by bringing the Bank's experience to bear on project design and by helping China to seek appropriate technical solutions through international competitive bidding, training, and foreign technical assistance. 25. Bank assistance will be closely linked with the Government's reform efforts. There are five major elements common to both rural and urban reform in China that will be the focus of the Bank's involvement. First, institu- tional change, involving both the separation of economic and administrative functions and further decentralization of decisionmaking, will extend to every sector in which the Bank is involved as well as the overall process of plan- ning and management. Second, financial sector reform, primarily development of financial institutions that can serve as intermediaries between the suppliers and users of resources, has become a focus of reform and is an area where Bank assistance can play a useful role. Third, improving planning and project analysis will be critical to reform in sectors such as agriculture and industry, where decisions are now being made by households and independent enterprises, as well as in infrastructure where direct government involvement will be required. The Bank will therefore continue its emphasis on introduc- ing appraisal methods and will include sector investment and financial planning as well as analysis of intersectoral issues. Fourth, the Bank will be involved in the Government's major program of price reform and development of indirect levers such as control via money, credit and fiscal policies. And finally, the Government will make institutional and policy changes to further improve the quality of social programs. The Bank will thus support reforms in health, education and other social services and measures in particular, to address the problems of poor regions. Economic and Sector Work 26. Our economic and sector work in China aims to develop the Bank's understanding of the structure and direction of the Chinese economy and to introduce to the Government new perspectives on economic management. This work builds a foundation for lending and for the dialogue with Government on issues of reform and development options and policies in the various sectors. Past work has included two major economic reports, studies on sectoral investment analysis and planning, and collaborative research with Chinese institutions. We have also organized seminars on macroeconomic and sector issues. 27. Over the next two years, the Bank will carry out a large program of studies to follow up on issues identified in the most recent economic report and analyze policy options. In this program, we will examine alternatives for developing the financial system and foreign trade and investment. We will also analyze issues of intersectoral and interregional planning and develop- ment of resource-poor regions. One such study is already underway in Gansu province to review and formulate programs to increase interregional resource flows, improve the spatial efficiency of development and reduce poverty. Research on urban development and transport planning and finance at the provincial level will also be initiated, and we will undertake studies of  - 9 - regional industrial subsectors to form the basis for project preparation. Collaborative studies with Chinese research institutions will continue. An ongoing study of management and guidance of state-owned industrial enterprises will be followed by a study of collective enterprises, which are expected to become increasingly important industrial organizations in the reformed system. Lending Operations 28. Since China's change of representation in the Bank Group in May of 1980, 31 projects involving lending of $3,049.9 million to China have been approved. Of the projects, eleven have been in the agriculture sector, seven in energy, four in transport, three in industry, three in education and one each in health, water supply and technical cooperation. In FY85, IFC made its first investment in China of US$17.02 million in automobile manufacturing. Annex 1I contains a suinmary statement of these loans, credits and IFC invest- ment as of October 31, 1985. 29. In addition to the already approved rural credit project and the proposed project we expect to present projects to the Board this year for industrial credit, technical cooperation, port and railway development, aquaculture, power, gas and health. For FY87 and beyond, we expect the China lending program to continue to grow from current levels. Infrastructure projects in energy and transport will remain priorities. Technical renovation of enterprises, particularly in industry, will be given greater attention and support as will the regional approach to project development, now being used to assess the needs of Gansu province. 30. In the energy sector, future Bank lending will be aimed at reducing energy consumption and expanding energy production. For esample, in the coal subsector, we will assist in upgrading the facilities and operations of exist- ing mines and in transferring improved technology for mines under construction or in operation. In power, we will assist China in technology transfer, staff training and institution building. Through a power tariff study, we will seek to introduce a tariff system based on marginal cost and the need for a nation- wide power system development program. In the gas subsector, the rationale for project involvement will lie in the identification, packaging and transfer of specialized technologies as well as in the strengthening of investment plAnning and management capabilities. 31. Future transport projects will both upgrade technology and strengthen institutions. In roads, major changes in organization and financing will be required as a result of administrative decentralization and introduction of the production responsibility system in rural areas. In rail- ways, we wilL focus on technologies to improve domestic production of railway equipment and materials in addition to our work on line construction and electrification. We also intend to broaden our involvement in ports to include coastal shipping and inland water transport. For all transport subsectors, we will support efforts to improve financial analysis and investment planning. 32. Agriculture lending will focus on developing institutions to provide services to individual farmers and to monitor and stimulate change in the pace  - 10 - and pattern of agricultural development. The shift from grant to loan finance and the increased autonomy of the rural banking system will be major aspects of change that will be supported through rural credit projects. We will continue to assist with the training, research, extension, and other service activities of the ministries concerned with agriculture. In addition, we expect to finance programs for specialized agricultural deveLopment such as livestock and fisheries, and for irrigation and area development. 33. Bank lending in industry, as in agriculture, will focus on strength- ening of financial intermediaries which provide credit to state and collective enterprises. In addition, we expect that there will be large regional projects in fertilizer, cement and machine tools and other subsector projects concerned with upgrading technology and improving organization and management. 34. Bank lending in education will gradually be broadened beyond the present concentration on higher education. For example, we will finance vocational and technical education which is now being given great emphasis in China. In view of the Government's recent decision to universalize access to primary and lower secondary education, another major aim of education lending will be to assist with basic education, particularly in poor rural areas. In this context, support for teacher education will be given priority. 35. Project preparation in the urban sector is currently concentrated in Shanghai on efforts to improve services, especially in environmental upgrading and housing, and development of municipal institutions. Future lending is expected to include support for development of medium-size and small urban areas in specific provinces. In addition, we expect to continue lending for rural water supply. Bank lending in health will provide access to new medical technologies for more efficient health care in both the lingering problems of communicable disease, primarily in poor rural areas, and the emerging problems of chronic disease. This will involve further support for medical training and planning and management of service delivery systems. Projects will also support the reform of systems for supplying and financing health services. 36. Cofinancing with multilateral and bilateral agencies has been arranged for projects in coal, power and rural water supply and will remain a feature of our assistance program. We will explore options for cofinancing with export credit agencies. Commercial bank cofinancing and the use of B-loans also appear viable, particularLy as China increases the overall volume of its foreign borrowing. In technicaL assistance, we will continue to incor- porate into projects components for training, overseas study, and access to foreign expertise. In addition, we will be a cooperating agency for a second UNDP umbrella project in China. EDI activities rpmain an important element of the Bank's program and in coming years will provide an extensive program of policy seminars for senior Chinese officials, and economic and financial management courses and sector-specific training for officials from core and line agencies. Implementation 37. Project implementation is generally proceeding well. Most project agencies, as well as the Ministry of Finance and the State Planning  - 11 - Commission, have established and staffed offices to handle Bank projects. Disbursement performance has also been satisfactory. Special accounts have been established for 22 of the 31 approved projects and have helped to speed disbursements. In October 1985, the Bank opened a resident office in Beijing to support further expansion of the lending program, accelerate project prepa- ration, improve project implementation and further economic and sector work. PART III - OVERVIEW OF EDUCATION IN CHINA Prospects 38. During the remainder of this century China's educational system will adjust in several ways: (a) a declining population will lead to a decrease in enrollment at the primary and lower secondary levels; (b) a new grade struc- ture will add grade 6 to all primary schools and extend the secondary level to include grade 12; (c) there will be higher enrollment ratios and increased numbers of pupils per teacher at the secondary and post-secondary levels; and (d) more emphasis will be placed on vocational programs at secondary and post- secondary levels. Primary enrollment will be affected by a remarkable 30Z reduction in the age group population caused by the success of the nation's family planning program. Offsetting this decline will be the Government's drive to attain full enrollment in remote and poorer regions and to extend primary education to six grades. Lower secondary schools offering grades 7-9 will move toward universal access. The Government target for the upper secondary level is to simultaneously increase the enrollment ratio and provide the opportunity for vocational education for students who are not college- bound. Special problems in the primary and secondary school systems are the large number of small schools and a high proportion of unqualified teachers. Higher Education 39. A widely used classification system for higher education categorizes institutions according to their controlling authorities and the general type of curricula offered. At pre ent national authorities control 301 of the 902 "conventional" institutions.- The remaining 601 institutions are controlled by provincial and municipal authorities and are referred to as provincial institutions. The emerging system of 28 provincial television universities are not included in this total because they use less conventional delivery means. 40. Courses of study are relatively uniform across all universities because the State Education Commission (SEdC) controls content of curricula. Higher education curricula are generally divided into political, general and 1/ "Conventional" refers to the delivery mode of the institution. Conven- tional instruction generally involves structured teaching to a group of students in a classroom setting and tends to be full-time. Television university, correspondence school, and worker and spare-time universities are considered non-conventional institutions.  - 12 - subject majors. Electives, about 10% of total hours, are confined to the student's major subject field. 41. For admission to higher education institutions, all students are required to take a very challenging national university entrance e-amina- tion. Nationally controlled institutions draw new students from all parts of the country, but provincial, municipal and county institutions draw only from their areas of jurisdiction. Although it is the Government's long standing policy to assign national university graduates on a national basis, many graduating students prefer to obtain employment in their home provinces. Increasingly, applicants seek to avoid distant assignments by electing to go to provincial universities or municipal polytechnics. National Universities 42. These institutions enroll an average of 5,000 undergraduate students. Graduate programs are rapidly being initiated in this type of institution, with over 441 doctoral programs in place by 1982. National universities controlled by ministries other than SEdC number over 200 and are usually more specialized with curricula directed to the technical needs of the controlling ministry. On average a technical ministry can meet only about 40% of its manpower needs through graduates of its own institutions. Provincial Universities 43. The major types of provincial universities are comprehensive, normal (teacher education), technical, agricultural and medical. Comprehensive provincial universities vary. In the larger provinces they are nearly the equivalent of a national comprehensive university. Their curricula include most standard disciplines with undergraduate and, to some extent, graduate programs. Normal universities and colleges are the largest category of pro- vincial institutions. "Major" normal universities (a total of about 70) offer a four-year bachelor's degree program and usually a few graduate programs as well. These institutions devote most of their resources to training upper secondary school teachers and play a central role in pre-service teacher training. About 160 "minor" normal colleges offer two- or three-year, non- degree programs to train lower secondary school teachers. Because they offer only a non-degree program, minor colleges suffer from low prestige and are generally neglected. Provincial technical universities provide programs in selected fields in science and engineering. They are akin to the technical universities under national ministries other than SEdC and are important to provincial development since curricula and program are determined by the needs of provincial economies. Provincial medical and agricultural colleges are limited in curricula, but not in distinction nor in their contribution to provincial development. The nationally controlled medical and agricultural colleges are unevenly distributed among provinces and the national system of graduate assignment is far from perfect. As a result, provinces may well have an unmet demand in these two important sectors. Moreover, in both medicine and agriculture there are needs for new professional staff beyond what the national institutions can provide. Also, in both sectors provincial conditions var, and specialized training is needed.  - 13 - Finance of Higher Education 44. Higher education institutions are financed largely by SEdC, the technical ministries, or the provinces. The Bank Group estimates that on a national level about 22Z of recurrent expenditure on education is allocated to higher education. Unit recurrent expenditure in higher education averaged about Y 2,000 in 1983. China estimates that its GNP will triple before the end of the century. Bank Group staff estimate that this anticipated economic growth -- together with favorable demographic trends and possibilities for improving internal efficiency - offers China the opportunity to both meet the financial needs of planned educational development and achieve quality improvements, without sharp increases in its allocation to higher education as a share of GNP. 45. Despite this largely favorable trend, resources for expansion and improvement of education are insufficient and Chinese authorities are explor- ing options to improve resource allocations among educational levels and increase resource mobilization. The Government has announced plans for gradual application of tuition fees for university students, including charges of full cost for students sponsored by their work units, combined with an increase in the proportion of non-boarding students, in those urban locations where reasonable alternatives exist. However, in consideration of poverty Nareas, the Government plans to eliminate primary and lower secondary tuition and school fees for rural families in poor and remote areas. Government Objectives and Strate 46. The Government has adopted three principal objectives for higher education: (a) enrollment expansion, especially in graduate programs; (b) improvement of teaching and research programs; and (c) management reform. 47. Enrollment Expansion. The Government is keenly aware of the substantial waste inherent in providing less than 5% of the nation's youth with opportunity for education beyond secondary school. Three targets for higher education enrollment ratios (percentage of the undergraduate age cohort - 19-22 - which is enrolled in higher education) by the year 2000 are suggested for China - high 15%, medium 12.5% and low 10%. A second rationale for expansion of higher education enrollment derives from the skewed educational pyramid. Largely because of the Cultural Revolution, which stopped or hampered higher, upper secondary and technical education for 10 years, the proportion of persons with advanced educational qualifications is low (less than 1%) in relation to the high proportion possessing primary education (over 652). In addition, China's many years of isolation and corresponding disregard of higher education have contributed to the smallness of the stock of manpower equipped to apply or to teach the skills essential for modernization. Only 1.4Z of staff across key sectors in 1982 had university level or higher qualifications. These percentages are between one quarter and one tenth of the corresponding levels in a set of comparator countries. To reach the medium target of 12.5% undergraduate enrollment rates in 2000, the higher education system enrollment would need to triple in about 15 years. This would require expansion of enrollment in existing institu- tions, establishment of new institutions, and further development of non-  - 14 - conventional approaches such as television universities, correspondence programs and spare-time universities. An equally important national objective is to expand post-graduate education. 48. Improvement of TeachinB and Research Programs. This objective has many dimensions, including: (a) broader and more relevant curricula; (b) improved competence and qualification of faculty to teach and carry out research; (c) provision of adequate equipment to conduct all experiments required under the curriculum; and (d) improved facilities design in relation to the objectives of educational programs. Improvements in faculty remunera- tion and promotion policy are being considered, and the International Advisory Panel (IAP) and Chinese Review Commission (CRC) under the First University Development Project are developing policy recommendations for improvements in research. 49. Management Reform. The Government and the universities recognize that higher education is suffering from many management deficiencies. The basis of such self-appraisal is the student-staff ratio of generally less than 4 students to 1 staff while foreign observers advocate higher ratios (approximately 8 to 1). The objectives agreed under the First and Second University Development Projects will continue to be pursued in order to improve the ratio. Space, equipment, time utilization and higher education financial management issues are also recognized. Depreciation allowances and performance auditing are being proposed. A significant move was the repLacement of nearly all college and university presidents over 60 years of age. New presidents have been appointed in over 60% of the institutions in the last two years. 50. In May, 1985 the Government announced a wide-ranging package of policy changes for China's educational system. A newly created State Education Commission has replaced the Ministry of Education. Increased operating autonomy at all levels of education is to reform the current centralized system. In the short run, the main targets are: (i) to universalize basic education (up to grade nine) throughout China, (ii) to increase enrollment in secondary vocational/technical schools, and (iii) to privatize higher education institutions. In the long run, however, the success of these reforms depends on China's ability to develop education at all levels and to update both instructional materials and teaching methods. Bank Group Strategy 51. Through its sector work program and dialogue with the Government, the Bank Group has formulated an education sector lending strategy which entails three lines of action: (a) develop technical and vocational education to increase the supply of technicians and skilled workers; (b) in basic education strengthen the education of teachers and administrators and improve the quality of teaching materials and management services; and (c) expand higher education and improve its quality and management to provide more high level manpower. To date the largest share of Bank Group assistance has been directed to higher education. However, balanced and equitable development requires upgrading and expansion of education at other levels. Accordingly, the current lending strategy has three themes: (a) increased emphasis on  - 15 - technical and vocational education taking into account the needs of other sectors; (b) support for the basic education needs of provinces which are less developed or have other special needs; and (c) continued support for higher education at a more moderate level compared to the past five years. Experience with Past Lending 52. The first Bank-assisted education project in China was approved in 1981 to assist 28 major national universities in the fields of science and technology (Loan 2021/Credit 1167-CHA, $200 million). The Bank Group also eztended two loan/credits totalling $144 million for the development of professional agricultural manpower in 1982 and 1984 (Credit 1297-CiA, Loan 2444/Credit 1500-CHA). A $85 million credit in 1983 for the development of polytechnics and television education (Credit 1411-CHA) is helping China establish a new system of two to three-year technical education to produce technicians and strengthen the television education system to reach a greater number of youths. Both systems have the advantage of accommodating enrollment expansion at a lower cost than conventional universities. A Rural Health and Medical Education Project (Credit 1472-CHA, $85 million, of which $43 million is for medical education) in 1984 provided assistance for improved education and research in core medical colleges and research institutions. A second University Development Project (Credit 1551-CiA, $145 million), approved in February 1985, will contribute to strengthening education in engineering, economics and finance in approximately 35 higher education institutions. Sector specific and project-related training is also included in or planned under Bank projects in agriculture, energy and transportation. 53. The progress of ongoing projects has exceeded expectations. Disbursements are running over 50Z above appraisal estimates. Enrollment growth targets are being exceeded in most cases. Qualitative measures of teaching programs are being reached or exceeded. Even more impressive is the major reform of higher education policy which is emerging. The reform includes decentralization of decision-making to the provincial and institu- tional levels on such issues as student admission, curriculum content, degree requirements, faculty promotions and departmental budgets. However, much improvement is still needed in civil works planning, design and execution and in procedures for equipment selection and justification. Project Rationale 54. The proposed project is the first to address specifically the needs of conventional higher education in provincial institutions. It would include assistance to the subsector in the poorer provinces and provinces previously not assisted by the Bank Group. This could lead to a more direct Bank Group contribution to specific regions and provinces in China, as the process of decentralization proceeds. The Bank Group's influence on higher education policy development gained through the previous six projects would be extended to conventional provincial higher education institutions and to provincial higher education planning authorities. The project will contribute directly to improving the quality and quantity of educated manpower in each province since the output of these provincial universities will remain in the respec- tive province. The contribution to teacher education should assist further  - 16 - development of secondary and primary education, particularly in provinces that are behind national averages in enrollment and quality of education. PART IV - THE PROJECT Project Objectives and Scope 55. The project was identified in February 1984 and prepared by SEdC. It was appraised in November/December 1984. Negotiations were held in Washington from February 18-20, 1986, with a Chinese delegation headed by hr. Chen Zhenyao, Ministry of Finance. A staff appraisal report (No. 5673-CHA, dated February 25, 1986) is being distributed separately to the Executive Directors. Supplementary project data are provided in Annex III. 56. The project will consist of: (a) direct assistance to 60 provincial universities in 28 provinces; and (b) planning assistance for the higher education subsector. Under part (a) the project will provide civil works, equipment and staff development to expand enrollment, improve educational programs and strengthen university management. Under part (b) technical assistance will be provided to SEdC and the provincial higher education bureaux (PHEBs) to strengthen their planning and management capabilities and improve efficiency in the higher education subsector. There will be two comprehensive provincial planning activities on higher education master- planning and teacher education. 57. The universities proposed for assistance were selected jointly by SEdC and the provincial governments using the following criteria: (a) the university contributes to the supply of provincial high level manpower needs for qualified secondary school teachers or other high priority development fields; (b) the university offers four-year undergraduate degree programs and will either provide for 10% of the total provincial university undergraduate intake or have a minimum enrollment of 100 in each of its departments; (c) each university has a development plan approved by the provincial government and has submitted institutional requirements for civil works, equipment and staff development; and (d) for each institution the provincial government agrees to provide an adequate counterpart budget for capital investment in civil works and locally procured equipment and a recurrent budget for meeting the planned expansion of enrollment, adequate teaching materials, maintenance of buildings and equipment and depreciation allowances. 58. The project universitieJ are classified into normal (28), comprehen- sive (18), technical (7), medical (5), and agricultural (2). Provinces have selected imiversities for inclusion in the project on the basis of manpower priorities and the numbers of national and regional universities located in the province. All provinces are represented by a regional or provincial normal university. The selected universities are leading institutions in the provinces and through participation in the project will become models for other provincial universities.  - 17 - Project Components Assistance to Provincial Universities ($372 million, excluding contingencies) 59. Enrollment Expansion. As an outcome of the project, total enroll- ment (including enrollment in short-term and evening courses) in the 60 universities would grow from about 320,000 in 1984 to over 500,000 in 1990 including about 220,000 students enrolled in special curricula, short courses or evening courses, an increase about 58% over the period. Growth in under- graduate enrollment would be from 200,000 to over 260,000, an increase of 30Z. Graduate enrollment would expand from about 5,200 in 1984 to about 25,000 in 1990, or an increase of over 380Z. The average enrollment per institution would increase from 5,500 to 8,400, thereby contributing to economies of scale. 60. Educational Program I rovement. The project will raise the quality of instruction by supporting: (a) staff development for faculty; (b) improved curricula and teaching methods through provision of equipment to conduct experiments required under the curriculum and the introduction of alternative teaching methods such as audiovisual and computer assisted instruction; (c) the pursuit of a more flexible and relevant curricula through the advisory programs of the Chinese and international panels (para. 69); and (d) the improvement of academic support services (libraries, computer centers and audio-visual programs) through the fellowship program and the contribution of the panels. Specific outcomes over the project period will include: (i) increase in the percentage of faculty with master's and doctorate degrees including those with equivalent educational levels, with an appropriate mix of local and foreign degree holders; (ii) lowering of the average faculty age; (iii) ability to offer over 95% required experiments performed in basic undergraduate courses and 80X in specialized undergraduate courses; (iv) lower percentage of compulsory courses and higher percentage of optional courses; (v) increased use of discussion method and audio-visual material; and (vi) postponement of a final decision on undergraduate major until the second academic year. Special attention will be given to teacher education program improvement in normal universities where the project will result in increased number of weeks of teaching practice, and increased number of teaching hours for pedagogy and psychology courses. 61. Management Reform. The project will result in improved utilization of existing staff, space, equipment and facilities, and more efficient university management and administration, substantially reducing duplication and waste. Efforts toward management reform will complement those for enrollment expansion and program improvement. Outcomes of the reform will include the following: (a) an improved student:faculty ratio; (b) more inten- sive use of classrooms and laboratories; (c) more hours of library operation; (d) increased percentage of commuting students; (e) introduction of a student credit-hour system; (f) more efficiency in the management of student and personnel records and inventories of equipment and facilities; and (g) provi- sion of maintenance and depreciation allowances for equipment.  - 18 - Assistance to Higher Education Development ($5 million, excluding contingencies) 62. Through the practical experienced gained in the execution of two planning activities, the central and provincial higher education authorities will strengthen their capacities to design and implement similar comprehensive plans. Furthermore, the results will serve as a basis to plan quantitative and qualitative improvements, taking into account the manpower requirements and the financial and staffing implications. While the provincial governments will be involved, responsibility for coordinating and implementing these activities will rest with SEdC. 63. Provincial Higher Education Hasterplans will be prepared under the project to assist each province in considering its future needs in light of the three broad national objectives. Baseline data would be assembled to determine present (1986) status on number and locations of higher education and post-secondary education institutions. Enrollment expansion will be addressed through projected numbers, types and locations of higher and post- secondary institutions in detail for 2000 and enrollment levels by specializa- tion, including new specialization options not presently offered. Program development will be interwoven with the enrollment expansion section above, but should include inter alia the following: (i) numbers of faculty members needed by specialization, rank and degrees; (ii) new specializations or combinations of specializations to be added and specializations to be eliminated; (iii) new policies on electives, inter-disciplinary study, inter- institutional programs, etc.; and (iv) research programs to assist provincial development. Organization plans for each institution will be assembled showing procedures for management and qualifications of managers. Plans will include estimates of approximate expenditure per year on recurrent costs, expected investment and sources and approximate levels of finance. 64. Provincial Teacher Education Plan. Since the size and structure of the primary and secondary education systems will experience major changes in the 1980s and 1990., particular attention needs to be given at national and provincial levels to both the size and quality of the teaching force. At the secondary level, rising enrollment ratios and demographic changes will result in first an increasing and then falling demand for teachers. Even more impor- tantly, in-service training must receive attention to upgrade unqualified teachers at all levels. The planning activity will assemble an inventory of the existing teacher stock by school and field(s) of study taught. Projections of school enrollment will be essential to predict demand in 2000. The activity will employ simulation techniques to analyze the variation resulting from different policy alternatives. 65. The project will provide funds for civil works, equipment, and tech- nical assistance, in order to attain the project objectives listed above. 66. Civil Works. Through the provision of civil works an estimated total area of 1.4 million sq m at 60 sites will be constructed. Construction costs have been calculated at about Y 425 million. In anticipation of the project many universities have been provided special budgets by the provinces to construct new buildings and remodel existing ones, and work in both  - 19 - categories is expected to be completed by end-1987. The additional and remodelled space will accommodate the larger student body through provision of more classrooms and laboratories. Furthermore it will enable new equipment for teaching and administrative use to be installed and maintained property in space of adequate size and environmental control thus contributing also to program improvement and management reform. Early in the project four institu- tional space utilization surveys will be undertaken to help establish models for space standards for future construction. The Association will review plans and offer advice for improvement for buildings not yet designed. In the future the Government and the universities are expected to adopt a more rigorous approach to facilities planning to achieve greater effectiveneas when universitites will have to bear the full costs of civil works instead of receiving completed buildings as a subsidy from the Government. 67. Equipment procured under the project will contribute to improved quality of instruction through enabling more experiments to be performed, and expansion and upg-ading of libraries through provision of more library equip- ment and books. Audio-visual equipment and computers will also be provided for instruction. The equipment will accommodate expanded enrollment without compromising the quality of education, and also be used for better management of university affairs. Guidelines will specify that teaching equipment has priority over research equipment. 68. Technical Assistance will be addressed through fellowships, study tours, seminars and specialist services programs. Overseas and local fellowships will be provided from domestic sources as well as credit proceeds. Fellowships will principally support study at the masterts and doctoral levels. A target will be for the 638 departments with about 28,000 faculty to each have six graduate degree-holders or scholars with equivalent educational levels at the end of the project, significantly improving the quality of academic staff. The Government has agreed during negotiations that fellowships will be awarded in accordance with selection procedures and criteria agreed with the Association. A second form of staff development will consist of study tours and seminars led by specialists on selected mAnagerial and curricular topics. 69. Spzcialist Services and International Advisory Panel. Overall efficiency of the higher education authorities will increase as a result of technical assistance provided through an International Advisory Panel (IAP). The IAP will provide expertise in general higher education management, higher education planning and teacher education planning. The IAP, in collaboration with a Chinese Review Commission (CRC) consisting of local higher education experts, will advise SEdC on the best strategies for project implementation. It will identify the locations abroad from which the most suitable resources can be drawn for the specialist services and fellowship programs and assist SEdC in designing and ezecuting the two planning activities. Two hundred forty man-months of specialist services will be provided through visits by high level specialists to individual institutions and participation in national or regional seminars introducing techniques and procedures for curricula and management reforms.  - 20 - Monitoring and Evaluation 70. Progress toward project objectives will be monitored through: (a) a set of measurable indicators (such as enrollment, Dcudent:staff ratio and space utilization targets) agreed upon with the Government during nego- tiations; (b) reports and recommendations prepared by specialists selected with the assistance of the CRC and IAP, subject to approval by SEdC, which :ll be synthesized as part of project evaluation; and (c) additional measures for evaluation developed by the CRC and IAP. The Government has agreed during negotiations that project progress will be monitored and evaluated through such performance indicators agreed with the Association. Annual progress reports covering calendar years would be submitted each year in February starting in 1988. While these reports will also include the status of physical executions, special emphasis will be placed on reviewing progress toward meeting project objectives. The annual progress report to be submitted in February 1989 would become the basis for an especially intensive mid- project review articulated with the evaluation activities of the CRC and IAP. Progress on the performance indicators will also be reviewed at this time. Costs 71. Summary of Costs. The total project cost is estimated at Y 1,526 million or $477 million equivalent. Base costs refer to April 1986 prices. Civil works costs for new buildings were estimated on the basis of unit costs per m in recent building contracts awarded by the related provincial govern- ments. The cost of furniture is estimated as 8% of the civil works costs due to its relatively low price in China. The cost of equipment is based on recent bid prices under ongoing Bank Group-assisted education projects. The foreign exchange components are estimated as follows: civil works including furniture - 11%; equipment - 90%; specialist services and fellowships - 50%; planning activities - 50%; and assistance to higher education development - 33%. The low foreign exchange component estimate for civil works is consistent with estimates in the Second University Development Project approved in February 1985. Other estimates are consistent with previous Bank- financed education projects, but with minor adjustments. The contingency allowances of $100 million include: (a) physical contingencies estimated at 10% of the base coats of civil works, furniture, equipment, specialist services, fellowships and assistance to higher education development; and (b) price contingencies averaging 16% of the base cost plus physical contin- gencies. Annual price escalation rates were applied to the domestic and foreign cots as follows: 7.0% in 1986 and 1987, 7.5% in 1988, 7.7% in 1989, 7.6Z in 1990, and 4.5% in 1991 and 1992. 72. Utilization factor and unit cost. Utilization factors for class- rooms, laboratories and workshops are not available due to the Lack of micro- analysis. Unit costs per student place are reasonable, as the average of $4,600 compares favorably with the median for Bank education projects of $16,500 per student place at university level, both figures excluding contin- gencies. The significant gap is because additional capacities are created as extensions to existing places instead of totally new places.  - 21 - Financing 73. Out of the total project cost of $477 million, the Covernment will finance $357 million equivalent (75%) and the Association, $120 million (25Z), representing 44X of the estimated foreign ezchange costs. The project when in full operation with an additional enrollment of about 80,000 undergraduate and graduate students will generate an estimated recurrent expenditure of about $45 million p.a. at 1985 prices which consists of: (a) estimated average unit recurrent cost per student of $400 which is based on recent higher education cost studies; (b) an increase of 10% for an improved supply of teaching materials and better maintenance and repair; and (c) a 5% depreciation allowance on equipment. This represents less than 7% of the present annual recurrent expenditure budget in higher education, while the planned enrollment increase exceeds 7Z of the present enrollment in existing universities. There should be no budgetary constraint to the Government caused by the project, and there is some likelihood of a reduced financial burden to the Government, when some costs, e.g., dormitory and boarding, will be partially recovered by fees, as a result of the Government's changing policies. Implementation 74. Responsibility for implementing the project rests with SEdC. The Vice Chairman for Planning and Development, SEdC, will carry overall respon- sibility for directing the project. At the higher level is a Steering Committee which has as its members the Vice Chairman and senior officials from SEdC bureaux concerned, viz, the Foreign Investment and Loan Office (FILO), the Planning Department and the External Affairs Bureau responsible for impiementation, planning and relations with provinces respectively. It is chaired by the Vice Chairman. FILO will be assisted in implementation by experts and administrative staff from the project universities. FILO consists of a secretariat and four divisions, namely Project Coordination, Equipment Procurement, Specialists and Fellowship Affairs, and Accounting. At the provincial level, a project office has been established within PHEB in some provinces and an existing division within PHEB has been assigned to take responsibility for implementating the project in other provinces. It is headed by a Deputy Director of the PHEB and will guide project implementation, and coordinate with the universities and the related technical ministries on matters involving the provincial government and the technical ministries. He reports to the Implementation Committee, transmits university requirements on equipment and technical assistance to FILO and obtains data as required by FILO. At the institutional level a loan office has been established in each project university headed by a vice-president. It has a managing director and will report to the PHEB Deputy Director. The Government has agreed during negotiations that these project implementation units will be maintained with staff, responsibilities and functions acceptable to the Association. 75. Aside from these units, a Chinese Review Commission (CRC) and an International Advisory Panel (IAP) have been established for the purpose of the project. The CRC will be active in applying the agreed criteria for equipment procurement and fellowships and determining the requirement for specialist services and fellowships during project implementation. It will have regular joint meetings with the IAP to guide and monitor project  - 22 - implementation. The IAP will consist of three persons, a chairman and two vice chairmen, assisted by a secretariat. The Government has agreed during negotiations that the CRC and ZAP will be maintained with staff responsi- bilities and functions acceptable to the Association. 76. Status of Project Preparation. The project is in an advanced stage of preparation. Construction of most civil works has been started and will be completed by end-1987. Equipment lists and specifications winll have been reviewed by the CRC, IAP and the Association by end FY86. Comercial terms of the bid documents will be substantially the same as those used for previous education projects. The final bid documents will be printed by about April 1986, and submission of bids will be invited by about May 1986. The IAP has commenced work before credit signing on specialist selection and appointment, discussions on curriculum improvement and providing advice on equipment and university administration. Fellowship selection will be completed for the first group of scholars to be placed in overseas universities in September 1986. 77. Procurement. Procurement arrangements will be largely the same as those used in previous education projects in China and are simmnrized in the table on page 23. 78. Civil works and furniture, all financed by the Government, gill be contracted through established local procedures. The credit will finance about $100 million equivalent of instructionaL equipment including books and journals and about $20 million equivalent of technical assistance. About 83Z of the equipment from credit proceeds will be procured through international competitive bidding (ICB) and the remainder through direct purchase or limited international bidding. Equipment financed from Government funds will be procured through local competitive bidding under local procedures which are acceptable to the Association. 79. The International Tendering Company (ITC) of CNTIC will continue to be the procurement agency responsible for inviting bids, participating in bid evaluation and signing and enforcing contracts as under previous education projects. Equipment items for the project will be grouped, to the extent possible, into packages for bulk procurement. Contracts estimated to cost $200,000 or more will be awarded through ICR in accordance with the Bank Guidelines. Local manufacturers will be eligible to participate and will be extended a 15% preference margin, or the prevailing custom duties, whichever is lower, in bid evaluation. Items or groups of items estimated to cost less than $200,000 in each contract and not exceeding an aggregate amount of $5 million may be procured through limited international bidding whereby contracts will be awarded on the basis of comparison and evaluation of quota- tions obtained from at least 3 suppliers. Proprietary items or where justi- fied by the need for standardization, up to an aggregate of $7 million, may be purchased directly. Books and journals estimated to cost about $5 million will be procured directly from suppliers after negotiations for the best discount. Based on experience gained with good performance on equipment pro- curement implementation in China, awards on contracts valued at $500,000 or more will be subject to the Association's prior review instead of the $200,000 threshold as set in the Second University Development Project. It is expected  - 23 - that such review of equipment awards would cover about 3Z of the number of contracts and about 34Z of the total value of all contracts awarded through ICB. All specialists will be selected and appointed in accordance with Bank Guidelines for Use of Consultants. PROCUREMENT ARRANGEMENTS ($ mln) Procurement method Total ICB LCB Other N.A. cost Civil works and furniture - - 181/a - 181 Equipment, instructional /b 83 147 177T - 247 (83) (17T (100) Technical assistance Specialist services - - 4 - 4 (4) (4) Fellowships /d - - 13 25 38 (13) (13) Assistance to higher - - 3 4 7 education development (3) (3) Subtotal for TA 20 29 49 (20) (20) Total 83 147 218 29 477 (83) 7%7 (120) /a Through assigned contracts. 7i Includes buoks and journals. Tc Direct purchase for proprietary items, or where justified by need for standardization and limited international bidding. /d Includes overseas and local. Note: Figures in parentheses denote the amount of the Association's financing. 80. Disbursement. The credit of $120 million equivalent will be disbursed over a period of 5-1/2 years. Disbursements will be made on the basis of: (a) 100Z of the foreign expenditures on imported equipment, books and journals, or the ex-factory cost of locally manufactured equipment; (b) 75% of local expenditures for other equipment procured locally; and (c) 100% of the expenditures for specialist services, exchange programs, overseas fellowships and overseas study tours. Disbursement profiles of previous education projects in China indicate a faster pace than both the regional average of all projects and the Bank Group average of all education projects. The project's Completion Date will be December 31, 1990, and the Closing Date will be December 31, 1991.  - 24 - 81. In order to facilitate the the Association's processing of disbursement applications, a minimum level for withdrawal application will be $200,000. Disbursement applications for contracts valued at $200,000 or more will be submitted to the Association with two copies of the contracts together with other appropriate supporting documents. For overseas fellowships, study tours and expenditures incurred under contracts below $200,000, statements of expenditure (SoEs) certified by authorized government officials will be used. In this case, contracts and supporting documents will be retained by the Foreign Investment and Loan Office, SEdC, Beijing, and, upon request, will be made available for review by visiting missions from the Association. Disbursements against SOEs will be made on the basis of a consolidated summary, each not less than $200,000. Disbursements for other project expenditures will be made against full documentation. For the proposed project, a special account will be established and maintained in US dollars in a bank acceptable to the Association to facilitate disbursments for eligible projects expenditures. An initial deposit of the US dollar equivalent of SDR 5,000,000 representing four months' average project expenditure to be covered through the Special Account will be made. Applications for replenishment of the Special Account will be submitted quarterly, or more frequently if necessary, with certified SOEs as supporting documentation for disbursements against consultant's services, exchange programs, fellowships, study tours and expenditures against contracts below $200,000 and full documentation for all other expenditures. Accounts and Audits 82. Project accounts will be maintained by the FILO. Accounts related to the universities will be maintained at the PHEB Project Offices. The Audit Administration of the People's Republic of China (AAPRC) will audit these accounts. Annual audit reports will be submitted to the Association within eight months of the end of the Government's fiscal year. Six months after the Closing Date, the Government will submit a project completion report to the Association. Benefits 83. The provincial universities assistance component would assist leading provincial institutions to: (a) increase undergraduate enrollment by 30% and increase graduate enrollment almcst five-fold; (b) improve educational programs in all to: (i) enable departments to offer over 95Z of required experiments in science fields; (ii) improve faculty qualifications through local and foreign fellowship programs aiming toward a target of 6 graduate degree holders in each department (including those with equivalent educational levels) compared to a current average of 2% for masters and less than 1% for doctorates; (iii) provide special assistance to the further development of the education/psychology departments of normal universities which are at present in need of improvement; and (c) improve management efficiency by means of policies for more economical use of resources. Through these and many other measures, the beneficial effects of the two previous higher education projects will be extended to the provincial segment of conventional higher education which enrolls 60% of the total enrollment and comprises two-thirds of the total number of institutions.  - 25 - 84. The assistance to higher education development will have a long- range impact in guiding higher education development. The higher education masterplan will set enrollment targets, Locate areas where new institutions are needed, identify priority fields of study in relation to the manpower needs of industry, agriculture and government, more clearly define institutional roles to avoid unprofitable duplication, facilitate more rational faculty and staff deployment, contribute to improved civil works policy, design and utilization and support a more rational policy for equipment allocation, procurement, utilization, maintenance and replacement. The teacher education plans will assist the provinces to address the nation's unprecedented problems of matching teacher supply and demand in a period of sharp demographic change and educational reform. Risks and Justification 85. The principal risk of the project would lie in the variation of ability among the 28 provinces to implement both components. This risk is reduced by: (a) excellent performance in project implementation exhibited by SEdC in the First University Development Project and the Polytechnic/Tele- vision University Project where in the latter case the project beneficiaries are also provincial institutions; (b) active involvement of the SEdC Planning Bureau in overall coordination of the two planning activities; (c) strong comitment shown during appraisal by the provinces to meet criteria for inclusion in the project in such matters as counterpart funds, maintenance and depreciation budgets and early and ample financial commitments for civil works; and (d) the contributions the IAP would make. PART V - RECOHMENDATIONS 86. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association, and recommend that the Executive Directors approve the proposed credit. A.W. Clausen President Attachments February 25, 1986 Washington, D.C.  - 26- Annex I TASIL 3L Page 1 of 7 014. POPLES REP. OF - M.I A = UPLr8 UP. or EuiiCE I06N0 (WIIUW DRES) p_& mS (Cast 3CS ntS LW HUMCO S3U -a inGotb 19701b usnnt "An A innCXC an a nAcxvX mia (TAnM SQ. no) TOTAL 9561.0 9561.0 9561.0 ARICULTUUAL 3257.6 36U2.0 3U65.9 CG PM CAPITA (59) .. .. 300.0 276.3 1011.1 CE1LORAE Or OIL SqIALET 202.0 259.0 641.9 285.7 566.8 vAcm A maL mDanm IOPOULAION.MC-EAR CTOSAD) 651000.0 315160.0 1019102.0 QURAN POPULATION C OF TOTAL) 16.4 t .. 21.0 22.3 U. POPULATON PKOJECIIoHS PoPULATIOs IN TEAR 2000 CHILL) 1242.3 STAnTOART POPULATION CHILL) 1571.0 POPULATION IU11Hh 1.6 POPULATION macn33 PER SQ. MH. 68.1 65.3 106.2 1736 366.9 PuM SQ. MI. ARI. LAN 199.6 210.0 260.3 353.3 1591.2 rOeuLmnOm AZ STYCIU (Z) 0-14 US 38.9 37.6 32.0 36.3 36.2 15-64 Is 56.2 57.2 63.1 59.4 57.7 65 nID SlOY 4.7 5.0 5.0 4.3 3.5 voULAfION GROVS RATE CZ) rTaL 1.1 2.2 1.7 2.0 2.3 URBAN .. .. .. .1 4.1 CDe BIRTH RACE (PR TOlS) 39.2 Id 35.7 1.6 27.5 30.1 Cum O54LT RATE (P tRIlS) 23.5 7T 6.6 7.1 10.2 9.4 CROSS W ZRAUICTO RATE 2.8J 2.3 1.0 1.7 1.9 FAMILY PLAWING As ORS. ML CUES) (Tows) USERS (S or NrD3 OEN) .. .. 71 49.4 56.5 -o -m marmns USE or FOOD rOD. PEA CAPITA (1969-71-100) .. 100.0 123.0 116.6 124.4 PUR CAPITA SUPPLY OP CALORIES C or REIUIRITS) 94.6 Id 101.6 119.8 106.3 115.7 PRLTINS (CAMS ER DAY) 53.0 d 56.2 69.7 60.1 60.3 OF UNIOC SAHUL SA PUS 12.5 7d 13.3 15.9 14.4 14.1 CHILD CAGES 1-4) DELAT RATE 13.5 8.5 2.0 7.3 7.2 LIFE EXPECT. AT SlEN (ClUS) 41.0 /a 60.9 67.1 60.5 60.6 INFANT NDTR. AT (PEa TrUS) 165.0 7' 69.0 36.0 69.2 64.9 ACCESS TO SAEt WATER (POP) TOTAL .. .. 50.0 44.2 46.0 URA .. .. 65.0 77.2 57.6 RMUAL .. .. 40.0 34.6 37.1 ACCESS TO EECREA KSPOSAL ( OF POPULATION) TOTAL .. .. .. 7.8 50.1 UR .. .. .. 26.6 52.9 L .. .. .. 5.5 44.7 POPULATI PER FIISICIAN 7940.0 If 3690.0 If 1740.0 /f 3316.0 7751.7 FOP. Pu SRI PEtRSO11 3830.0 2760.0 1710.0- 690.7 2464.8 POP. PR OSPITAL BED TOTAL 1040.0 760.0 440.0 1039.2 1112.1 URBA 210.0 .. 160.0 299.1 651.4 RURAL 10140.0 .. 1020.0 6026.2 2596.9 ADMISSIONS P HOSPITAL BED .. .. .. 52.3 41.1 AVERAGE SIZ OF HOUSEWOLD TOTAL .. .. 5.1 URN .. .. 4.1 RURAL .. .. 5.4 AVERAGE NO. o0 PERSONSIRoo0 TOTAL .. .. UREAN .. .. tnaL .. .. . .. PEUBTKAGZ OF WUINCS WXRT ELECT. TornL .. .. . .. UA .. .. . .. TURAL .. ..  - 27 - Annex I ,T L LC 3A, Page 2 of 7 Ift 9 - r m rmoaw *sotnw lbs)l not? CPoOTslow 3 31? I 1?ZAfl) I1OL 1970!k LWu 11001 * U?i.3&*=X ma&, Ism I tIunaU MIA4 PA IFA IC ASIA. & PACVIC PIDM TOTL 109.0 110.0 110.0 92.6 100.7 HALS *- *. 123.0 105.3 104.4 NEW" .. .. 97.0 79.3 97.2 SZOWATYs TOTAL 21.0 23.0 35.0 31.3 470. IaLX .. .. 46.0 40.3 50.6 Z .. .. 23.0 21.9 44.1 VOCATIONA CZ ND ) .. .. 2.2 3.2 18.4 FaiDWIT . 33.0 23.0 36.0 30.4 COWD .. 22.0 16.0 17.4 22.2 PAUUUUG CARIUSAND POP .. .. 0.2 b 0. 10.1 RUDO ammars/hOuS po .. 1 .7 210.1 129.J 172.9 TV BZ-IY3kg/TIUDo .. 0.6 35.3 19.8 58.5 MISIXIT) CIOAUTIOU PU THOUSAID POPUT .. .. 334 23.7 63.3 C Dm AIAL AT DANCR/CAjTA .. .. .. 6.0 3.4 TOTL XANI YOM CTUS) 321646.0 310555.0 470692.0 1zNALK t133T) 36.3 38.0 37.3 33.2 33.6 A CULTnU CZC*) - * 6.9 69.6 52.2 IFD C T) .. .. 1.7 15. 17.9 PARTICIPATI RA (PUCET) TOTAL 46.U 45.0 46.1 41.9 38.9 VALE 53.9 54.5 55.4 53.6 50. Fmws 37.0 35.0 35.1 29.1 24.8 zcoUrc DEZ C= RO 0.9 1.0 0.8 1.0 1.1 PUBCcT OWP PRIVATE ZECONA PUCim aPnvna RU:CID 3! HIUS 0s 1 or unDs .. .. 12.5 A GsT 201 0F V .. .. 39.33 .. 4UA0 Lamm 20 O ousos .. .. 6.8 .. 6.4 LoUnS? 40 1 3 S1 .. .. 16.4 .. 15.5 - I 0ins HAMM AMoT POVUT I== LoL CUM PE CITA) URIAN 1.. .. .. 33.9 NODAl. .. .. .. 111.6 151.9 ESTDIAT roAT211 POVIEST LV=L CUSS cP prIA) URBAN .. .. . .. 177.9 .. .. .. 61.7 164.7 E5TDIAT POP. BELOW ABSOU PW93! icON LEVEL CZ) URBAN .. .. .. 43.8 23.5 tURAL .. .. .. 51.7 37.8 NOT AVAIL&BLX Nr APICABLE NOTES fr 7 TM group avorages for each IlAicator are popamtloetlghted *ditletic menow. Coveem og ceunt?eg am" the ladicatr depndo Oa eaviasbil3ity of dt ad im sot ugore. Ab gal1 othermUm notod. "Dtam for 1960' refer to ra yeer betwen 1959 and 1961 "Data for 1970" bet 1969 ed 1971; and data for wnlbt Reet gStlata bsietwe 191 sad 1983. /o 1964; d 1955-f5 average; 1955-6 avergep /1 Soor doctor of etere edicin; JA Distribution of peopl ra-nd by howshos per capits ame,9 data; ^ W980. JU, 1965  -28- Annex I Page 3 of 7 DDIIdrnob O_ SOCLAL INDIWA1O Notemb.v lbdiessis . ihonmu lb J_ ()b M wouambrheiw ed .iab. k ibul lm bo moud lb hy y W t 1We CIinuet_cy nistawaW bigiamg of inkod Nindmtd dsom aid mospi mmd by dama contimes a calkwag de den, The dela ma momdbim. usdw so mg Nbee op~ u (I) she tains a y pow of dom suljim cismy MA d a2) couy wmaw WMb mmewbs NOW avap' dam hm sWM cuntry powaofsbmeominu_ m '(fHriIl Imo_mOll ExpemlUs - -ines fIddle _ nnes Mouh Am end Middin enr imd-e bmmm of or __d.mIw mdu). IOmlw Maw dmd nv a_an psp m'S. u itineWe mom br au .aib.r md dhe.omy wb. m_jonty ofbi.aw~ dm fo heuanIbmi_ sh aiwaofml.ma lb himmdepamib onsellmhiy odda md mu mafm lbfampmdr u AREA (umad sq.k.) CG _ * fn_ R (p.rsh nd)-Number oftiv binhs in the yer Tr6--Toudl nfieas m conprng land am md inlad waterq pr tdoumd of mid-year population 1960.1970. and 1983 data. 1960. 1970 and 1963 data Crude Dmh Et (p. t1)-o *)Number of dead. in the year haft-d Ei of agc-1ral ans ued tempomrily or per tboumd of mid-year population; 1960. 1970. and 1963 data. permanently for crops. paturee. morkat and kitcen padm or to GCm Rdprod Ae-Aversge number of daughten a woma he faw. 1960. 1970 and 1962 data. will beer in her normal reproductive period if she peea age-Wpcflc fatiliqty a; usually fie-year avemcs ending GNP PM CAPT (US)-GNP p. capita esana at cunun in 1960.1970. and 1963. m e pnor. Iculatksm by arne conveio method em World Bash Ada, (196143 bakal; 19613 data ber of accpton of birth-contr devie un ausi of nuana EDIGY CONSUMPTlON PU CAPITA-AnnZul. appant fai mlypamg mwum conumpto of commercrl prmar ,mey (ca and ibpit. ?mip a-Uisr (psua .1 wrkd inn)-The peen- peurola. nuaul ps and hydra-. nucler and pothermal eec- tap ofmared den oftcild-ering au who ae practg or tricity) in kilogma of oil equivalent per capita; 1960, 1970. and whoe humbands ar practcing any form ofcoouceptoc Women 1982 data. of childbearing age am ep mfly oem agd 15-49. alhogh for roa countrine, conincepave uam isnmem d for other age PO- IlATION AND VYEAL STATISTCS P0313. TatdPI MiYe (t _ _)-As of July 1; 1960. 170. FOOD AND NUTRON and 1963 data Ur& hp (_ f 1 1 of S)-Ratio of urban to al 1mkz if FedP w Per Copka (1969-71 - 17 )-index of per ppulton. dii mardeitmon of urb an=my afihet cma- apta annual production of all tood commodities. Production --ty of; datiL among countriem 19 IM and 199 data. cxucsi animal feed an sed for agriculture. Food com de abity of datamong coutrea 196. 1970. and 1933 d. ind ude pr y commoditie (e.g. sugrcae instd of sugr) Ppmb. he eba which are edible uad contain nutrients (eg. coffee and tea are Pop*lon in yaw 20W -The projeton of population for 2000 excluded); they comprise cereals, root crops. pules. oil seeds. made for eah economy seprately. Stang with infornation on vegtabl. fruits. nute. sug_aae and sugr bes livestock. and otl populton by age and m fertility mt. mortlity te. and linvstock products Agpegte production of ech country ts bed untatol migaion n the bme year 1980. theme pameters on natonal average producer prce weights; 1961-65. 1970. and we= projeted at ie-year intervab on the bas of genealimd 1982 data. _mptos until the popution became statonay. r-r Cq*a SW& efCalrle (pereer Df)reg entm)-Comput- Sm y popuIaMme-ls one m whih age- and sl-speci mor- ed from calorie equiwvant of net tood supplies available in country tiity rate. have not changd over a ln peiod, whi agepecific per capita per day. Available supplies comprise domestic produc- fertility rtres have smultuaeously remaied at relcemet levd tion. imports less exports. and changes in stock. Net supplies (net rproduction rte- 1). In such a popuation, the birth rate is exdude animal feed. seeds for use in agriculture. quantities used in constant and equal to the death amm. the age structure is also food processing. and loaes in distribution. Requirements were constant, and the growth rate is zero. The stationary population estimated by FAO based on physiological needs for normal activity size was esimated on the basis of the projected characterstic of and health considering environmental temperture. body weights. the populton in the year 2000. and the rate of dline of fertlity age and ma distnbution of population. and allowing 10 percet for rae to replaement levd. waste at household level; 1961. 1970 and 1982 data. Pbpufatimn Manwaam-Is the tendency for population growth to Pff Cap&i Skp* of PrtmW (grin pe dA-Protein content of continue beyond the time that replwcment-lvel fertility has been per capita net supply of food per day. Net supply of food is defined achieved that is. even after the net reproduction late hS macbed as above. Requirenents for all countries established by USDA unity. lbe momentum of a populion in the year t is measurd as provide for minimum allowances of 60 grams of total protein per a ratio of the ultimate statonary population to the population in day and 2C prma of animal and pule protein. of wbicb 10 granms the yer s. given the aumption that fertity remains at replac- should be animal protein. These standards.are lower than those of meat klvel from year i onward. 1985 data 75 grams of total protein and 23 gramns of animal protein as an _p I Deally aveage for the world. proposed by FAO in the Third World Food Per sqkm.-Mid-year population per squae kilometer (100 hec- Supply; 1961. 1970 and 1982 data. tare.) of total aea; 1960. 1970. and 1983 data. Ar Capit Awem Supply Fom- Anima ad PkLe-Protemn supply Per sqJam. agrkuuraa laid-Computed as above ror agricultural of food derived from animals and pulses in grams per day: 1961-65. land only. 1960. 1970. and 1982 data. 1970 and 1977 data. Pepulade. Age S5rnetm'e (prwar)-Children (0-14 year). work- CMd (ageD14) Death Rat (per trA-usad)-Number of deaths of ing ae (15-6 yeas), ad retired (65 yea and over) as percentage cbildren aged 1-4 years per thousand children in the same age of mid-year popula; 1960. 1970, and 1983 data. group in a given year. For most developing countrics data derived PepuiCm GrowtA Rawe (perceAt)-tal-Annual growth rtes or from life table; 1960, 1970 and 1983 data. total mid-year population for 1950-60. 1960-70. and 197083. HEAETH hpa Cdm Gwth Rate (cwct) bm -Annual growth rates 1* Expectancy at Bfr (yenws)-Number of yes a newborn of urban population for 1950-60. 1960-70. and 1970-83 data. infant would live if prevailing patterns of mortality for all people  - 29 - Annex I Page 4 of 7 at the tie of of its birth weo to stay the - thou0out its lite:; A4isMuher JRatio- p_,wy. aNd aeord,pp-Totol students en- 1960. 1970 .d 1913 data. rolled in pimasEy and secondary leve dridd by numbers of 1 MWAp ReaW (pa lsm)- lube oroi,wod t wchets,hb con t ponding lavl. bets incing oue yr orap pe thowuad lI birt in a gie ;19d I%% I an 1963 dsta. corvW INo A r SO W (_ ) WIM P Coo (pw d A I b sIr_ corn con-m wind-Nubew of popl (totaL A and a wi m prbe mown cm mtin m tbe eight psm ecudes amubu ~- to oh wowe supply (cdmi. asrn usAc. Warns or a bn. .w stifitary VeNcdh untrate but uanoontandoad wau r mh that fiom P rnmsdI ed Rem tw(p thsinppamii -AMm-mf bombOIIO aspI mitdry UUI)upescie w odmr for rad boadcat to el pubLic per dtusad otpopulrle dt p uint 1k *am a_ a public fotaoi or _apdct we ai countrasie me in year when located nor - ta mou ha a hon may be o sd I emstraio, of rado setsu w o dc dat for aint yam, may u bein withi reaonabe -cm of that house In rura aimm ecmoWimm mi bM iass riuohacorns muld imply tha the hauawife or mmbe of t n be otm eli.vemostbootatcasaol g. bwdboiud do ot have to nd a dipoortit pat of dth day r ( wF 1 tcre _ br in fetchin the f_ilys wae seds to pusel pubic per _ i po eiclud. md TV Acem Ewsma D&p.seI (perea .IpepaIatk.)-.sud, ~ raver i counies an in y._ whe iof ctTV am w Acsa to^ *_mf Dko t_wcm of *#n ined ad rlm-Number cpeopie (totl. urban, and naal) senred by e excrt disal a peroatagu of the r pqau t Akw Ch m . ts thie ayo Excr diposl may include the colecio am dispoaL with or Ofdaily uald inist _wpr," ded as a without tmtmrt. of human xcrsta and was_-watar by water- peodcl publication devoted pmarly to rcdig g.sa me bone system or the use of pit privie and simile injtafladuL I is consed to be -daiUy Wit appea1 at l.st ct a ws M _ -8-h pm Pkysk -P_pWation dividod by number of pmc- C21sasain b_ J A a- - I pw Coplo pw 14mr-41bad on the tisingpsaiqualifiale fm a ndlschool*t "ty kvd nnumber of dck sold dorng the year incldn adminiom to M p Plam-I*pulation divided by number of dnv Cmi_ and mobile unt practicing msale ad (male grdut nurs, wastnt nurss LBR FORMu p_cau nure and nursng auzahane..R __ m g _ * ,_ , _Ed L_ Fe (it_ -hoonomically acte pesoa. in- (total urban. and raQ divided by dtr respetve mbe or cluding armed forcean dmo but eaclud hewi bospatai b,eris av0ailbeO iliaii adre, isnrs a s ~ -~stdenspoiXi. etc., covrn populton ofal ags Definitin i htspal. an itabie in cand p ilsad stablizedua comparsbWa 1960.1970 ad 1983 data. pemamady stf by at eant one physiciab Estabmeen prov- _ ( ) F el labor fo re as pe topeof total lbor idig pnimpafy cuoa cae are not icluded. Rur hospa, fo- hot, include M and a ceitts no permanently staffed *jds'e (pr).-4lAr tor e fom rnfing foun", baunn by a phya (but by a mdical nt nursej midwik tcr) and fishing as pcentage of ta lbor foem 1960IV70 and 1910 which ofrer npet mmnodation and provide a limited rag datL or medial facilite Adnwj (jirceMD-Labor fora in mini constructon. man- Addadeau - H.s_pd 3d-Total number of admissons to or factuing and dectricity. water and as as percentae of otal labor dischar from hospita dividdo by the nub of beds. rOm 1960.1970 and 1980 dat P A (pffcss-rik-, fsse-Apk HOUSING or auivity re are computed a tota mle uad fle labor force Awf SW of H_4h (Pffi p.r mr, as perent of total, mr Nd femal popul of aln aw _'.ia--A hbouwbold constn of a group of individual who share rpevely,. 1960.1970. ad 1993 data Thbee ae baud on ILOs living quarters and their mn mca& A boarder or kbdir may or participation ratn rlect ag-se sucr ofthe populadon, and may not be induded in the houshold for statistical purpoa. long time tre A few estmte are from national soume Averwqe N..gr of Parsons per Reeim-qoai harm, md m- Ecemdc Dependeucy Ri-Rtatio of population under 15. and Average number of permons per room in all urba and rural 65 and over. to the working ag population (thos aged 15-64). occupied conventional dwldling respectivdy. Dwelingp cldude non-permanent structurs and unoccupied parts. INCOME DISMMlDUTION Pacetqe of D1EAgr wh Eidip-ossal wham, and n_al- P_ceam of Tod Divmkle,w (brot in cash ut kbW - Conventional dwellinp with elecricaty in living quarte as permn- Adccring to percentile groups of household ranked by otal hous- lage of totaL urban, and rural dwelling respecively. hold income EDUCAT1ION POVERTY TARGET GROUPS A4 msd Ewehl.e Rnio The following estinates an very approximate mssums of poverty Fbmary sxhoe - toal. mak and fanaL-Gross totaL mak a levels and should be interpreted with considerable caution. feme earotmen of al age at the prinmry levd as preng or Esidm dA&eba Pwmny (acuw Le&e ((S53,. capita -srtm respective prmay chool-e populat . Whie mny countries ad wrd-Absolute poverty income levd is that incoe leved consider pimay sdhool age to be 6-l1 yeas others do noL The bdow which a minimal nutsitionally adequae diet plus rsential differencs in country practces in the ages and duration of scbool non-food requirements is not affordable. are reflcted in the ratios given. For some countries with unversal Esm& 1 Relbdre Pobrj' lam,. Lewd (I5f pr 3capit)-wbm educato gross rollment may exceed 100 percet sic some | rerl-Rural relative poverty income level is onethird of pupils are below or above the country's standard pmary-school average per capita personal income of the country. Urban level is age. derived from the rural level with adjustmet for higher cost of Secidwy shool - toal. mak andfaema-Corputed as abo: living in urban areas secondaryedato requires at lt foLr yeass of appmoved psi- Es sd Popalhim B. AkWl b,e -yw:_ bnome Laed (per- mary inn;ucb provids gemeral vocational or techer trammg cent)-whar sd wed- Prcent of population (urban and rural instructions for pupils usualy of 12 to 17 year of age: conespond- who are absolute poor.' ence coun are generally excluded. VocadK a E i (percen of secondivJ-Vocational insttu- Comparative Analysis and Data Division ons includeh tech indusL or othr programs wbich operae Economic Analysis and Projections Department indepedently or as departments of scond ionstuons. June 1985  - 30 - ANNEX I niaUtiom i 1.019 Billion (md-1963) Page 5 of 7 ON1, pew aapitat 8300 (1983) CHINA - UC1oSIIC ZNDICASTO _ouS t ~19S4 Annual erowth rate. (X) (mAlll.n US at Actual froiectad Zadicator nt pricae)Ab 'MD0 1981 1912 1983 l9U 1 1985