Announcement of China Receives IDA Credit for Agriculture Project on June 16, 1982

I •. , ' ' · ~F.ORt ~ . ' • IMMEDIATE· R'ELEASE .' .. . I · • •World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 IDA NEWS RELEASE NO. 82/86 Contact: Sundaram Sankaran June 16, 1982 (202) 477-3962 CHINA RECEIVES IDA CREDIT FOR AGRICULTURE PROJECT China's efforts to overcome the agricultural constraints of soil salinity, waterlogging, and surface flooding will be assisted by a credit of SOR 54 mill ton ($60 million) from the International Development Association (IDA), an affiliate of the World Bank. The $177.5 million project wiil provide drainage and irrigation for about 200,000 hectares in nine counties, located in the three provinces of Shandong, Anhui, and Henan in the North China Plain. It is the first integrated attempt to control soil salinity and waterlogging in China. The project would serve as a model for futu;e agricultural developments in the North China Plain where some six million hectar.es are affected by varying degrees of salinity and waterlogging. With proper irrigation and drainage, these lands can be reclaimed and become • highly productive . Some 1.2 million people are expected to benefit directly from the project through increased production of crops such as wheat, corn, cotton, oilseeds,and rice and improved earnings from tree planting. At full development, the project will help China save a considerable amount of foreign exchange every year t~rough reduced imports. The project includes construction and improvement of main, lateral, and sub-lateral drains and irrigation ditches; construction of and equip- ment for pumping stations and tubewells; additions to existing rural electrifica- tion systems; rural roads, provision of chemicals, agricultural machinery and equipment; strengthening of research and extension services; comprehensive soil and water studies; and a North China Plain Agricultural Study. The IDA credit to China is for 50 years, including 10 years of grace; it carries no interest but bears a commitment fee of 1/2 of 1% per annum on the un- disbursed portion of the credit, and a service charge of 3/4 of 1% per annum on the disbursed portion of the credit to help cover IDA's administrative costs. Chinese Agriculture Agriculture, including livestock, forestry and fisheries, provides sus- tenar,,,e to nearly 1 bi 11 ion people and is the main source of 1ivel ihood for some 800 mi11ion rura1 workers and their dependents. It accounts for over 30% of.the country's Gross Domestic Product. Farmers are organized into collective units under the commune system or work on state farms. Some production also comes from privately controlled household plots. NOTE: IDA credits are denominated in SDRs (Special Drawing Rights), which are va 1ued on the basis of a "basket" of currencies. The U.S. do 11 a r equiv- a lent of the SOR amount of the IDA credit reflects the exchange rates existing at the time of negotiation of the credit. I • ••  -2- Agriculture in China is dominated by foodgrain production, which accounts for some 65% of total agricultural output and 80% of cropland. Despite the country's vast land area of about 960 million hectares, only about 100 million hectares -- 10.4% -·- are arable. China accounts for less than 8% of the world's a rab 1e 1and, but provides food for about 22% of the wor 1d's popu 1at ion. This has • been possible because of the generally high standards of crop production. Food- grain production during the 1970's increased at an average of more than 3% per annum, but in recent years, due to growth in population and incomes, increased feedgrain requirements for livestock, readjustment of crop pattern and appropriate development of cash crops and diversified undertakr.ngs, China imported 10.5 mil- lion tons of foodgrains in 1979 or about 3 percent of total consumption. The development of agriculture continues to be accorded high priority by the Government. The project being assisted by IDA will help exploit the potential for further increases in grain and cotton production in the North China Plain. China and the World Bank In terms of population, China is the largest member country of the Dank. The relationship between China and the Bank has developed since the People 1 s Republic of China assumed China's representation at the World Bank in May 1980. In late 1980, a large economic mission, which included se~tor teams on agricul- ture, industry, education, population and health, transport, and energy visited China. The mission's report was revfewed with the Government and circulated to • Bank member Governments. This report has been translated into Chinese and the Government plans to distribute it to officials at various levels in China. The Bank is now beginning to undertake a follow-up economic work. In addition, the Government and the Bank have agreed on a program of collaborative economic research designed to broaden both the Bank's and China's understanding of the development process. The IDA credit of SOR 54 million is the second operation for IDA in China. In June 1981 a $200 million operation--$100 million in a Bank loan and $100 mil- lion in an IDA credit--in support of higher education in science and engineering was approved. -o- •