Announcement of China to Modernize Machine Tool Industry with World Bank Loan on March 5, 1987

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 87/42 Contact: P. B. Sison (202)-477-3653 CHINA TO MODERNIZE MACHINE TOOL INDUSTRY WITH WORLD BANK LOAN WASHINGTON, March 5 -- The World Bank has approved a $100 million loan for a project to help China modernize its machine tool industry in Shanghai to meet part of the country's demand for reliable and efficient machines. Most of China's machine tool industry currently utilizes technologies that are about 20 years old. Outdated equipment, combined with inadequate , manufacturing facilities and insufficient management experience, result in products that are unreliable and unsuitable for precision work. The main beneficiaries of the project are the Shanghai Machine Tool Works (SMTW) and the Shanghai Machine Tool Corporation (SMTC), whose combined output of machine tools accounted for about 10 percent of China's machine tool production in 1985. The project will support the rehabilitation and modernization of 18 plants and two research institutes owned by the SMTW and the SMTC; the importation of manufacturing and design/process technologies; the establishment of a modern management system; and the development of a comprehensive training program for managers and engineers. Additional financing foe the project will come from domestic loans ($81.6 million) and funds generated from operations by the beneficiaries ($41.5 million). The World Bank loan is for 20 years, including five years of grace, with a variable interest rate, currently at 7.92_ percent, linked to the cost of the Bank's borrowings. It also carries an annual commitment charge of 0.75 percent on the undisbursed balances. NOTE: Money figures are in U.S. dollar equivalents.