China - Enterprise Housing and Social Security Reform Project

Document of The World Bank Report No: 32366-CHA IMPLEMENTATION COMPLETION REPORT (IDA-26420 CPL-37730 SCL-3773A SCPD-3773S) ON A LOAN AND CREDIT IN THE AMOUNT OF US$275 MILLION AND SDR53.1 MILLION (US$75 MILLION EQUIVALENT) TO THE PEOPLE'S REPUBLIC OF CHINA FOR THE ENTERPRISE HOUSING AND SOCIAL SECURITY REFORM PROJECT June 29, 2006 Urban Development Sector Unit East Asia and Pacific Region  CURRENCY EQUIVALENTS (Exchange Rate Effective December 31, 2004) Currency Unit = Yuan (Y) Y1 = US$ 0.12 US$ 1 = Y 8.3 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS ASEM Asia-Europe Meeting CAS Country Assistance Strategy CCG Central Coordination Group EIA Environmental Impact Assessment GDP Gross Domestic Product FRR Financial Rate of Return HMC Housing Management Company (Joint Stock Company) HPF Housing Provident Fund HRO Housing Systems Reform Office IT Information Technology MOC Ministry of Construction MOF Ministry of Finance MOL Ministry of Labor MOLSS Ministry of Labor and Social Security MOPH Ministry of Public Health ODA Overseas Development Authority PBC People's Bank of China (central bank) PFI Participating Financial Intermediary PMO Project Management Office QAG Quality Assurance Group (of the Bank) SAR Staff Appraisal Report SARS Severe Acute Respiratory Syndrome SOE State-owned Enterprise SPC State Planning Commission SRC Systems Reform Commission TA Technical Assistance Vice President: Mr. Jeffrey Gutman, Acting EAPVP Country Director: Mr. David Dollar, EACCF Sector Director: Mr. Keshav Varma, EASUR Task Team Leader: Mr. Songsu Choi, SASEI  CHINA ENTERPRISE HOUSING AND SOCIAL SECURITY REFORM PROJECT CONTENTS Page No. 1. Project Data 1 2. Principal Performance Ratings 1 3. Assessment of Development Objective and Design, and of Quality at Entry 2 4. Achievement of Objective and Outputs 8 5. Major Factors Affecting Implementation and Outcome 12 6. Sustainability 15 7. Bank and Borrower Performance 15 8. Lessons Learned 18 9. Partner Comments 19 10. Additional Information 20 Annex 1. Key Performance Indicators/Log Frame Matrix 21 Annex 2. Project Costs and Financing 22 Annex 3. Economic Costs and Benefits 24 Annex 4. Bank Inputs 25 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 27 Annex 6. Ratings of Bank and Borrower Performance 28 Annex 7. List of Supporting Documents 29  Project ID: P003603 Project Name: ENTERPRISE HOUSING AND SOCIAL SECURITY REFORM PROJECT Team Leader: Songsu Choi TL Unit: EASUR ICR Type: Core ICR Report Date: June 29, 2006 1. Project Data Name: ENTERPRISE HOUSING AND SOCIAL L/C/TF Number: IDA-26420; CPL-37730; SECURITY REFORM PROJECT SCL-3773A; SCPD-3773S Country/Department: CHINA Region: East Asia and Pacific Region Sector/subsector: Housing finance and real estate markets (93%); Sub-national government administration (6%); Central government administration (1%) Theme: Other financial and private sector development (P); Municipal governance and institution building (S); Social risk mitigation (S) KEY DATES Original Revised/Actual PCD: 02/07/1992 Effective: 12/09/1994 Appraisal: 10/04/1993 MTR: Approval: 07/05/1994 Closing: 06/30/2001 12/31/2004 Borrower/Implementing Agency: People's Republic of China/Municipalities of Beijing; People's Republic of China/Chengdu; People's Republic of China/Ningbo and Yantai Other Partners: STAFF Current At Appraisal Vice President: Mr. Jeffrey Gutman (Acting) Mr. Russell Cheetham Country Director: Mr. David R. Dollar Mr. Nicholas Hope Sector Director: Mr. Keshav Varma Ms. Katherine Sierra Team Leader at ICR: Mr. Songsu Choi Mr. Songsu Choi ICR Primary Author: Ms. Yan F. Zhang; Mr. Songsu Choi; Mr. Herbert Boehm 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: L Institutional Development Impact: SU Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: No  3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: Background. Because of the highly unusual and experimental nature of this Project, a more extensive description of the background of Chinese economic reforms, as well as the enterprise, housing, and social security sectors at the time of appraisal, is in order. The key to the transformation of China's economic and urban systems during the 1980s was radical decentralization that increased the autonomy of enterprises and local governments. The central government set broad policy directions and targets but allowed local governments to specify implementation arrangements and schedules. Locally generated fiscal revenues were shared among levels of government through periodic negotiations and local governments could exercise substantial discretion in spending the locally retained revenues. Local governments were given authority and responsibility to oversee state-owned enterprises as well as collectively-owned enterprises which were fewer and smaller in urban areas. As a result, the systems reform also greatly increased the autonomy of the enterprises. Production quotas and pricing restrictions were gradually abolished. Instead of government deciding or approving all pricing and spending decisions, the enterprises were allowed to decide how to spend their after-tax financial surpluses. Main areas benefiting from the autonomy were investments and employee benefits