Announcement of World Bank Assists Railway Project in China with Two Hundred Twenty Million Dollar Loan on March 29, 1984

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. 84/54 Contact: P.B. Sison March 29, 1984 (202) 477-3573 WORLD BANK ASSISTS RAILWAY PROJECT IN CHINA WITH $220 MILLION LOAN The World Bank will support the development of China's regional railway network with a loan of $220 million. This is The World Bank's first railway loan to China. The loan will help finance construction of a new line between Xinxiang and Heze, in the eastern provinces of Henan and Shandong. The new line will connect the coal producing areas of southern Shanxi and the line now being built to the new east coast port of Shijuso. The project will also finance the rehabilitation of the Datong-Taiyuan line. Datong is the largest mining center in northern Shanxi and Taiyuan, the provincial capital, is also a major mining and industrial center. The capacity of the line will be increased and some 127 kilometers (km) will be double-tracked and electrified. The existing 34 stations will be enlarged and four new ones added to the line. China has the third largest freight railway in the world after the Soviet Union and the U.S. Freight traffic has grown from about 100 million tons in 1950 to over 1 billion tons in 1981--an average rate of 9 percent a year. Although freight traffic has grown less rapidly in recent years (5.7 percent a year), forecasts are for a substantial increase by 1985. Ten commodities account for about 75 percent of the freight carried on China's railways. Of these, coal is the most important. Coal provides over 70 percent of the energy used in China. As a result of economic reforms, production rose from 550 million tons in 1977 to 666 million tons in 1982, and has already exceeded the 1985 planned target of 700 million tons. A further rapid growth is expected. The project will finance urgently needed rail investments for the transport of the expanding coal production. Thus it will contribute directly to increasing the supply of energy needed to support China's economic development. NOTE: Money figures are expressed in U.S. dollar equivalents. - 2 - To meet the growing demand for electric locomotives the project will finance the equipment needed to increase the current annual production from 40 units to 120 units by 1985. The loan will also finance technical assistance and training in general, mechanical and electrical technology, and in specialized technology and management practices. To improve railway operations and management, the project will provide funds for a study designed to update and improve the costing system of the railways. The government will contribute $573.1 million towards the cost of the project. The World Bank loan is for 20 years, including 5 years of grace,with a variable interest rate linked to the cost of the Bank's borrowings. It also carries an annual commitment charge of 0.75 percent on undisbursed balances and a front-end fee of 0.25 percent on the amount of the loan.