Announcement of China to Receive First World Bank Loan : World Bank and IDA Approve 200 Million Dollars Lending for Education on June 24, 1981

. .. . FOR IMMEDIATE RELEASE • n .world Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 81/122 IDA NEWS RELEASE NO. 81/107 June 24, 1981 CHINA TO RECEIVE FIRST WORLD BANK LOAN WORLD BANK AND IDA APPROVE $200 MILLION LENDING FOR EDUCATION China's efforts to achieve one of its top priorities--the development of higher education in science and engineering to relieve the persistent shortage of trained manpower--will be assisted with a loan of $100 million from the World Bank and a credit of $100 mil lion from the International Development Association (IDA) through the University Development Project. This is the first World Bank operation in China since the People's Republic assumed China's representation at the World Bank in May 1980. The project will help increase enroliment of science and engineering students at 26 leading universities from 92,000 to 125,000, introduce graduate degree programs, improve the quality of teaching and research, and strengthen the management of universities and the Ministry of Education. Economic Background • In terms of population, China is Bank. China's per capita GNP has grown reaching $260 in 1979- This growth rate low-income developing countries (1.6% in rapid in industry, the share of which in (around 40%) is currently similar to the the largest member country of the World at an annual rate of 2.5% to 3% in 1957-79, is significantly above the average for 1960-78). Growth has been especially the country's gross domestic product average for middle-income developing countries. In meeting basic needs also, China has made a striking progress. The worst aspects of poverty have been eliminated. Life expectancy, probably the best single indicator of the extent of real poverty in a country, is, at 64 years, remarkably high for a country at China's per capita income level. Economic priorities and policies have been under intense discussion in China in recent years. It is now generally agreed that the country's future growth will have to come mainly from improving the efficiency of resource use. To this end, the government has embarked on~ long-term program to adjust the structure of the economy and to reform the basic economic system. NOTE: IDA credits are denominated in SDRs (Special Drawing Rights), which are valued on the basis of a "basket" of currencies. The U.S. dollar equivalent of the SDR amount of the IDA credit reflects the exchange rate existing at the time of negotiation of the credit . •  - 2 - • Science and Technology Effective use of physical resources has been held back in the past in China berau~e of the underdevelopment of science and technology. Progress in these fields lias been limited and sporadic, and China is now considerably behind other countries. Thus, China is currently engaged in the task of increasing the output and improv- ing the quality of higher education and research. The country's education develop- ment program calls for an increase in undergraduate enrollment by 7% per annum, reaching 2.2 mill ion students in 1990 and producing 4 mill ion graduates during the 1980s. Graduate programs will increase their enrollments from nearly zero to 200,000 by 1990 and produce 100,000 gr~duates in the 1980s. University Development Project The University Development Project is the first phase of China's higher education development program for the 1980s. In addition to increasing enroll- ment and the number of science and engineering graduates, the project will provide assistance for developing techniques and procedures to improve the quality of teaching and to make fuller use of physical facilities. The project also assists in strengthening management at the project universities and the Ministry of Edu- cation. The total cost of the project is estimated at $295 mil 1 ion. The World Bank and IDA will finance the full foreign exchange cost of $200 mill ion. The remaining $95 million will be financed by the government. The World Bank loan of $100 mill ion is for 20 years, including five years of grace, with interest at 9.6% per annum. The IDA credit of $100 million (SOR 81.4 million) is for 50 years, including 10 years of grace. It carries no interest, but has a service • charge of 0.75% per annum to cover administrative expenses. About $160 mill ion will be used to acquire instructional and research equipment, 90% of which would be procured through international competitive bidding. The remainder of the funds would be used for staff development, fellowships and specialist services. The IDA credit will be committed when funds are available. - 0 - • FQR.t,r; NO. 1121 (5-76) T E C HN I CA L DAT A • PROJECT: COUNTRY: TOTAL COST: University Development China $295 million BANK FINANCING: $100 million,for 20 years including 5 years of grace, with interest at 9.6% per annum IDA FINANCING: SDR 81.4 million($100 million), standard IDA terms OTHER FINANCING: Government of China, $95 million IMPLEMENTING ORGANIZATION: Ministry of Education 35 Oamucang Hutong Beijing, China PROJECT DESCRIPTION: It will provide civil works, furniture, equipment, specialist s e r v i ce s , f e l 1ows h i p s , an d o tr. e r re l a t e d i n puts to : a ) i n - crease the number of graduates and the volume of research work at 26 leading universities; b) raise the quality of graduates and research work at these universities; and c) strength- • en management at universities and the Ministry of Education . PROCUREMENT: Contracts for equipment estimated to exceed $100,000 each will be awarded on the basis of international competitive bidding (ICB) in accordance with Bank guide] ines. Local manufacturers will be given the standard preferences in bid evaluation. The amount of equipment contracts to be awarded to local suppliers through ICB is expected to be small. Purchases estimated to cost less than $100,000 per contract and not exceeding an aggregate amount of $20 million could be pro- cured through direct purchase under procedures satisfactory to the Bank. Award of con-· tracts for items or packages exceeding $100,000 in value will be referred to the Bank for prior review. CONSULTANTS: Consultant services for improving the quality of science and engineering education and research will be required. •• ECONOMIC RATE OF RETURN: ESTIMATED COMPLETION DATE: n.a . 1985 - 0 -