China - Shanxi Poverty Alleviation Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-6776-CHA MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT OF SDR 67.3 MILLION TO THE PEOPLE'S REPUBLIC OF CHINA FOR A SHANXI POVERTY ALLEVIATION PROJECT FEBRUARY 21, 1996 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS (As of October 1995) Currency Unit = Yuan (Y) $1.00 = Y 8.4 Y 1.00 = $0.119 FISCAL YEAR January 1 to December 31 WEIGHTS AND MEASURES 1 meter (m) = 3.28 feet (ft) 1 kilometer (kmn) 2 0.62 miles 1 square kilometer (km2) = 100 ha 1 hectare (ha) = 2.47 acres - 15mu 1 ton (t) = 1,000 kg 2,205 pounds 1 kilogram (kg) = 2.2 pounds PRINCIPAL ABBREVIATIONS AND ACRONYMS ACWF - All China Women's Federation EIA - Environmental Impact Assessment ERR - Economic Rate of Return FAO/CP - Food and Agriculture Organization/Cooperative Program IDA - International Development Association PLG - Project Leading Group PMO - Project Management Office  FOR OFFICIAL USE ONLY CHINA SHANXI POVERTY ALLEVIATION PROJECT CREDIT AND PROJECT SUMMARY Borrower: People's Republic of China Beneficiary: Shanxi Province Poverty: Program of Targeted Interventions Amount: SDR 67.3 million ($100 million equivalent) Terms: Standard, with 35 years' maturity Commitment Fee: 0.50 percent on undisbursed credit balances, beginning 60 days after signing, less any waiver. Financing Plan: See Schedule A. Economic Rate of Return: 28 percent Staff Appraisal Report: Report No. 15079-CHA Maps: IBRD 27654; IBRD 27655; IBRD 27656 Project Identification No.: CN-PE-3649 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.   MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE PEOPLE'S REPUBLIC OF CHINA FOR A SHANXI POVERTY ALLEVIATION PROJECT 1. I submit for your approval the following memorandum and recommendation on a proposed credit to the People's Republic of China for SDR 67.3 million, the equivalent of $100 million, on standard IDA terms with a maturity of 35 years, to help finance the Shanxi Poverty Alleviation Project. The Government of China will make the proceeds of the IDA credit available to Shanxi Province at an annual interest rate of 3.5 percent with a repayment period of 20 years, including a 7-year grace period. The Province will bear the foreign exchange risk. 2. Background. China's economic reforms, begun in 1978, sharply reduced poverty in the period 1978-1985. In 1978, 270 million (one-third of the population) lived below the absolute poverty line compared to 100 million (one-tenth of the population) in 1985. But, since 1985 there has been only a small decline in the incidence of absolute poverty. This is because gains in farm incomes have come mainly in areas with favorable natural resources, where farmers could benefit from market-oriented reforms. Gains in poverty alleviation have been harder to make in the remote mountainous areas of the southwest, north and northwest, where the area of farmland per family is small and irrigation potential is limited. In these areas, per capita output of grain and subsistence foods failed to show any significant increase in the 1980s, and rural enterprises employ only 4 percent of the rural labor force in the poorest counties in contrast to the 22 percent national average. 3. Recognizing the necessity of a stepped-up, redirected poverty reduction effort, in 1993 the State Council endorsed a new program to focus on the poorest counties throughout China. Called the "Eight-Seven Poverty Alleviation Plan (8-7 Plan)", its objective is to raise the estimated 80 million people in absolute poverty to above the poverty line by the end of the century, with a focus on raising living standards and incomes through investments in land development, rural works and rural enterprises. Counties included in the plan generally had incomes below Y 400 per capita ($50 equivalent, 1992 prices). The 592 nationally designated poor counties covered by the program include over 70 percent of the 80 million poor. 4. Shanxi Province, on the east bank of the Yellow River, has a population of 30.3 million. It is one of the poorest provinces in China, with 50 of its 118 counties identified as poverty stricken. The total population of the 50 counties is 8.4 million, of whom 7.5 million are rural. Average rural per capita income in 1993, which was a good year for agriculture, was Y 509, about 29 percent less than the Y 718 average rural per capita income for the province and just over half the national average rural per capita income of  Y 921. Within the 50 counties, some 492 townships with a population of 3.8 million have been classified as areas of absolute poverty with incomes of below Y 400 per capita. 5. In 1993, agriculture accounted for about 15 percent of the province's gross product compared to 57 percent from industry and construction (particularly coal mining and mineral processing) and 28 percent from other sectors. While the agricultural sector has been declining over time as other sectors have developed, it still employs almost half of Shanxi's labor force and provides the bulk of its food requirements. Since 1985 a program to increase the high-quality cultivated land area through comprehensive rehabilitation of small watersheds, including terracing of slope lands, has been successfully pursued in Shanxi. The IDA supported Loess Plateau Watershed Rehabilitation Project (Cr. 2616- CHA) builds on this experience. The program is an important means of tackling poverty through the development of unused land in poor areas. 6. To encourage continued support of the 1985 program, the Province published a regulation in 1994 extending the period for which land can be contracted to farm households. Normal land contracts, previously for 15 years, will now be extended to 30 years, except in poverty and marginal areas where they will be for 50 years. In areas of uncultivated slopes, gullies and river beach land, the tenure can be extended to 100 years. The new regulations aim to encourage farmers to practice sound soil and water conservation measures. As a further incentive, farmers on uncultivated slopes and gullies will be excused payment of agricultural taxes for the first ten years of occupancy. The method of land allocation would be by auction among farmers in nearby villages. In order to protect the interests of poorer families in the community, payment for the land can be by installments over a period of years. The main objective of the auction system is to give a farmer security in the use of his land, provided his farming practices meet the standards laid down for land management by the province. 7. The poverty alleviation strategy of the Shanxi Government, over the next five years, aims to raise cultivable land from the present 1.3 mu (0.09 ha) per head to 2 mu (0.13 ha) per head, to develop agroindustries, to improve rural infrastructure, and to encourage integrated development of orchards, forests and ruminant livestock. In addition, the Government has focused attention on the social sectors, and several ongoing programs in the poverty areas and in the proposed project area-Luliang and Yuncheng Prefectures, are currently supported by IDA. The Educational Development in Poor Provinces Project (Cr. 2336-CHA) seeks to improve the efficiency and quality of primary and lower secondary school education and support the establishment of a nine-year compulsory education system; the Rural Health Workers Development Project (Cr. 2539- CHA) is improving medical colleges, township hospitals and training centers. A number of other locally-funded social sector programs are also ongoing in the area. 8. Project Objective. The project would help alleviate poverty in the 20 poorest counties of Yuncheng and Luliang Prefectures in Shanxi Province. It would complement ongoing social sector activities in the counties and support the Government's policy of reducing the imbalance in economic development between the increasingly prosperous  - 3 - eastern provinces and the poorer central and western regions. The project would include a range of activities aimed at raising incomes of about 3 million poor. These activities include: (a) terracing and irrigation improvement to increase agricultural production for subsistence or sale; (b) improvement of rural roads to provide better market access and encourage farmers to grow cash crops; (c) expansion of livestock raising and horticulture development; and (d) support of income-producing enterprises and activities for poor and disadvantaged women, through local women's federations operating under the aegis of the All China Women's Federation (ACWF) which manage a number of these programs in the project areas. 9. Improvement of the irrigation system in the project area will have a major impact on poverty alleviation. At present, because of small farm sizes and unreliable irrigation, farm families live in considerable insecurity. Even if a family manages to escape poverty in one year, it often returns to poverty the next year. The project would also have significant environmental benefits, since past problems in diverting water from the Yellow River have led to sinking of large numbers of tubewells and over-exploitation of the aquifier. The irrigation system to be constructed under the project would virtually eliminate the need for the tubewells. 10. Project Description. The main features of the project are: (a) construction of a new pumping complex and associated structures on the Yellow River at Langdian in Yuncheng to supply water to three existing pumping stations; and provision of 14 floating pumps at the existing station at Zuncun; (b) improvement and expansion of the Yuncheng Irrigation System; (c) river beach development, including land leveling, electrification, upgrading of rural roads, and tubewells (the area has ample groundwater resources on 13,000 ha of presently cultivated land) in Yuncheng; (d) construction of 78 village water supply schemes to serve 620,000 people in Yuncheng, and 204 smaller village water supply systems to serve 64,000 people in Luliang; (e) improvement of existing rural roads in both prefectures; (f) comprehensive soil and water conservation works in small watersheds in Luliang, consisting of terraces, construction of check dams, and an afforestation program for slope land; (g) expansion of the area under fruit and nut trees; (h) expansion of livestock raising by individual farmers; (i) expansion and improvement of agricultural processing facilities; (j) support for a program targeted at poor and disadvantaged women managed by the ACWF; and (k) an institutional development component including facilities for project management; and training and overseas study tours. 11. Project Implementation. Overall responsibility for managing the project rests with the Shanxi Provincial Government. The planning and subsequent implementation of the project is coordinated at the provincial level by a Project Leading Group (PLG), headed by the Vice-Governor responsible for agriculture, it includes representatives from all the concerned agencies, including the Poverty Alleviation Office, the departments of planning, finance, agriculture, water conservancy, forestry, and animal husbandry. Under the PLG at each level, a Project Management Office (PMO) will be responsible for executing the project. The PMOs will direct, coordinate and manage the work of the various  - 4 - implementing agencies such as the water conservancy, agricultural, and animal husbandry bureaus. The Provincial PMO has been given department level status, reporting directly to the Provincial Commission. This will increase their ability to coordinate the various line departments all the way down to the township level. Village committees will be the key to physical implementation of the livelihood components and mobilizing village labor for the engineering infrastructure components. For project implementation, special groups will be formed to manage the mobilization of farmers, organize training, supervise construction and control financing. Once completed, the beneficiary households will be fully responsible for managing the operation and maintenance of the facilities. 12. The project cost is estimated at $182.8 million equivalent, with a foreign exchange component of $26.6 million (15 percent). Retroactive financing of SDR 6.7 million ($10.0 million equivalent) is recommended for payments made between August 1995 and the date of the signed Credit Agreement. This would allow the start of preliminary activities during winter when farm labor is available, and a full working season thereafter, when weather conditions improve. A breakdown of costs and the financing plan are shown in Schedule A. Amounts and methods of procurement and of disbursements, and the disbursement schedule, are shown in Schedule B. A timetable of key project events and the status of Bank Group operations in China are presented in Schedules C and D, respectively. A map is also attached. The Staff Appraisal Report, No. 15079-CHA, dated February 21, 1996 is being distributed separately. 13. Project Sustainability. The project will raise incomes of about three million poor in a sustainable way. Through improvements in land utilization, cropping patterns and increased production technology, household incomes in this area are likely to rise by 50 to 100 percent after taxes and loan repayment, leading to real increases in net incomes and sustained poverty reduction. Recurrent costs will be financed through realistically determined user fees and funds earmarked under the 8-7 Poverty Alleviation Program. Institutional sustainability is addressed through a comprehensive program of technical assistance, training, and study tours to strengthen existing capacity and ensure development of long-term capabilities. 14. Lessons Learned from Previous Bank Group Operations. The Bank Group has assisted in the financing of numerous projects aimed at raising living standards and incomes in the rural areas of China. These projects have been implemented efficiently, time and cost overruns have been moderate despite periods of sharp price escalation, and rates of return have generally equaled or exceeded appraisal estimates. A notable feature of these projects has been the involvement of local communities in their planning, design, and implementation. The agricultural and water conservancy bureaus of the counties and townships have played a leading role in the projects, under the overall supervision of the provinces, and several projects carried out in relatively resource-poor areas, such as the Red Soils I and II Projects, the Gansu Agricultural Development Project and the Loess Plateau Project, are or promise to be notably successful.  -5- 15. Worldwide, the lessons derived by the Bank's Operations Evaluation Department from nearly 300 projects of similar nature point to the importance of: (a) concentrating on geographical areas where the poor live, products and services the poor produce and consume, and assets the poor hold; (b) commitment to and ownership of the project objectives and components by the people directly affected, which in turn requires active beneficiary participation during planning and design of the components; (c) an enabling policy environment providing sufficient incentives for the farmers to respond to the opportunities offered by the project; (d) flexibility to react to unforeseen or unforeseeable events by adopting a process approach for components with higher risk, and (e) design simplicity and replicability. These lessons have been explicitly incorporated into the design of the individual components of the project. Careful selection of the project and targeting of beneficiaries, active participation of shareholders throughout the design phase, focus on the policy environment through guaranteed long-term land contracts, flexibility and process approach in components with high risk (e.g., livestock) and design simplicity where appropriate (e.g., horticulture and watershed rehabilitation), were integral parts of project preparation. To succeed, past experience clearly indicates that poverty alleviation projects need strong government commitment, broad-based beneficiary participation, incentives to the rural poor complementing their own small investments (e.g., externalities such as a rural road, a canal, or a processing plant), a capable institution to implement the program, and proven technologies backed by functioning support services. These factors are present in the project areas. 16. Rationale for Bank Group Involvement. The project is consistent with the Country Assistance Strategy being presented today. Under this strategy two of the Bank Group's operational priorities in China are poverty alleviation and environmental enhancement and protection. The Bank's 1992 report: "China: Strategies for Reducing Poverty in 1990s" and the subsequent International Conference on Poverty Issues in China held in Beijing in November 1992, led to a substantial level of agreement between the Chinese authorities and the Bank on the nature of the poverty problem and approaches to its alleviation. The project design reflects those approaches and the strategy of the Government's "8-7 Plan" by addressing two of the key challenges facing rural development in China-slow income growth and limited entrepreneurial development as well as the need for greater government investment in rural areas. The project attacks poverty at its core and will improve the lives of many of the rural poor in the project areas. The project will also have a positive environmental effect by: increasing the input of surface water to replace unsustainable exploitation of groundwater; modernizing agroprocessing facilities to enhance efficiency and reduce pollution; conserving land and reducing sediment runoff in parts of Luliang prefecture; and supporting establishment and protection of a nature reserve in Yuncheng prefecture. 17. Agreed Actions. The principal agreements reached at negotiations were that: (a) the Province will forward to the Association by November 30 of each year, a proposed program of training activities to be carried out during the following calendar year and thereafter implement such programs as approved by the Association; (b) the province will comply with agreed safety procedures for review of design, construction and maintenance  - 6 - of hydraulic structures; (c) the project accounts, the Special Account and statements of expenditures will be audited by an independent auditor acceptable to IDA and will be submitted to IDA within six months of the close of each financial year; (d) the project will be implemented in accordance with an environmental management and monitoring plan acceptable to the Association; (e) each prefecture will implement the Resettlement Action Plan agreed with IDA; (f) Shanxi will prepare and submit a detailed annual budget and work plan to IDA for review by November 30 of each year in respect of project implementation in the following year, and carry out such plans, as approved by the Association; (g) the PMOs at provincial, prefecture, county and township levels would be maintained with terms of reference acceptable to IDA and staffed by competent staff in adequate numbers; (h) the land developed under the Project will be leased to farmers for terms between 30 years and 50 years under written contracts; (i) project monitoring would be carried out in accordance with indicators acceptable to the Association; (j) Shanxi would furnish the Association with a mid-term report by September 30, 1998; and (k) livestock, as well as subloans for agroprocessing and ACWF subprojects, would be made available in accordance with procedures, terms and conditions acceptable to the Association. 18. Environmental Aspects. This is a Category B project. An Environmental Impact Assessment (EIA) has been prepared for the project and is satisfactory. The EIA finds that the project's environmental and social impacts are beneficial and the potentially adverse impacts are confined to some of the agroprocessing plants. Mitigation measures as well as detailed proposals for environmental management and monitoring are included in the EIA. Resettlement is minimal, with only 84 households affected as a result of expanding rural roads. The Government has prepared a Resettlement Action Plan satisfactory to the Association. 19. Project Objective Categories. The proposed project relates to the Bank's Program Objective categories for poverty reduction and women in development. The project has a two-pronged approach to the alleviation of poverty. Some components will provide direct benefits to targeted villages and households while other components will benefit a large area and large numbers of people. The ACWF component will specifically target poor and disadvantaged women through small and focused subprojects to generate cash income for women in remote villages. Women will also be the prime beneficiaries of the improved rural water supply. Not only will the distance to water points be dramatically reduced, which is directly beneficial to women, but reliable water supply also allows the household to keep a draft animal and small livestock 20. Participatory Approach. During the process of project preparation-including four joint missions by IDA and the Food and Agriculture Organization/Cooperative Program (FAO/CP) conducting numerous site visits and two years of field preparation- the prefecture PMOs have created widespread awareness of the project. Numerous meetings were held at the township and village level to identify candidate villages and households. The public media were utilized to increase awareness in the entire project area (multiple TV and radio coverage of preparation activities). In addition, the environmental  - 7 - assessment team conducted an opinion survey of farmers, administrators, technicians and intellectuals. The social assessment team conducted pilot surveys of 130 villages in Yuncheng and 70 villages in Luliang. The Yuncheng team has done a pilot survey covering 156 households. Consequently, the level of awareness is high and the local farmers are anxious to see the start of the project. 21. Successful implementation of the project requires a high level of community participation. The larger engineering schemes will require labor input from the villagers as their contribution to the project investment. Proper participation, mobilization, motivation and organization will be required to ensure high quality construction and a feeling of ownership in the project. For the livelihood improvement schemes, a broader community approach will be taken although typically there are a few target households in each village. This will provide learning opportunities for other villagers and will prepare the ground for future investments using local funds. In China, introduction of the household responsibility system has developed more individualistic attitudes amongst the farmers. Now some blending of entrepreneurial initiative and collective support is required for poverty alleviation to extend maximum benefits to the greatest number of poor. 22. Economic Analysis. For each of the project components and for the project as a whole a rigorous economic analysis was conducted. Non-quantifiable benefits were also described where appropriate. Uneconomic components were eliminated early. Cropping patterns, yields and economic crop budgets were estimated for all of the main project components for the "without project" and "with project" cases. These were used to estimate project benefits for the irrigation, beach land, rural roads, horticulture and soil conservation components. Household models were used to derive benefits for the livestock component. For the water supply component the economic analysis was based on projections of future water use and the villagers' willingness to pay for the supply of drinking water to the village. The period of analysis for most of the components was 20 years, with the exception of the protection of forests and the agroprocessing component, where it was 35 and 17 years, respectively. Operating costs for Yuncheng irrigation, the beach land and the water supply components include pumping costs, maintenance and replacement of pumps and other equipment, and personnel. Economic prices in 1995 constant terms were calculated for all traded inputs and outputs based on the World Bank's price projections. For nontraded goods the economic prices are local market prices. The overall economic rate of return (ERR) is estimated at 28 percent, largely as a result of the high sunk cost of the existing irrigation systems. Sensitivity of ERRs of each of the project components has been tested for cost overruns, increased input costs and shortfalls in output, and the results show that the components are robust and economically viable. Switching values were calculated and components with a somewhat higher risk underwent more specific sensitivity tests. None of these variants reduced the ERR of the components below acceptable levels. In fact, a worst case scenario, a major shift of the Yellow River channel away from the pumps for the Yuncheng Irrigation System within five years of completion, would only lower the ERR of this critical component to 17 percent.  - 8 - 23. Benefits. The project will raise incomes and living standards of about three million people in some of the poorest areas of Yuncheng and Luliang Prefectures in Shanxi Province. There will be significant increases in crop production on the 123,000 ha Yuncheng Irrigation System through a more reliable supply of irrigation water, and on 13,000 ha of the river beachlands of Yuncheng through irrigation and other works. Water supply schemes will provide a safer source of water for nearly 700,000 people, and will relieve them of the task of hauling water from long distances so that their time and energy may be more productively used. The increased water supply will also allow watering of seedlings and thereby promote orchard establishment. Rural roads will help 355,000 people in remote areas to diversify their agricultural production on about 70,000 ha through better access to markets and input supply, and enhance employment opportunities and access to social services. Expansion of horticulture and livestock raising will offer opportunities for tens of thousands of families to raise their incomes. Finally, expansion and improvement of agroprocessing facilities will provide more markets for agricultural produce and create employment. 24. Risks. The project will be executed by local government units that have a good record in implementing agricultural and rural development projects. Two components of the project present some elements of risk-the Langdian Pumping Complex and the livestock component. The channel configuration of the Yellow River at the Langdian site appears to be stable, but this might change suddenly in the aftermath of an extreme flood or through gradual changes in the river's morphology. If the river channel were to move away from the site of the new pumping station, it would become necessary to dredge a connecting channel to the river at the end of each flood season. The dredges in the sediment basin would be used for this since they are needed in the sediment basin only in the flood season. It is also to be noted that the discounted net agricultural benefits of the Langdian complex will exceed the cost of the complex after four years of operation. The livestock component will introduce thousands of farmers to livestock ownership. This will call for careful selection, intensive training and monitoring of the beneficiaries, all of which are supported under the project. 25. Recommendation. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association and recommend that the Executive Directors approve the proposed credit. James D. Wolfensohn President Attachments Washington, D.C. February 21, 1996  - 9 - Schedule A CHINA SHANXI POVERTY ALLEVIATION PROJECT ESTIMATED COSTS AND FINANCING PLAN ($ million) Local Foreign Total Yuncheng Irrigation System 30.4 4.7 35.1 River Beach Development 11.0 4.4 15.4 Rural Water Supply 6.6 2.6 9.2 Rural Roads 17.1 0.1 17.1 Soil & Water Conservation 13.6 1.0 14.7 Horticulture 20.8 6.0 26.7 Livestock 14.0 0.5 14.5 Agricultural Processing 13.7 3.6 17.3 All China Womens' Federation 0.6 - 0.6 Support Services 11.0 2.6 13.5 Base Cost 138.8 25.3 164.1 Physical Contingencies 9.0 - 9.0 Expected Price Increase 8.4 1.3 9.7 Total Project Cost 156.2 26.6 182.8 FINANCING PLAN Local Foreign Total ----------------------($ million)-------------- IDA 73.4 26.6 100.0 Shanxi Province 45.7 - 45.7 Prefectures/Counties 7.3 - 7.3 Farmers 29.8 - 29.8 156.2 26.6 182.8  - 10 - Schedule B CHINA SHANXI POVERTY ALLEVIATION PROJECT SUMMARY OF PROPOSED PROCUREMENT ARRANGEMENTS Item Procurement Method ICB NCB Other /a NIF /b Total Civil Works and Buildings Yuncheng Irrigation 9.9 21.0 30.9 Beach Land 10.3 10.3 Water Supply 6.7 6.7 Rural Roads 2.5 15.5 18.0 Buildings 6.1 1.4 7.5 Total 18.5 53.5 1.4 73.4 (9.2) (26.8) (36.0) Soil and Water Conservation Terracing 12.6 12.6 Check Dams 2.0 2.0 Afforestation 1.3 1.3 Total 15.9 15.9 (9.5) (9.5) Livestock Animals 11.9 11.9 Support Services 0.6 0.6 Total 12.5 12.5 (9.0) (9.0) Horticulture Establishment and Tending 22.5 22.5 Support Services 0.5 0.5 Total 23.0 23.0 (9.0) (9.0) Equipment/Goods Agroprocessing 7.0 7.0 Pumps and Motors 3.4 0.4 3.8 Electrical 4.0 3.1 7.1 Dred-es and Excavators 2.4 2.4 PVC Pipes 1.8 0.2 2.0 Fertilizer 7.4 7.4 Vehicles 1.7 0.3 2.0 Miscellaneous 2.3 2.3 Total 20.7 13.3 34.0 (20.7) (13.2) (34.0) ACWF Component 0.6 0.6 (Goods, works and training) (0.3) (0.3) Training and Study Tours 2.2 2.2 (2.2) (2.2) Project Management 14.0 14.0 (0) (0) Miscellaneous 7.2 7.2 (0) (0) TOTAL 20.7 18.5 121.0 22.6 182.8 (20.7) (9.2) (70.1) (0) (100) /a Other includes force account, community participation and shopping, and training. /b NIF: Not IDA-financed. Note: Figures in parentheses are the respective amounts financed by the Bank Group.  - 11 - Schedule B DISBURSEMENTS Amount Category ($ mln) Percent Disbursement Civil Works and Buildings 36.0 50 percent of expenditures. Goods/Equipment 34.0 100 percent of foreign expenditures; 100 percent of local expenditures (ex-factory cost); and 75 percent for other goods procured locally. Soil and Water Conservation 9.5 60 percent of expenditures. Livestock 9.0 80 percent of expenditures. Horticulture 9.0 40 percent of expenditures. ACWF Component 0.3 50 percent of expenditures. Consultant's Services, 2.2 100 percent of expenditures. Training and Study Tours Total 1 00. ESTIMATED DISBURSEMENTS IDA FY 1997 1998 1999 2000 2001 2002 ----------------------------------($ million)--------------------------- Annual 18 25 25 15 12 5 Cumulative 18 43 68 83 95 100  - 12 - Schedule C CHINA SHANXI POVERTY ALLEVIATION PROJECT TIMETABLE OF KEY PROJECT PROCESSING EVENTS (a) Time to prepare: 19 months (b) Prepared by: Govermnent, with FAO/CP and IDA assistance- partially funded with a grant from Japan (c) First IDA mission: November 1993 (d) Appraisal mission departure: June 20, 1995 (e) Negotiations: January 1996 (f) Planned date of effectiveness: June 1996 (g) List of relevant ICRs and PPARs: None This report was prepared by Juergen M. Voegele (Task Manager), G. Morgan (IDA), W.T. Smith, Liang Hleng, and R. Wallace (Consultants). Also involved in preparation were Joln Weatherhogg, F. Cossio, J. Kirk, J. Emstberger and S. Sugimura (FAO/CP) and S. Erb. The Division Chief is Joseph Goldberg and the Department Director is Nicholas C. Hope.  Schedule D Page 1 of 3 STArUS OF BANK GROUP OPERATIONS IN T1E PEOPLE'S REPUBLIC OF CHINA A. STATEMENT OF BANK LOANS AND iDA CREDITS (As of December 31, 1995) Loan/ Amount (USS million) Credit Bor- (net of cancellations) Number FY rower Purpose Bank IDA Undisb.(a) 38 loans and 47 credits have been fully disbursed. 3,831.7 2,813.0 - Of which SECAL: 2967/1932 88 PRC Rural Sector Adj. 200.0 93.2 - 2678/1680 86 PRC Third Railway 160.0 (70.0)'b) 1.3 2723/1713 86 PRC Rural Health & Preventive Med- 15.0 6-.0 6.8 2794/1779 B7 PRC Shanghai Sewerage 45.0 (100.0),b) 0.6 2811/1792 87 PRC Beijing-Tianjin-Tanggu Expressway 25.0 3125.0) b) 3.2 2812/1793 87 PRC Gansu Provincial Dev. (20.0)(b) 155.5 9.3 1885 88 PRC Northern Irrigation - 101.0 4.3 2951/1917 88 PRC Sichuan Highway 75.0 (50.0) b) 6.7 2955 88 PRC Beilungarng I 165.0 0.1 2958 88 PRC Phosphate Dev. 62.7 4.9 2968 88 PRC Railway IV 200.0 3.7 1984 89 PRC JLangxi Provincial Highway - 6 .0 0.7 1997 89 PRC Shaanxi Agriclultural Dev. - 10. 0 5.8 2009 89 PRC Integrated Reg. Health - 5" 0 9.2 3006 89 PRC Ningbo & Shar.ghai Ports 76.4 2.1 3022 89 PRC Tianjir. Light Industry 154.0 10.7 3060/2014 89 PRC Inner Mongolia Railway 70.0 (80.0) b) 0.8 3066 89 PRC Hubei Phosphate 137.0 13.2 3073/2025 89 PRC Shandong Prov. Highway 60.0 (50.0) b) 13.3 2097 90 PRC Jiangxi Agric. Oev. - 6, .0 0.5 2114 90 PRC Vocational & Tech. Educ. - S5 .0 2.1 2145 90 PRC National Afforestation - 30! 0 49.0 2159 90 PRC Hebei Agricultural Dev. - 15 .0 30.3 2172 91 PRC Mid-Yangtze Agricultural Dev. - 6 . 0 5.7 3265/2182 91 PRC Rural Credit IV 75.0 20C .0 10.0 3274/2186 91 PRC Rural Indust Tech (SPARK) 50.0 69.3 11.8 3286/2201 91 PRC Medium-Sized Cities Dev. 79.4 5: .9 17.1 2210 91 PRC Key Studies Development - 13:.2 18.0 2219 91 PRC Liaoning Urban Infrastructure - 7'.8 7.8 3316/2226 91 PRC Jiangsu Provl. Transport 100.0 (53.6) b) 15.9 2242 91 PRC Henan Agricul. Dev. - 1',. 0 44.9 3337/2256 91 PRC Irrig. Agricul. Intensif. 147.1 18' .9 49.4 3387 92 PRC Ertan Hydroelectric 380.0 5.2 2294 92 PRC Tarim Basin - 123 .0 36.4 2296 92 PRC Shanghai Metro Transport - 69.0 13.3 3406 92 PRC Railways V 330.0 45.3 3412/2305 92 PRC Daguangba Multipurpose 30.0 3 .0 8.0 2307 92 PRC Guangdcng ADP - 163 .0 72.8 3415/2312 92 PRC Beijing Environment 45.0 83.0 69.1 2317 92 PRC Infectious and Endemic Disease Cont - 12'.6 91.3 3433 92 PRC Yanshi Thermal Power 180.0 14.6 2336 92 PRC Rural Water Supply and Sanitation - lt .0 61.3 2339 92 PRC Educ. Development in Poor Provs. - 13( .0 46.1 3443 92 PRC Regional Cement Industry 82.7 - 14.7 3462 92 PRC Zouxian Thermal Power 310.0 - 120.4 3471 92 PRC Zhejiang Provincial Highway 220.0 - 107.7 2387 92 PRC Tian7in Urrban Devt. & Envir. - 10 .0 65.9 2391 92 PRC Ship Waste DLsposal - 1'-.0 16.4 2411 93 PRC Sichuan Agricultural Cevz, - 14-.0 77.2 3515 93 PRC Shuikou Hydroelectric I1 100.0 - 64.4 2423 93 PRC Fnanciail Sector TA - 61.0 51.1 3530 93 PRC Guangdong Provincial Transport 240.0 - 126.i  Schedule D Page 2 of 3 Loan/ Amount (US$ million) Credit Bor- (net of cancellations) Number FY rower Purpose Bank IDA Undisb. (a) 3531 93 PRC Henan Provincial Transport 120.0 - 66.6 2447. 93 PRC Ref. Inst'l and Preinvest. - 50.0 36.0 3SS2 93 PRC Shanghai Port Rest. and Devt. 150.0 - 78.4 2457 93 PRC Changchun Water Supply & Env. - 120.0 113.5 2462 93 PRC Agriculture Support Services - 115.0 71.8 3560/2463 93 PRC Taihu Basin Flood Control 100.0 100.0 116.7 2471 93 PRC Effective Teaching Services - 100.0 100.6 3572 93 PRC Tianjin Industry II 150.0 - 142.8 3582 93 PRC South Jiangsu Envir. Prot. 250.0 - 177.9 2475 93 PRC Zhejiang Multicities Devt. - 110.0 92.9 3581 93 PRC Railway VI 420.0 - 267.3 3606 93 PRC Tianhuangping Hydroelectric 300.0 - 257.9 3624/2518 93 PRC Grain Distribution 325.0 165.0 472.1 2522 93 PRC Environmental Tech. Assist. - 50.0 41.9 2539 94 PRC Rural Health Workers Devt. - 110.0 90.7 36S2 94 PRC Shanghai Metro Transport II 150.0 - 33.2 3681 94 PRC Fujian Provincial Highways 140.0 - 116.6 3687 94 PRC Telecommunications 250.0 - 206.9 2563 94 PRC Second Red Soils Area Devt. - 150.0 109.0 2571 94 PRC Songliao Plain Agric. Devt. - 205.0 157.9 3711 94 PRC Shanghai Environment 160.0 - 151.0 3716 94 PRC Sichuan Gas Devt & Conservatn. 255.0 - 227.9 3718 94 PRC Yangzhou Thermal Power 350.0 - 319.5 3727 94 PRC Xiaolangdi Multipurpose 460.0 - 302.5 2605 94 PRC Xiaolangdi Resettlement - 110.0 90.8 2616 94 PRC Loess Plateau Watershed Devt. - 150.0 123.5 2623 94 PRC Forest Resource Devt. & Prot. - 200.0 192.2 3748 94 PRC National Highway 380.0 - 304.2 3773/2642 95 PRC Ent. Housing/Soc Sec Reform 275.0 75.0 336.9 3781 95 PRC Liaoning Environment 110.0 - 96.6 3787 95 PRC Xinjiang Prov. Highways 150.0 - 131.9 2651 95 PRC Basic Ed for Poor/Minorities - 100.0 92.6 3788 95 PRC Shenyang Industrial Reform 175.0 - 169.0 26S4 95 PRC Economic Law Reform - 10.0 9.9 2655 95 PRC Comp Maternal/Child Health - 90.0 83.4 3846 95 PRC Zhejiang Power Development 400.0 - 398.0 3847 95 PRC Technology Development (cC 200.0 - 200.0 3848 95 PRC Sichuan Power Transmission 270.0 - 270.0 3873/2709 95 PRC Fiscal TA 25.0 25.0 47.1 3874/2710 96 PRC Yangtze Basin Water Res Devt 100.0 110.0 211.5 3897 95 PRC Railway VII (c) 400.0 - 400.0 3906/2744 95 PRC Southwest Poverty Reduction 47.5 200.0 239.1 3910 9S PRC Inland Waterways 210.0 - 210.0 3914/2756 95 PRC Iodine Deficiency Dis. Control(c) 7.0 20.0 2S.9 3929 96 PRC Shanghai-Zhejiang Highway (c) 260.0 - 260.0 3933 96 PRC Ertan II Hydroelectric (c) 400.0 - 400.0 2794 96 PRC Disease Prevention (c) - 100.0 100.0 3966/2799 96 PRC Hubei Urban Environment (c) 125.0 25.0 150.0 3967/2800 96 PRC Labor Market Development cc) 10.0 20.0 30.0 Total 14,570.5 8,470.2 9,795.8 of which has been repaid 1,314.1 26.5 Total now held by Bank and IDA 13,256.4 8,443.7 Amount sold: Of which repaid - - Tocal Undisbursed 6,914.0 2,882.5 9,796.5 (a) As credits are denominated in SDRs (since IDA Replenishment VI), undisbursed SDR credit balances are converted to dollars at the current exchange rate between the dollar and the SDR. In some cases, therefore, the undisbursed balance indicates a dollar amount greater than the original principal credit amount expressed in dollars. (b) Credit fully disbursed. (c) Not yet effective.  Schedule D Page 3 of 3 B. STATEMENT OF IFC INVESTMENTS (As of December 31, 1995) Invest- Type of Loan Equity Syndicate Total ment No. FY Borrower Business (US$ Million) ---------- 813/2178 85/92 Guangzhou Peugeot Auto Automobile 15.0 4-5 - 19.5 974 88 China Investment Co.' Venture 3.0 - - 3.0 Capital 1020 88/ Shenzhen China Bicycle 17.5 3-4 - 20.9 92/94 Bicycles Co. Ltd. Manufacture 1066 89 Crown Electronics Manufacturing 15.0 - - 1S.0 1119 89 Shenzhen-YK Solar Energy Electric 2.0 1.0 - 3.0 Light/Power 3423 93 Shenzhen Tai-Yang PCCP Construction 4.0 10 - 5.0 Material 3150 93 Yantai Mitsubishi Cement Cement 28.7 2.0 - 30.7 3746 94 Dalian Glass Glass 30.5 2.4 30.5 32.9 3881 94 China Walden Investors Venture - 7.5 - 7.5 Capital 4470 94 Dynamic Growth Fund Venture - 20.0 - 20.0 Capital 4534 95 Newbridge Investment Venture - 10.0 - 10.0 Capital 4755 95 Nantong Wanfu (EEl) Agribusiness 6.9 3.0 8.9 9.9 2853 96 Dupont Suzhou Polyester Textiles 24.9 3.a 52.0 28.7 4486 96 Plantation Timber Product Timber, Pulp 10.0 1.0 20.0 11.0 Total Gross Commitments 157.5 59.6 111.4 328.5 Less cancellations, terminations, 53.2 0.3 0.0 53.2 repayments, write-offs, and sales Total Commitments now Held by Syndicates - - -11.2 -11.2 Total Commitments now Held by IFC 104.3 59.5 122.5 286.4 Total Undisbursed 40.5 32.0 66.3 138.8 - Subsequently canceled. 1/4/96 LA2DR   MAP SECTION   CHINA SHANXI POVERTY ALLEVIATION PROJECT L PARTICIPATING PREFECTURES NEI MONGOLI PROPOSED PllOAE f PAFIARTAlNG COWUIES a inhe PREFCTIURE EVEt CMES o F7- CCY KX.MIARIES ' R EFEC"E 51"RES /6 OY Zout oog9t FC" E KX4DARIES 6//{/\ FIJ-U GREAI wALL uinn9f tGunln s l 2 7 <,Shonyin ~~~~~T ying.io 1 f \- J Hequ } X 2- ) ~~~~~~~~~~~~~Fanshi <; . 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