China - Vocational and Technical Education Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 16759 IMPLEMENTATION COMPLETION REPORT CHINA VOCATIONAL AND TECHNICAL EDUCATION PROJECT (CREDIT 2114-CHA) May 29, 1997 Rural and Social Development Operations Division China and Mongolia Department East Asia and Pacific Regional Office 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 Currency Unit = Yuan (Y) 1989 $1= Y 3.76 1990 $1= Y 4.78 1991 $1=Y5.32 1992 $1= Y 5.42 1993 $1= Y 5.73 1994 $1= Y 8.50 FISCAL YEAR- January 1 - December 31 WEIGHTS AND MEASURES Metric System ABBREVIATIONS AND ACRONYMS FILO - Foreign Investnent and Loan Office FRG - Federal Republic of Gennany GSS - General Secondary School GTZ - German Agency for Technical Cooperation ICR - Implementation Completion Report MEdC - Municipal Education Commission MOL - Ministry of Labor PEdC - Provincial Education Commission PIO - Project Implementation Office PPI - Proposed Project Institution R&D - Research and Development SAR - Staff Appraisal Report SEdC - State Education Commission SOE - Statement of Expenditure STS - Secondary Technical School SVS - Secondary Vocational School SWS - Skilled Workers School TA - Technical Assistance TTC - Technical Teacher Training College TTD - University Technical Teacher Training Department UBE - Universal Basic Education VTC - Vocational Training Center VTE - Vocational and Technical Education GLOSSARY Key Provinces: Municipalities of Beijing, Shanghai and Tianjin, and Provinces of Jiangsu and Liaoning are called Key Provinces in this report. Vice President : Jean Michel Severino, EAP Director : Nicholas C. Hope, EA2 Division Chief Joseph Goldberg, EA2 Staff Member : Dingyong Hou, Consultant, EA2RS  FOR OFFICIAL USE ONLY CONTENTS PREFACE .................................................... iii EVALUATION SUMMARY .....................................................v PART I. IMPLEMENTATION ASSESSMENT .....................................................1 A. Project Objectives and Description .....................................................1 B. Achievement of Objectives .....................................................2 C. Major Factors Affecting the Project .....................................................7 D. Project Sustainability .....................................................8 E. IDA Performance .....................................................8 F. Borrower Perfornance .....................................................9 G. Assessment of Outcome .................................................... 10 H. Future Operation .....................................................1.1 I. Lessons Learned .....................................................11 PART II: STATISTICAL TABLES .................................................... 12 Table 1: Summary of Assessments .................................................... 12 Table 2: Related Bank Loans/Credits .................................................... 13 Table 3: Project Timetable .................................................... 14 Table 4: Loan/Credit Disbursement: Cumulative Estimate and Actual ....................... 15 Table 5: Key Indicators for Project Implementation .................................................... 15 Table 6: Key Indicators For Project Operations .................................................... 16 Table 8a: Project Costs .................................................... 18 Table 8b: Project Costs .................................................... 19 Table 8c: Project Financing .................................................... 19 Table 10: Status of Legal Covenants .................................................... 20 Table 11: Compliance with Operational Manual Statements ....................................... 21 Table 12: Bank Resources: Staff Inputs .................................................... 21 Table 13: Bank Resources: Missions .................................................... 21 ANNEX A: BORROWER'S CONTRIBUTION TO THE ICR ....................................... 22 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.  - 11 - ANNEX B: ICR MISSION'S AIDE MEMOIRE ................................. 25 ANNEX C: OPERATION PLAN ................................. 33  - iii - IMPLEMENTATION COMPLETION REPORT CHINA Vocational and Technical Education Project CREDIT 2114-CHA PREFACE This is the Implementation Completion Report (ICR) for the Vocational and Technical Education Project in China, for which Credit 2114-CHA in the amount of SDR 38.5 million ($50 million equivalent) was approved on March 27, 1990 and made effective on August 21, 1990. The credit was closed on December 31, 1996. Funds were fully disbursed, and the last disbursement took place on February 25, 1997. The ICR was prepared by Dingyong Hou, Rene Welter and Jan Segerstrom in the Rural and Social Development Operations Division, China and Mongolia Department of the East Asia and Pacific Region, and reviewed by Joseph Goldberg, Chief, EA2RS and Yo Kimura, Project Advisor, EA2DR. Preparation of this ICR was begun during the Bank's final supervision mission in June 1996, and an ICR mission in December 1996. The ICR is based on materials in the project file. The Borrower contributed to the preparation of the ICR by providing views reflected in the mission's aide-memoire, preparing its own evaluation of the project's execution and initial preparation, and commenting on the draft ICR.   CHINA Vocational and Technical Education Project (CREDIT 2114-CHA) EVALUATION SUMMARY Project Objectives and Description 1. The main objectives of the project were to expand, upgrade and increase the efficiency of the secondary vocational and technical education (VTE) system with emphasis on improvements in the quality of the system, including its institutions at all levels. The project concentrated on five highly industrialized provinces and municipalities' while also covering eight other provinces. The project included four components: (a) construction, laboratory and workshop equipment, library books and teaching materials, and related technical assistance for 59 secondary VTE schools in 10 provinces and 3 municipalities to develop into vocational training centers (VTC) which would serve as models for further development of VTE; (b) similar provision as in (a) above for 9 technical teacher training colleges (TTCs) and 3 university technical teacher training departments (TTDs) to expand enrollments and upgrade the quality of laboratory and workshop instruction; (c) strengthen the management of the VTE system at all levels through technical assistance (TA); and (d) equipment and technical assistance required to establish a national and two regional VTE research and development (R&D) centers to research and recommend policy measures to improve the quality, efficiency, and cost-effectiveness of the VTE system. Assistance for the latter component was provided through parallel financing by the then Federal Republic of Germany through the German agency for technical cooperation, GTZ. Implementation Experience and Results 2. Negotiations for the project were completed early in May 1989 and Board presentation was initially scheduled for mid-June of the same year. This was delayed to March 27, 1990 due to the delays experienced during the previous year in presenting China projects to the Board. Local funding, however, was not affected during the abeyance period, thus allowing civil works, furniture procurement and some local training to proceed as originally planned. Once the project was declared effective on September 21, 1990, implementation proceeded smoothly. The high inflation prevalent since 1990, coupled with depreciation of the local currency against the US dollar did not appear to affect implementation substantially. (The exchange rate was 1:3.8 between the dollar and the Yuan at appraisal and was 1:8.3 at project completion.) A likely cause was the fact that most civil works to be financed by counterpart funding were completed early in the implementation cycle, mostly within the first and second year of implementation and before 1 The highly industrialized jurisdictions were Beijing, Tianjin, Shanghai, Liaoning and Jiangsu.  - vi - the inflationary trend could have major repercussions. The local governments were able to secure the planned counterpart funding. A one-year extension of the closing date was granted (from 31/12/95-31/12/96), in order to allow for the completion of the training program and the procurement of computers. As a result of the extension and upon request from the Government, reallocations between categories of Credit funds were made to reflect minor changes, some allocation for training was transferred to equipment, but did not involve any use of savings or any change in the project description. Summary of Findings, Future Operations, and Key Lessons Learned 3. Overall Outcome. The project is rated generally satisfactory in that it initiated a process of quality and efficiency improvements in the VTE system that are now accelerating with the pace of economic reform. The most important external factor in determining the success of the project has been the growth of the economy with strong demand for the schools' graduates. Also contributing to this outcome were a number of important reforms of the VTE system introduced by the government during the project period, including: the elimination of guaranteed employment and assignment of graduates; encouragement for progressive increase in the number of and proportion of students sponsored by enterprises and by self-support fee payment, improvement of teachers' qualifications, and improved conditions of services, and adoption of a national Vocational Education Law. With the exceptions noted (paras. 13, 14, 17, 18), the development objectives were relevant and achieved. 4. The transformation of 59 selected schools within the vocational system in 12 provinces and municipalities into Vocational Training Centers or "centers of excellence," through the proceeds of about 80 percent of the Credit, thus enabling a very significant increase in enrollments and internal efficiency gains, has been a major achievement of the project. Of equal importance is the fact that all graduates have been gainfully employed and that, through establishment of Industrial Liaison Committees, more flexibility has been introduced in the curriculum as well as the new institutions receiving increasing financial assistance from industry. Similar achievements can be reported on the teacher training institutions with respect to facilities, equipment, and enrollments. On practice-oriented curriculum development and the "training of trainers," the introduction of system efficiency measures and indicators points toward evolution and changes already in place. The three research and development centers were established with some delay due to external financing issues. GTZ, on behalf of the German government which provided parallel financing for these centers, conducted an implementation review in March 1997 and shared with the Bank a summary of its findings. The GTZ review found the component satisfactory but noted issues in recruiting qualified VTE research specialists and provision of project staff. Training for the VTCs and TTCs included overseas fellowships and in- country workshops were provided through a program with Ohio State University. For management training, the programs were implemented as planned. The TA program was implemented mostly in terms of number of trainees, while some weaknesses in quality and appropriateness were observed. Other weaknesses identified were related to the difficulty of measuring improvements in teaching or improvements in management as a result of  - vii - teacher and management training for the absence of a more effective monitoring and evaluation system and some aspects of project management. 5. Sustainability. The probability of maintaining the project's achievements in terms of expansion of the VTE system is high due to the demand for skilled manpower generated by an economy in expansion, industry and state-owned enterprises absorbing the full complement of graduates produced by the system and industry's growing share of training costs (50 percent). Because of this strong demand and its economic impact, upgrading and efficiency of the system is part of a continuing process of reform the project was able to facilitate. Since the major part of funding of secondary vocational and technical education has gradually shifted to the provinces and industry which are assuming full financial responsibility, sustainability could also be seen on a case by case basis and according to the economic development of each region. Most of the schools supported by the project became national or provincial "key schools," which very often receive priority funding from local governments both in recurrent and capital expenditures. In the case of Jiangsu, one of the fast-growing provinces with high demand for skilled labor, the provincial government has established an earmarked vocational training fund for the next five years. The fund will be used to finance physical expansion and maintenance and qualitative improvements in its VTE institutions, for which the project schools would be able to compete along with other institutions. The fact that five out of twelve participating provinces are also involved in the Vocational Education Reform Project speaks highly for sustainability, while the remaining seven are now experiencing high demand for skills provided by project schools and have also proven their high commitrnent to the project and its objectives. 6. Future Operations. The project Operation Plan provides a Government strategy with respect to the development and reform of vocational education and its plans to sustain the project impact in project institutions and replicate to nonproject institutions. The lessons learned from implementing this project are reflected and integrated in the design of the Vocational Education Reform Project, approved in July 1997, which capitalizes on the experience and strength provided by the Vocational and Technical Education Project. 7. Lessons Learned. The main lessons learned from the project are: (a) establishment of Industrial Liaison Committees is a useful vehicle in promoting increased participation of industries and in advising VTE training institutions on policy, financing and curricula renewal in response to market demand; (para. 7b) (b) a monitoring and evaluation system is essential to track implementation and assess project impact. Under this operation, the design of project performance indicators should have focused on project impact and results on the ground rather than only quantitative targets. The extent of this project's quite apparent improvements in VTE training quality could therefore not be systematically monitored during implementation. (para. 15); and (c) under the project, more supervision resources, both in terms of staff time and appropriate technical expertise, should have been provided by IDA. Heavy supervision is essential during the early years of implementation with a focus on sectoral issues rather than processes in both supervision and reporting. (para.24)  IMPLEMENTATION COMPLETION REPORT CHINA VOCATIONAL AND TECHNICAL EDUCATION PROJECT (CREDIT 2114-CHA) PART I. IMPLEMENTATION ASSESSMENT A. PROJECT OBJECTIVES AND DESCRIPTION 1. Objectives. The main objectives of the project were to expand, upgrade and increase the efficiency of the secondary vocational and technical education (VTE) system with emphasis on improvements in the quality of the system, including its institutions at all levels. The project concentrated on five highly industrialized provinces and municipalities2 while also covering eight other provinces.3 2. Project Components. The project included four components: (a) Assist 59 secondary VTE schools in 9 provinces and 3 municipalities to develop into vocational training centers (VTC) serving as models for further development of VTE through the provision of construction, laboratory and workshop equipment, library books and teaching materials, and related technical assistance; (b) Provide similar inputs as in (a) to 9 technical teacher training colleges (TTCs) and 3 university technical teacher training departments (TfDs) to expand enrollments and upgrade the quality of laboratory and workshop instruction; (c) Strengthen the management of the VTE system at all levels through technical assistance (TA); and (d) Provide equipment and technical assistance required to establish a national and two regional VTE research and development (R&D) centers to research and recommend policy measures to improve the quality, efficiency, and cost-effectiveness of the VTE system. Assistance for this component was provided through parallel financing by the then Federal Republic of Germany (through the GTZ, The German agency for technical cooperation). 2 The highly industrialized jurisdictions were Beijing, Tianjin, Shanghai, Liaoning and Jiangsu. 3 The eight other jurisdictions were Shandong, Hubei, Hunan, Zhejiang, Sichuan, Shaanxi, Fujian, Guangdong.  2 3. Despite extensive prior lending operations of the Bank Group in Chinese education, this was the first vocational and technical education project in China, which was initiated through a sector study carried out late in 1986, followed within months by a Bank project preparation mission in 1987. The project concept and objectives were generally well designed and appropriate to the Government's strategy to expand and upgrade the VTE system to meet the growing demands for technical manpower. However, in terms of the research and development component and overall technical assistance, expected outcomes could have been more clearly outlined. Also, the inclusion of eight additional provinces to the five key provinces spread available resources too thinly. B. ACHIEVEMENT OF OBJECTIVES Component One-Vocational Training Centers 4. General. The development of the Vocational Training Centers (VTCs), a major component of the project, absorbed about 65 percent of project funds. The financing of construction, lab and workshop equipment, training materials and technical assistance enabled 59 selected secondary vocational schools (SVSs), secondary technical schools (STSs) and skilled workers schools (SWSs) from 13 provinces and municipalities to build up capacity, initiate improvements and transform from a group of traditional narrowly specialized, poorly equipped and exclusive preservice VET schools into a new generation of multifunctional and adequately equipped training centers. Of the above schools, 31 or 53 percent of the total were located in the 5 highly industrialized provinces/municipalities referred to as key provinces. Graduates from project schools have to a very high degree been employed in industry in positions they have trained for. 5. Infrastructure. Construction, mostly of laboratory and workshop facilities required to enable the above transition to take place, has been very satisfactory. Entirely financed by counterpart funds and implemented early in the project, planned areas have largely been exceeded and user satisfaction is quite positive as verified during site visits to a representative sample of institutions. Similarly, in terms of equipment and training materials, the outcome has been very positive. The institutions have been upgraded to a level appropriate to the country's present level of industrialization and meet the demands for classrooms, laboratories, workshop and practice equipment as required by the curriculum. 6. Quantitative Expansion. In response to the demand for skilled workers, the project set out as one of its essential goals the expansion of regular enrollment at the selected 59 schools. Based on data from all the institutions, full time enrollment increased by about 98 percent over the period 1988-1995 from 43,052 to 87,019. The project also set out to expand inservice training enrollments and to make the equipment and facilities available to students from nearby schools. Expansion of enrollment in short and part-time upgrading and retraining programs increased by about 620 percent from 11,929 to 73,886 annually, compared with an expected increase of about 330 percent. These courses were expanded more rapidly than estimated at appraisal in response to a heavy demand for these skills from industry.  3 7. Qualitative Improvements. A fundamental goal of the project, while supporting the expansion of capacity, was to improve the quality of teaching, curriculum development and management processes by piloting a package of quality improvement measures. Reports from the VTCs also indicate efficiency improvements in specific areas designed under the project and grouped under (a) immediately below: (a) improvement in the utilization rates of facilities and equipment, which have doubled, averaging about 90 percent of the target set in the SAR; weekly teaching contact hours for technical teachers, which ranged from 6-10 hours at the time of appraisal, have been increased to an overall average of 14 hours. This increase has also been a factor in increasing student/staff ratio from an average of 9/1 to about 14/1, thus allowing for increased enrollment without corresponding increases in staffing; the proportion of nonteaching staff in the institutions has been reduced, with the ratio of teachers to non- teaching staff increasing from about 1.4/1 to a value of 1.9/1. (b) a process was initiated to improve the participation of industry and foster closer links between employers and training providers through establishing Industrial Liaison Committees at each project school. These committees appear to have had successful outcomes including: assistance with placement of trainees for industrial training as part of their training programs, sponsorship of trainees and associated payment of tuition fees, donation of funds and equipment, advice on training needs, and employment opportunities for graduates. (c) institutions are able to provide facilities for conduct of most of the practical exercises required by the curriculum. Attempts were made in many schools to diversify the mode of delivery by mounting new, short term, quick and tailor-made courses to market demands, particularly in their inservice and contract training programs. The project schools possess greater flexibility to develop and revise their curricula and syllabus within a broader framework set by national and provincial authorities and in response to demand for skilled manpower. Practice has been prioritized in the total curriculum requirement compared to a previous theory oriented curriculum. Also, new courses have been established in Secondary Vocational Schools to satisfy demand from industry. (d) the majority of institutions have set up arrangements for student counseling, particularly to assist with job placement following the gradual elimination of the system of guaranteed employment which prevailed, particularly at the STSs, at the time of project appraisal; and (e) project institutions have supported nonproject institutions in a number of ways, including making available their upgraded specialist laboratories and workshop facilities to the trainees of those schools, and providing training  4 for their teachers. It appears that typically such dissemination activities account for 5-10 percent of the project institutions' total work program. 8. Assessment. In this major component of the project, quantitative expansion in regular enrollments and even more in short-term/part time training exceeded all expectations and targets set at appraisal. The full employment of graduates from project institutions, in response to economic development and industrial expansion, was a very positive and important outcome as well as the closer and more responsive links between the VTCs and industry, which is also taking on an increasing share in the financing of these institutions. Despite many efficiency improvements, continuing effort is needed in the areas of improved curriculum and better trained teachers. Nonetheless, project-initiated changes have had a positive impact on the participating institutions in terms of their management, operations and, to a lesser extent, teaching processes, including utilization of facilities and equipment. The impact is likely to be sustained in their future operations and with high probability can be replicated through effective dissemination. Component Two-Technical Teacher Training 9. General. Complementing the expansion and quality improvement of the Vocational Training Centers, the project also assisted the technical teacher education system to provide an adequate supply of well trained technical teachers. Since most of the industrialized provinces had a Teacher Training Center (TTC) or Technical Teacher Training Department (TTD) attached to a university, the project supported 12 TTCs or TTDs in the relevant provinces. This support, utilizing about 25 percent of funds allocated to the project, included: (a) provision of civil works; (b) procurement of workshop and laboratory equipment; (c) teaching materials including books; and (d) a technical assistance component consisting of overseas and domestic staff development programs. These inputs have enabled the institutions to complete 100 percent of all lab/workshop exercises prescribed by the curriculum and to improve the quality of their instructional programs while greatly increasing their enrollments. 10. Infrastructure. The process of upgrading and equipping facilities for both TTCs and VTCs was very similar and the implementation process for both types of institutions followed very much the same course. As for the VTCs (para. 5), physical expansion and procurement of equipment and materials have been successful and the same comments apply. 11. Quantitative Expansion. As a result of the resources provided for expansion of the TTCs and TTDs, the enrollment of students increased according to targets and in many cases exceeded them. Preservice student enrollment in the key provinces increased from 5,200 in 1988 to 10,784 in 1996, while in the other seven provinces the figures were 6,400 in 1988 and 14,477 in 1996, respectively. In terms of preservice training, the key provinces recorded enrollments of 1,300 in 1988 against 5,902 in 1996. At the same time, the enrollment for inservice students went from 1,000 in 1988 to 3,828 in 1996. Altogether, preservice enrollment of 11,500 in 1988 was forecast to rise to 21,500 by the end of the project, whereas the final number in 1996 reached 25,261. The corresponding enrollment  5 for inservice training was 2,300 in 1988, forecast at 10,000 by 1994, but reached only 9,730 in 1996. In addition, enrollments at the 12 project TTCs and TTDs, which have provided training for students in less developed provinces, were forecast at about 5,000 annually by 1994, but reached 4,900 in 1996 instead. 12. Qualitative Improvements. Through the TA program, trainers benefited from outside training both overseas and in the one-year national programs. While a positive initial step, effectiveness of the training is difficult to measure in terms of improvement in teaching methods as a result of training. Efficiency measures and indicators, common to both VTCs and TTCs, which were introduced in the project and described under para.7 above for the VTC component, point toward quality improvements. The new facilities and new equipment greatly facilitated lab/workshop practice. Curriculum changes have been initiated but do not yet fully reflect the new approach. 13. Assessment In the technical education system analysis in the SAR, it was stated that technical teacher training needed upgrading and that a high percentage of the course work was to be conducted in classrooms and lecture halls as theoretical instruction while a rather small part was allocated to practice, such as workshop and laboratory practice and, very importantly, industrial and teaching practice. It is of crucial importance that future teachers, assigned to instruct and train skilled workers for industry, should have the practical skills to carry out this assignment. The provisions under the project have initiated the process of change but have not yet substantially changed the mode of operation of the TTCs and TTDs, and continuing curriculum reform, to reflect the necessary practical elements of technical teacher training, would be a very high priority. In this context, it would also be important that the "trainers of trainers" should have the background and experience to follow a new curriculum which would be technically and practically oriented with much less academic and theoretical content. Component Three-Upgrading of Management 14. General. The primary objective was to improve management of the VTE system at the national, provincial, municipal, and project institution levels. It was aimed at the top VTE echelons including officials of the State Education Commission (SEdC), Provincial Education Commissions (PEdCs) and Municipal Education Commissions (MEdCs) with emphasis on management principles related to enrollment planning, data processing and analysis, VTE financial and personnel management, evaluation of curricula, VTE institutions and standards of graduates, facility and equipment planning. Less han 1 percent of project resources were allocated to this component which nevertheless provided extensive local and overseas training programs for VTE administrators at all levels and specialist services. 15. Assessment. Although the training programs were implemented as planned, their effectiveness was difficult to assess fully because of the absence of assistance for establishing improved systems, including the provision of hardware and software and comprehensive training of administrative support staff. The vocational education department of SEdC and the Central Research Institute designed and pilot tested a set of  6 instruments for evaluation of training performance, these appear not to have been fully implemented on a routine basis. IDA Financed Technical Assistance 16. The IDA-financed technical assistance was similar for all three components. Technical assistance was provided overseas and in-country as consultant services and long- and short-term staff training for key teachers and principals, including some overseas study tours. Consultants, both domestic and international, conducted seminars for institutional staff in the VTCs and the TTC/TTDs (about 40 man-months of international experts and about 1,020 man-months of domestic consultants). As regards short term staff training, provisions were made for one, two and three months training benefiting about 2,200 staff through domestic training focusing on instructor and management training as well as industrial practice. Long-term training, about one year, mainly in pedagogic and instruction methods, was given in-country to about 2,000 teachers and trainers from VTCs and TTCs, respectively. Another 80 staff, mainly teachers, teacher trainers and principals from the VTCs and TTCtlTDs, went through one-year training programs overseas. Also, about 35 administrative staff participated in a three week study tour abroad to study VTE systems in other industrialized countries. 17. The foreign part of the technical assistance was executed by Ohio State University. For a variety of reasons, mostly foreign language capability, the fellowship program fell short of the target set at appraisal by about 20 percent which were converted into local training. The foreign consultant-led seminars were completed as planned, but the selection of participants did not take sufficient note of prerequisite knowledge and skills. The necessary Chinese-English interpretation during the seminars was in many instances inadequate, since interpreters often lacked knowledge of the subject matter being discussed. This raises concern whether this type of seminar is an effective method of transferring knowledge and skills. As regards the domestic training, the targets were met, although far from the full amount allocated was utilized because costs were overestimated at appraisal and higher cost efficiency was achieved. As a result, some funds were reallocated to the equipment category in connection with the extension of the Credit closing in late 1995. Component Four-VTE Research and Development Centers 18. General. The objective of the component was to develop a research and development (R & D) capability to address the problems of the VTE system, including uneconomical use of facilities and equipment, imbalances between teaching and nonteaching staff, inadequate links with industry and a narrowly based curriculum. The project assisted in the establishment of a national R & D center in Beijing and two regional centers located in Tianjin and Shanghai. No new construction was required since the R & D centers were established in existing institutions. The project therefore included only equipment, books and periodicals, and related technical assistance representing about 10 percent of the project, which was provided on a grant basis and through parallel financing from the Federal Republic of Germany.  7 19. Implementation. The National Center was established in Beijing and one regional center in Shanghai. The third center, originally planned for Tianjin as a regional center under the Ministry of Labor (MOL), was later transferred to SEdC and located in Shenyang, Liaoning province. A steering committee for the centers was established with membership from SEdC and MOL. The roles and functions for the three centers were planned in great detail and the National Center in Beijing was to be the coordinating center. Major activities for the centers were inter alia: linkages with industry related to trainee performance and general feedback, curriculum review, job analysis, development of new programs and more effective utilization of workshop and laboratory equipment. Implementation of the component was delayed for a number of reasons, including MOL's decision not to participate. Secondly, recruiting the necessary research staff for the centers proved difficult and SAR targets for staffing were not met. Despite the foregoing, the National Center prepared the framework and details for a national vocational education law, which was approved by the Government in June 1996. The same center is responsible for preparation, with the VTE department, of annual reports on Vocational Education and the first report for 1995 was published in Chinese and English. The center also publishes a monthly journal on vocational education with a circulation of 40,000 copies. It has also been reported that the center has been given an increased role in national policy formulation and development in association with the VTE department. Most of the research staff has been trained in Germany and the technical assistance team also comes from Germany. 20. Assessment. The evolution and late inclusion in the project of this research and development component, after the overall financing plan of the project had been agreed to in principle, required seeking external financing to accommodate the component, placed it outside IDA control, and resulted in some implementation delays. GTZ, on behalf of the German government, conducted an implementation review of the three centers in March 1997, and shared with the Bank a summary of its findings. The GTZ review of the component found it satisfactory but noted issues in recruiting qualified VTE research specialists and provision of project staff as constraints in the implementation. While the improvement made in the later stage of project implementation and the infrastructure the project helped create in these centers, provide a base to be capitalized on, the expected outcome of this component could have better supported formulation of VTE policy and related strategy, considering demand from employers. C. MAJOR FACTORS AFFECTING THE PROJECT 21. Implementation-Record. Negotiations for the project were completed early in May 1989 and Board presentation was initially scheduled for mid-June of the same year. This was delayed to March 27, 1990 due to the delays experienced during the previous year in presenting China projects to the Board. Local funding, however, was not affected during the abeyance period, thus allowing civil works, furniture procurement and some local training to proceed as originally planned. Once the project was declared effective on September 21, 1990, implementation proceeded smoothly. The high inflation prevalent since 1990, coupled with depreciation of the local currency against the dollar did not appear to affect implementation substantially. (The exchange rate was 1:3.8 between the dollar and  8 the Yuan at appraisal and was 1:8.3 at project completion.) A likely cause was the fact that most civil works to be financed by counterpart funding were completed early in the implementation cycle, mostly within the first and second year of implementation and before the inflationary trend could have major repercussions. The local governments were able to secure the planned counterpart funding. A one-year extension of the closing date was granted (from 12/31/95-12/31/96), in order to allow for the completion of the training program and the procurement of computers. As a result of the extension and upon request from the Government, reallocations between categories of Credit funds were made to reflect minor changes, some allocation for training was transferred to equipment, but did not involve any use of savings or any change in the project description. D. PROJECT SUSTAINABILITY 22. The probability of maintaining the project's achievements in terms of expansion of the VET system is high due to the demand for skilled manpower generated by an economy in expansion, industry and SOEs absorbing the full complement of graduates produced by the system and industry's growing share of training costs (50 percent). Because of this strong demand and its economic impact, upgrading and efficiency of the system is part of a continuing process of reform the project was able to facilitate. Since the major part of funding of secondary vocational and technical education has gradually shifted to the provinces and industry, which are assuming full financial responsibility, sustainability could also be seen on a case by case basis and according to the economic development of each region. Most of the schools supported by the project became national or provincial "key schools" which very often receive priority funding from local governments both in recurrent and capital expenditures. In the case of Jiangsu, one of the fast-growing provinces with high demand for skilled labor, the provincial government has established an earmarked vocational training fund for the next five years. This fund will be used to finance physical expansion and maintenance and qualitative improvements in its VTE institutions, for which the project schools would be able to compete along with other institutions. The fact that five out of twelve participating provinces are also involved in the Vocational Education Reform Project speaks highly for sustainability, while the remaining seven are now experiencing high demand for skills provided by project schools and have also proven their commitment to the project and its objectives. E. IDA PERFORMANCE 23. When China decided to expand vocational education, a sector dialogue was initiated with IDA which provided guidance, initially through the findings of the sector study, followed by the formulation and development of the project. Although there was consensus on the objectives, there was some divergence of views on project design. The Government wanted to maximize project resources over a greater number of provinces and institutions, while IDA's position was one of concentration in fewer provinces, resulting in manageable supervision. The project resulted from a compromise where eight provinces were added to the initial five key provinces. Also, the relatively late inclusion in the project of the research and development centers (between preappraisal and appraisal), after the overall  9 financing plan of the project had been agreed to in principle, required seeking external financing to accommodate the component. 24. Project generation from the early stages of identification and preparation to appraisal was carried out satisfactorily by IDA in terms of development and processing of the project as well as completing these stages in a timely manner. IDA staff and consultants assigned to these tasks, in terms of numbers and skill mix, were also appropriate. Project supervision, however, was deficient with only three missions carried out during more than 42 months from October 1990 (project effectiveness) to May 1994. Supervision coefficients during this period varied from one to two staff/weeks in the field per year without the professional expertise required to assess and advise the Borrower. This situation was beyond the control of the staff involved who, apart from the VTE project, simultaneously supervised up to three other projects in the course of a single mission or combined supervision with other lending operations because of budgetary limitations. As a result of this situation, two project provinces were not visited and the mid-term review rather than being a joint exercise as specified in the credit agreement was prepared by the Borrower and submitted to the Bank without ensuing comments. From mid-1994 up to completion of the project the situation improved with the raising of frequency of missions and assigning a technical education specialist as task manager. Finally, the content of annual reports should have been discussed and agreed in more detail with the implementing agencies. F. BORROWER PERFORMANCE 25. As with other projects in the education sector, SEdC had overall responsibility for implementing the project and acted as coordinating body at the central level as well as with the project entities in the provinces. The Foreign Investment and Loan Office (FILO), the coordinating and executing arm of SEdC and its affiliates in the provinces, was responsible for day-to-day management of the project including equipment procurement, technical assistance and accounts including withdrawals and audits. 26. Areas of strength were in the phases of project design and preparation where SEdC and the PEdCs/MEdCs provided all the necessary means, information and dialogue to move the project ahead. Also, several aspects of implementation were handled well by FILO including local and international procurement, accounting and disbursements and submission of yearly audits on time. Regarding implementation in general, the project benefited at the central level from the experience and procedures in place for other Bank/IDA education projects; this being particularly applicable to procurement and accounts. Procurement of equipment through ICB was contracted to the International Tendering Company under the Ministry of Foreign Economic Relations and Trade with good results. The Technical Assistance program managed by FILO was effective in organizing local training with its very large number of workshops and participants, signing of the major TA contract and liaison with Ohio State University as well as the mechanics of sending candidates on overseas training. With respect to selection of competent fellows, advising on contents of workshops and training programs and the long term benefits of the  10 training, however, there were weaknesses in evidence in directing the program overall and assessing its appropriateness in relation to the project's objectives. 27. FILO, by engaging the technical vocational department of SEdC, could have provided more necessary and specialized staff to travel to the provinces, organize regular meetings either centrally or regionally to deal in a comprehensive way with program/curriculum issues to achieve quality improvement of the system. From IDA's perspective through travels to the various entities, it appeared that there was more interest and knowledge at that level. 28. Although annual reports were prepared regularly during the course of implementation in accordance with the Credit Agreement, information contained in these reports proved to be of less value due to their submission three months after the end of the reporting year. Also reporting on implementation by categories of the project with emphasis mainly on equipment, contracts and disbursement gave a very limited view of overall implementation. For the future, reports should provide a comprehensive view of the project, its activities, problems and adjustments and, most important, the meeting of its objectives. The format and contents for reporting need to be discussed with the Bank at the beginning of project implementation. G. ASSESSMENT OF OUTCOME 29. The project is rated generally satisfactory in that it initiated a process of quality and efficiency improvements in the VTE system that are now accelerating with the pace of economic reform. The most important external factor in determining the success of the project has been the growth of the economy with strong demand for the schools' graduates. Also contributing to this outcome were a number of important reforms of the VTE system introduced by the government during the project period, including: the elimination of guaranteed employment and assignment of graduates; encouragement for progressive increase in the number of and proportion of students sponsored by enterprises and by self- support fee payment, improvement of teachers' qualifications, and improved conditions of services and adoption of a national Vocational Education Law. With the exceptions noted above, the development objectives were relevant and achieved. 30. The transformation of 59 selected schools within the vocational system in 12 provinces and municipalities into Vocational Training Centers or "centers of excellence," through the proceeds of about 80 percent of the Credit, thus enabling a very significant increase in enrollments and internal efficiency gains, has been a major achievement of the project. Of equal importance is the fact that all graduates have been gainfully employed and that, through establishment of Industrial Liaison Committees, more flexibility has been introduced in the curriculum as well as the new institutions receiving increasing financial assistance from industry. Similar achievements can be reported on the teacher training institutions with respect to facilities, equipment, and enrollments. On practice-oriented curriculum development and the "training of trainers," the introduction of system efficiency measures and indicators points toward evolution and changes already in place. The three  11 research and development centers were established with some delay due to external financing issues. GTZ, on behalf of the German government which provided parallel financing for these centers, conducted an implementation review in March 1997, and shared with the Bank a summary of its findings. The GTZ review found the component satisfactory but noted issues in recruiting qualified VTE research specialists and provision of project staff. Training for the VTCs and TTCs included overseas fellowships and in- country workshops were provided through a program with Ohio State University. For management training, the programs were implemented as planned. The TA program was implemented mostly in terms of number of trainees, while some weaknesses in quality and appropriateness were observed. Other weaknesses identified were related to difficulty of measuring improvements in teaching or improvements in management as a result of teacher and management training for the absence of a more effective monitoring and evaluation system and some aspects of project management. H. FUTURE OPERATION 31. The Government prepared and submitted to the Association a draft Operation Plan in December 1996. Integrating the comments provided by the Association, the Government resubmitted the Operation Plan in April 1997, which is attached in this report as Annex C. This plan provides a government strategy with respect to the development and reform of vocational education and its plans to sustain the project impact in project institutions and replicate to nonproject institutions. The lessons learned from implementing this project are reflected and integrated in the design of a Vocational Education Reform Project, approved in July 1997, which capitalizes on the experience and strength provided by the Vocational and Technical Education Project. I. LESSONS LEARNED 32. The main lessons learned from the project are: (a) establishment of Industrial Liaison Committees is a useful vehicle in promoting increased participation of industries and in advising VTE training institutions on policy, financing and curricula renewal in response to market demand (para. 7b); (b) a monitoring and evaluation system is essential to track implementation and assess project impact. Under this operation, the design of project performance indicators should have focused on project impact and results on the ground rather than only quantitative targets. The extent of this project's quite apparent improvements in VTE training quality could therefore not be systematically monitored during implementation. (para. 15); and (c) more supervision resources, both in terms of staff time and appropriate technical expertise, should have been provided by IDA. Heavy supervision is essential during the early years of implementation with a focus on sectoral issues rather than processes in both supervision and reporting (para. 24).  12 PART II: STATISTICAL TABLES TABLE 1: SUMMARY OF ASSESSMENTS A. Achievement of Objectives Substantial Partial Negligible Not Applicable Macroeconomic policies X Sector policies X Financial objectives X Institutional development X Physical objectives X Poverty reduction X Gender issues X Other social objectives X Environmental objectives X Public sector management X Private sector development X B. Project Sustainability Likely Unlikely Uncertain x C. Bank Performance Highly Satisfactory Satisfactory Deficient Identification X Preparation assistance X Appraisal X Supervision X D. Borrower Performance Highly Satisfactory Satisfactory Deficient Preparation X Implementation X Covenant compliance X Operation (if applicable) X E. Assessment of Outcome Highly Satisfactory Satisfactory Unsatisfactory Highly Unsatisfactory x  13 TABLE 2: RELATED BANK LOANS/CREDITS LOAN/CREDIT PURPOSE YEAR OF STATUS APPROVAL PRECEDING OPERATIONS UNIVERSITY DEVELOPMENT To strengthen science & engineering in 28 leading 1981 Completed PROJECT Chinese Universities. Objectives were to 1986 (LN 2021-CHA, CR. 1167-CHA) increase the quality & quantity of graduates & research, to strengthen the planning & management capabilities & to prepare investments in the education sector. AGRICULTURE EDUCATION To assist agriculture higher education and research 1982 Completed AND RESEARCH PROJECT in 11 agricultural colleges and 7 institutions. 1989 (CR. 1297-CHA) POLYTECHNIC/TELEVISION To increase the number of students & to improve 1983 Completed UNIVERSITY PROJECT the quality of instruction in China's 17 1992 (CR. 141 1-CHA) polytechnic institutions & 28 television universities. RURAL HEALTH MEDICAL The educational component of this project was 1984 Completed EDUCATION PROJECT designed to enhance the quality of education, 1991 (CR. 1472-CHA) training & curriculum. SECOND AGRICULTURAL To improve & assist agriculture education in 23 1984 Completed EDUCATION PROJECT agricultural colleges, 12 agricultural technical 1992 (LN. 2444-CHA) schools. SECOND UNIVERSITY To increase technical & managerial personnel 1985 Completed DEVELOPMENT PROJECT through policy & institutional changes related to 1992 (CR. 1551-CHA) the engineering and economic/finance education subsector. PROVINCIAL UNIVERSITY To provide direct assistance to 60 provincial 1986 Completed PROJECT universities in 28 provinces and planning 1992 CR. 1671-CHA) assistance for the higher education subsector. FOLLOWING OPERATIONS TEXTBOOK DEVELOPMENT To support the textbooks upgrading program by 1989 Completed PROJECT the Chinese Government. Objectives are to 6/30/95 (CR. 2006-CHA) improve the educational quality of textbooks at all levels of schooling, to increase the variety of available textbooks & to improve the efficiency of textbook production. VOCATIONAL & TECHNICAL To improve the quality of technical & vocational 1990 Completed EDUCATION PROJECT training in China through supporting 59 secondary 12/31/96 (CR. 2114-CHA) vocational/technical schools in 10 provinces and 3 municipalities. MEDIUM-SIZED CITIES To assist Changzhou, Luoyang and Shashi cities to 1991 To be DEVELOPMENT PROJECT improve overall and sector planning and completed (LN. 3286-CHA) management, including education. 6/30/97 KEY STUDIES DEVELOPMENT To support the government's plan to reform the 1991 To be PROJECT management of science and technology programs. completed (CR. 2210-CHA) It consists of support for research and graduate 6/30/97 training in 133 State Key Laboratories and Special Labs affiliated with Universities and with the Chinese Academy of Sciences. EDUCATION DEVELOPMENT To support three main goals for the development of 1992 To be IN POOR PROVINCES education in relatively poor provinces - Shanxi, completed (CR. 2339-CHA) Shaanxi, Hubei, Hunan, Guizhou and Yunan. 12/31/98  14 LOAN/CREDIT PURPOSE YEAR OF STATUS APPROVAL EFFECTIVE TEACHING To contribute to improved learning at the lower 1993 To be SERVICES PROJECT middle school level by providing teaching completed (CR.2471-CHA) services, including instructional methodology, 12/31/98 teacher training and management of teachers training and assignment. BASIC EDUCATION IN POOR To support the attainment of universal primary 1994 To be AND MINORITY AREAS education and expansion of coverage of lower completed PROJECT secondary education in poor and minority areas in 12/31/2000 (CR. 265 1-CHA) 6 provinces: Xinjiang, Sichuan, Inner Mongolia, Ningxia, Guangxi, and Jiangxi. THIRD BASIC EDUCATION To support the attainment of universal primary 1995 To be PROJECT education and expansion of coverage of lower completed CR. 2831 -CHA secondary education in poor and minority areas in 12/31/2001 7 provinces: Anhui, Fujian, Gansu, Hebei, Henan, Jilin and Qinghai. VOCATIONAL EDUCATION To improve and increase the supply of skilled labor, 1996 To be REFORM PROJECT raise the quality and efficiency of the VTE system completed (CR.4063/Ln2898-CHA) and build up capacity for monitoring and 12/31/2002 evaluation in four high growth provinces and Tianjin municipality. TABLE 3: PROJECT TIMETABLE Steps in project cycle Date planned Date actual Identification 04/23/87 04/23/87 Preappraisal 01/15/88 01/15/88 Appraisal 01/20/89 01/20/89 Negotiations 05/01/89 05/01/89 Board presentation 06/15/89 03/27/90 Signing 05/23/90 05/23/90 Effectiveness 08/21/90 08/21/90 Project completion 12/31/94 12/31/95 Loan closing 12/31/95 12/31/96  15 TABLE 4: LOAN/CREDIT DISBURSEMENT: CUMULATIVE ESTIMATE AND ACTUAL ($ million) FY90 FY91 FY92 FY93 FY94 FY95 FY96 FY97 Appraisal estimate 3.0 28.0 42.0 48.0 49.0 50.0 0 0 Actual 6.2 15.7 35.0 40.21 43.7 52.6 53.8 Actual as % of adjusted estimate 22.1 37.4 72.9 82.0 87.4 Final date of disbursement 02/25/97 TABLE 5: KEY INDICATORS FOR PROJECT IMPLEMENTATION Key Quantitative Indicators Vocational Training Centers Technical Teacher Training Institutes/Departments (12) Start Target Actual Start Target Actual Full-time Enrollment 43,967 66,819 85,359 13,517 21,500 25,261 Inservice Enrollment 11,907 40,680 55,370 4,267 9,890 9,730 Full-time Teachers 4,703 6,120 5,406 4,021 3,408 1,906 Student/Teacher Ratio 9 11 13.9 4 6 13 Teacher/Nonteaching Staff 1.4 1.86 1.9 1 2 2 Ratio Teacher Weekly Contact n/a 12 13.8 n/a 12 11.6 Hours Facility Utilization n/a 90 90 n/a 90 88  16 TABLE 6: KEY INDICATORS FOR PROJECT OPERATIONS Key Qualitative Indicators Status at Start Actual at Completion Effectiveness of Management (a) positive effect on work of nonproject n/a majority of schools report schools increase in support for nonproject schools by making aval able specialist labs for student/teachers for practice and training of teachers comprising a 10 percent school load. (b) improved utilization of physical low utilization rate overall facility/equipment facilities utilization factor is reported to have increased to a value based on criteria agreed at appraisal. (c) increased contact hours for teachers low weekly contact hours average teacher contact hours in VTCs increased to about 13 hours per week, double that at appraisal. (d) reducing proportion of nonteaching high proportion of overall teacher to non teaching staff nonteaching staff staff ratio reduced from 1.4 to I to 1.9 to 1. (e) reasonable cost sharing with other not in place a user fee was introduced by participating schools participating schools for the use of labs/works to contribute to maintenance costs (f) maintenance, including adequacy of not in place all schools report the maintenance budget establishment of arrangements/budget for maintenance. (g) effectiveness of student counseling and not in place majority of schools report job placement establishment of counseling services, particularly in job placement.  17 Key Qualitative Indicators Status at Start Actual at Completion Improved Quality of Project and Nonproject Schools (a) effectiveness of VET teacher training n/a volume of staff upgrading training and retraining has exceeded the amount planned under the project (b) allocation of teaching responsibilities n/a project-trained staff participated in and teacher performance development of VET programs. Many schools report promotion of staff after training to positions of responsibility and to their designation as key teacher status. (c) improved utilization of teachers in n/a majority of schools report nonproject schools improved utilization ofteachers. Improvement of VET and Industrial Liaison (a) establishment of Industrial Liaison not in place majority of PEdCs/schools report Committees (ILC) establishment of ILCs (b) meetings between PEdC and ILC not in place meetings are reported normally taking place 2 or 4 times a year (c) effect of work of ILC on school not in place outcomes include placement of curriculum and student training and trainees for industrial trainin placement in industry employment of graduates, advice on training needs, financial support and technical support including teaching by industrial staff. Improvement of Senior Management (a) management staff training n/a most schools report participation in overseas or domestic training for senior managers but needs to be continued and expanded. (b) arrangement and participation in n/a most schools report participation conferences and seminars etc. in overseas or domestic seminars and conferences but needs to be expanded.  18 TABLE 8A: PROJECT COSTS (Yuan million) Item Appraisal Estimate Actual/latest Estimate Local Foreign Total Local Foreign Total Civil Works 47.6 5.3 52.9 171.8 0.0 171.8 Furnitur 7.9 0.9 8.8 17.4 1.7 19.1 Equipment 76.6 92.7 169.3 373.5 94.6 468.1 Books and Teaching materials 2.2 0.9 3.1 4.9 1.7 6.6 Overseas Training 0.4 6.8 7.2 0.8 1.7 2.5 Local Training 11.8 0.0 11.8 1.7 0.0 1.7 Foreign Specialists 0.2 1.5 1.7 0.8 3.3 4.1 Local Specialists 0.6 0.0 0.6 24.1 0.0 24.1 Total Base Costs 147.3 108.1 255.4 - - - Physical Contingency 14.1 10.4 24.5 Price Contingency 27.8 5.3 33.1 Total 189.2 123.8 313.0 595.0 103.0 698.0 R&D Centers (FRG financed) 5.5 20.5 26.0 12.5 45.7 58.1 Total 339.0 756.1  19 TABLE 8B: PROJECT COSTS ($ million) Item Appraisal Estinate Actual/latest Estimate Local Foreign Total Local Foreign Total Civil Works 12.8 1.4 14.2 20.7 0.0 20.7 Furniture 2.1 0.2 2.3 2.1 0.2 2.3 Equipment 20.5 25.2 45.7 45.0 11.4 55.8 Books and Teaching materials 0.6 0.2 0.8 0.6 0.2 0.8 Overseas Training 0.1 1.8 1.9 0.1 0.2 0.3 Local Training 3.2 0.0 3.2 0.2 0.0 0.6 Foreign Specialists 0.1 0.4 0.5 0.1 0.4 0.5 Local Specialists 0.2 0.0 0.2 2.9 0.0 2.9 Total Base Costs 39.6 29.2 68.8 - - - Physical Contingency 3.7 2.8 6.5 Price Contingency 7.4 1.3 8.7 Total 50.7 33.3 84.0 71.7 12.2 83.9 R&D Centers (FRG financed) 1.5 5.5 7.0 1.5 5.5 7.0 Total 91.0 90.9 TABLE 8c: PROJECT FINANCING ($ million) Category IDA Government FRG Total Estimates Actual Estimates Actual Estimates Actual Esimates Actal Civil Works 0 0 17.5 20.7 0 0 17.5 20.7 Equipment, Books and Furniture 46.5 49.6 16.5 9.3 0 0 59.2 59.1 Technical Assistance 5.8 4.13 0 0 0 0 7.3 6.13 R&D Centers 0 0 0 0 7.0 7.0 7.0 7.0 Total 50.0 53.73 34.0 30.0 0 7.0 91.0 90.9  20 TABLE 10: STATUS OF LEGAL COVENANTS Covenant Present Original Revised Agreement Section type Status fulfillment fulfillment Description of covenant Comments date date Credit 3.01.A 10 C Project to be carried out with due diligence through SEdC and to provide funds, facilities and services as required. Credit 3.01.B 10 C Project to be implemented in accordance with the implementation program set forth in part A of schedule 4. Credit 3.01.C 3 C proceeds of credit to be made available to provinces under the project. Credit 4.01 1 C Annual Audit report to be submitted to the Association no later than August 31 of each year. Credit Sch.4, A. 1. a 9, 10 C Submit annual progress report in accordance with indicators agreed with the Association no later than September I of each year. Credit Sch.4, A. I.b 9 C 12/19/1992 Conduct mid-term review with the Association no later than December 31, 1992. Credit Sch.4, A.2 10 C Training under the project to be carried out in accordance with program agreed with the Association. Credit Sch.4, A.3 10 C Each province shall maintain a PIO during the project implementation period. Credit Sch.4, B.2 10 C provinces agree to undertake measures agreed with the Association to make the vocational/technical education system more efficient. Credit Sch.4, B.3 10, 5,4 C provinces are to carry out their components with due diligence through SEdC and to provide funds, facilities, and services as required. Credit Sch.4, B.4 4,3 C provinces are to allocate sufficient funds for the maintenance, repair and purchases of spare parts for schools and institutions. Covenant Class: Status: I = Accounts/audits 8 = Indigenous people C = covenant complied with 2 = Financial performance/revenue 9 = Monitoring, review, and reporting CD = complied with after delay generation from beneficiaries 10 = Project implementation not CP = complied with partially 3 = Flow and utilization of project covered by categories 1-9 funds 11 = Sectoral or cross-sectoral 4 = Counterpart funding budgetary or other resources 5 = Management aspects of the allocation project or executing agency 12 = Sectoral or cross-sectoral policy! 6 = Environmental covenants regulatory/institutional action 7 = Involuntary resettlement 13 = Other  21 TABLE 11: COMPLIANCE WITH OPERATIONAL MANUAL STATEMENTS Not Applicable TABLE 12: BANK RESOURCES: STAFF INPUTS Project Cycle Planned Actual SWs $'000 SWs $'000 Preparation to Appraisal n/a n/a 171.7 389.9 Appraisal n/a n/a 12.0 24.7 Negotiations to Board n/a n/a 9.2 18.5 Supervision n/a n/a 57.8 191.8 Completion n/a n/a 19.0 28.6 Total n/a n/a 269.7 653.5 TABLE 13: BANK RESOURCES: MISSIONS Stage of project Month/year Number Days in Specialized staff Performing rating Type of cycle of persons field skills represented La problems Implementa- Development tion status Lb objectives Identification 07/87 3 n/a PO/EC/Ed - - - Preparation 11/87 5 28 TEd/PS/EdC/Ar - - - Preappraisal 02/88 4 20 TEd/PS/EC/EdC - - - Appraisal 06/88 4 17 TEd/PS/EC/EdC - - - Supervision 1 11/90 2 15 EC/Ed I I - Supervision 2 10//91 1 7 EC 2 1 - Supervision 3 09/92 2 14 EC/Ed I I - Supervision 4 09/93 1 10 EC 1 I - Supervision 5 06/94 2 7 STEd/TEd I I - Supervision 6 10/94 2 5 STEd/E S S - Supervision 7 01/96 3 20 STEd/IS/OA S S - Supervision 8 06/96 3 20 STED/OA/TS S S - Completion 12/96 3 14 STED/IS/OA S S - La Ar: Architect; EC: Economist; Ed: Educator; EdC: Education consultant; IS: Implementation specialist; OA: Operation Analyst; PS: Procurement specialist; STEd: Senior technical educator. /b 1: Highly satisfactory; 2: Satisfactory. L/ Typical problems included: implementation delays in technical assistance and studies.  22 ANNEX A: BORROWER'S CONTRIBUTION TO THE ICR 1. Introductory remark This appendix was prepared in accordance with the new Bank procedures for ICR preparation replacing the original guidelines for ICR preparation. 2. Comments on the Two parts of the ICR prepared by the Bank. The Borrower recognizes that, on the whole, the brief descriptions of the project objectives, contents, implementation and outcomes contained in Part I of the ICR are clear, conform to reality, and acknowledges that the tables of statistical information given in Part II are sufficient for illustrating the key factors relating to the project implementation. The Borrower agrees in general with the views, analysis and comments of the Bank on the project execution. 3. Project Background. After the "Compulsory Education Law" of 1986 mandated universal basic education through grade 9, the Chinese government has strongly emphasized the development of secondary vocational and technical education (VTE) to provide the technical manpower required by the rapid expansion of national economy and decrease the pressure for admission to upper secondary schools and higher education institutions. Although the Chinese VTE has a certain solid foundation, there are deficiencies in enrollment, school building and equipment (some of them are dilapidated), major construction, teachers' quantity and quality, teaching method, management capability and financing of school and VTE research. To address these problems, the government designed the VTE developing program that led to this project with the World Bank. 4. Project Objective. To expand and upgrade the secondary vocational and technical education system and technical teacher training system that provides teachers to secondary VTE schools. The project emphasizes improvements in the quality of the project institutions and institution building in the VTE system at all levels, concentrating on five highly industrialized provinces and municipalities. The project has four components: (a) to assist 59 secondary VTE schools in 10 provinces and 3 municipalities to be promoted into vocational training centers (VTC) which would serve as models for further development of VTE; (b) to assist 9 technical teacher training colleges (TTCs) and 3 university technical teacher training departments (TTDs) to expand enrollment and upgrade the quality of laboratory and workshop instruction; (c) to establish one national and two regional VTE research and development (R&D) centers to conduct research and recommend policy measures to improve the quality, efficiency, and cost effectiveness of the VTE system and to develop inexpensive teaching materials and equipment for the VTE schools; and (d) to improve the management capability of the VTE system. The  23 project would provide construction, instructional equipment, books and teaching materials and related technical assistance (TA). 5. Project Implementation. The project was executed by SEdC at the central level. In order to ensure the smooth implementation of the project, a series of implementing units (some of them are belonged to other ministries) were closely organized at various level and a number of appointments were assigned to take responsibility for the implementation. During the five years of the project circle, under the successful administration and of SEdC according to the guidance of the World Bank, the overall implementation went well in disbursement, civil works, equipment procurement and training and technical assistance and administration at all levels. The project was successfully completed by the closing date on December 31, 1996, which was extended from December 31, 1995 as the requirement of the project implementation. The total credit amount was disbursed and the total local counterpart fund was expended. In another aspect, most of the key indicators for monitoring the overall progress of the project development were met or exceeded. In addition, the management capability in different levels are improved. It is natural that there are also a few of deficiencies losses in work to be corrected in future, e.g., the teacher training should be further strengthened in model, contents and arrangement for better servicing education and economic needs. Quite a lot of items illustrating the achievement of project objectives have been listed and analyzed in Part I of the ICR in detail. The Borrower agrees in general with the comments and will not take any further review in detail. 6. Project Sustainability. Although the project is affirmed successfully, there are still work to be done to sustain the project benefits in the future. Attention should be given to the following respects to the sustainability: (a) Further expand vocational education; (b) Continue and disseminate project initiated improvements; (c) Strengthen technical teacher training; (d) Further improve links between the project institutes and industry; and (e) Continually investment in project institutes. 7. Bank's Performance. The bank officials and staff participating the project's proportion appraisal and initial operation were highly professional and qualified with the task. Moreover, having been involved in the work of the previous education projects, most of them had established close and efficient working relationship with the counter Chinese staff and were efficient working relationship with the counter Chinese staff and were familiar with the working situation of Chinese projects. In the later period of the project's life, however, quite the number of Bank officials were transferred to new positions in the Bank and some were retired. It had affected, to certain extent, the understanding of each other and weakened the familiarity with the project. 8. Borrower's Performance. It was the first time for the project institutions to deal with the World Bank financed project. Hence most of them need indeed time to familiarize themselves with the situation of their task. In addition, the evolution and implementation of the project were simultaneously with economic and education reform and great development of the vocational and technical education in China and hence  24 affected by frequent changes of condition and policies. These difficulties, on the other hand, turns into a positive factor to the enthusiastic and diligent staff of the project entities under the well directed leadership of SEdC and other relative parts of China government. To accelerate the reform and development of education, the project has just served the central purpose of such accelerated reform and development in the vocational and technical education in China. The impressive achievements of project are conclusive evidences of the performance and quality of the participating institutions of the Borrower.  -25 - ANNEX B ANNEX B: ICR MISSION'S AIDE MEMOIRE November 25 - December 6, 1996 GENERAL 1. A completion mission for the Technical/Vocational Education Project, Cr. 2114- CHA, visited China between November 25 and December 5, 1996. The mission consisted of Jan Segerstrom (mission leader), Dingyong Hou, Gordon Hunting, Wenjin Wang, Rene Welter, and Wenbin Hu (RMC). The mission met with officials of SEDC/FILO to review progress in implementation since the previous supervision visit in June 1996, collect data and information for the preparation of the Implementation Completion Report (ICR), and discuss the respective inputs into the report by the Bank and the Borrower. 2. During 1996, and in anticipation of the completion process, the Bank visited a representative sample of project institutions in the provinces of Hubei, Hunan, Liaoning, Sichuan and the Beijing prefecture. The mission wishes to express its appreciation for all the assistance provided including the arrangements made and hospitality extended by FILO, SEdC, officials and staff of the provinces and institutions visited. OVERALL IMPLEMENTATION STATUS 3. With less than one month left until completion of the project on 31 December 1996, almost all activities related to implementation have been completed. The project was extended by one year in order to provide the necessary time for an additional technical assistance and training program to be carried out (replacing previously planned training programs which could not be carried out) and procurement of personal computers for selected project institutions. At this point in time, both of these major activities have been carried out satisfactorily with only minor exceptions. 4. Construction and Procurement. Civil works and procurement of equipment has been successfully carried out. Almost all construction, using Government counterpart funds, was completed in 1995 and exceeded original planned areas by about 32 percent. Designs are functional and of good quality. Equipment for laboratories and workshops was procured and installed. Altogether there were five major procurement exercises in the project totaling $44.8 million, of which three ICB, one LCB and one through Direct Purchase. 5. Technical Assistance. The program as defined in the SAR was mostly completed by the end of 1995. One to two month training programs for: (a) teachers, lab instructors and technicians on pedagogy and in industry; and (b) administrators on management,  -26- ANNEX B largely exceeded the SAR figures on the average by a factor of four. There was, however, a considerable shortfall in the one-year full-time domestic study program (1,385 actual versus 2,000 planned) and to a lesser extent in the one-year overseas training program (104 actual versus 128 planned). The initialized project funds resulting from these two shortfalls were reallocated in order to purchase more equipment. 6. Consultant Services. Twenty four foreign expert-led workshops were conducted out of a planned twenty six for faculty groups from the TTCs, TTDs and VTCs and were completed by the end of 1994. These workshops absorbed the foreign expert man/month provided in the SAR. 7. Disbursements/Audits. At completion, the Credit of SDR 38.5 million or $50.0 million will be fully disbursed. Audits were submitted annually throughout implementation in a timely fashion, reviewed and found acceptable by the Bank, with the final Audit falling due on 01/08/97. IMPLEMENTATION OF PROJECT COMPONENTS Development of Vocational Training Centers(VTCs) 8. The implementation of this component has been overall successful. The intended project objectives have been achieved. The project financed technical assistance, construction, lab and workshop equipment and training materials which enabled 59 selected SVS, STS and SWs from 13 provinces and municipalities to build up the capacity, initiate improvements and transform from a group of traditional narrowly specialized, poorly equipped and exclusive preservice VET schools into a new generation of multifunctional, and adequately equipped training centers. Quantitative Expansion 9. In response to the anticipated demand for skilled workers, the project set out the expansion of the regular enrollment at these 59 training center as one of its essential goals. Based on data from 49 of the 59 project institutions, the enrollment in full time increased by about 93 percent over the period of 1988 to 1995 from 37,134 to 71,581, compared with a planned expansion of about 52 percent. 10. The project also set out to expand inservice training enrollment and to make the equipment and facilities available to students from nearby schools. The expansion of enrollment in short and part-time upgrading and retraining programs increased by a factor of about 10 times, from only 4,496 to 51,507 annually, compared with an expected increase of about 250 percent. 11. The infrastructure at these training facilities has been upgraded to the level appropriate for the current level of industrialization meeting the demands for classrooms, laboratories, workshop and practice equipment as required by the curriculum.  -27- ANNEX B Qualitative Improvements 12. A fundamental goal of the project while supporting the expansion of capacity, is to improve the quality of teaching, curriculum development and management processes by piloting a package of quality improvement measures in these project institutions. 13. The reports from 49 of 59 project institutes indicated efficiency improvements in the following specific areas designed under the project: (a) utilization rate of facilities and equipment has been improved, including the abandonment of the previous practice of scheduling laboratory and workshop activities only in the afternoons. Utilization rates were reported to have doubled, averaging about 90 percent in line with the target set in the SAR; (b) weekly teaching contact hours for technical teachers, which ranged from 6 to 10 hours at the time of appraisal have been increased to an overall average of about 14 hours per week, compared with a target of about 12 hours per week. This increase has been a factor in increasing student staff ratio from an average of about 9 to 1 to about 14 to 1 compared with the target of 11 to 1 thus allowing for increased enrollment without comparable increases in staffing; (c) the proportion of nonteaching staff in the institutions, which at appraisal was relatively large, has been reduced, with the ratio of teachers to nonteaching staff increasing from about 1.4 to 1 to a value of 1.9 to 1. Tlhis ratio is short of the target, and the potential for further improvement is indicated by the large variation in the reported ratio from individual institutions ranging from 1:1 up to 8:1. (d) a process was initiated to improve the participation of industries and foster closer links between employers and training providers through establishing Industrial Liaison Committees at each project school. These committees appear to have had successful outcomes including: assistance with placement of trainees for industrial training as part of their training programs, sponsorship of trainees and associated payment of tuition fees, donation of funds and equipment, advice on training needs, and employment opportunities for graduates. (e) institutions are able to provide facilities for conduct of most the practical exercises required by the curriculum. Attempts were made in many schools to diversify the mode of delivery by mounting new, short term, quick and tailor-made courses to market demands, particularly in their inservice and contract training programs. The project schools possess greater flexibility to develop and revise their curricular and syllabus within a broader framework set by national and provincial authorities and the  - 28 - ANNEX B practice has been prioritized in total curriculum requirement compared to a previously theory oriented curriculum. Despite these gains, curriculum development and the quality of teaching by inter alia doing away from rote-learning remain the priority areas for further improvements. (f) the majority of institutions have set up arrangements for student counseling, particularly to assist with job placement following the elimination of the system of guaranteed employment which prevailed at the time of project appraisal. (g) project institutions have supported nonproject institutions in a number of ways including: making available their upgraded specialist laboratories and workshop facilities to the trainees of those schools, and providing training for their teachers. It appears that typically such dissemination activities account for 5 to 10 percent of the project institutions, total work programs. Upgrading of Management 14. The upgrading of management of the VET system was focused on training for senior managers, particularly for improvement of planning, management and financing and evaluation. Although the training programs were implemented as planned, their effectiveness was limited because of the absence of assistance for establishment of improved systems, including the provision of hardware and software and comprehensive training of administrative support staff. One example is that of the monitoring and evaluation of performance of the VET system. Although the Vocational Education Dept. of SEdC and the Central Research Institute designed and pilot tested a set of instruments for evaluation of training performance these appear not to have been implemented on a routine basis. Furthermore, the evaluation carried out by foreign and local consultants under the supplementary Technical Assistance program during the project extension has little value as a structured evaluation of performance of the sampled institutions because of weaknesses in the instruments employed and absence of measurement of outputs. Policy Development in the VET Sector 15. During project implementation the Government introduced a number of important reforms of the VET system including: the elimination of guaranteed employment and assignment of graduates; encouragement for progressive increase in the number and proportion of students sponsored by enterprises and by self support fee payment, improvement of teachers' qualification and improved conditions of service. The most important external factor in determining the success of the project has been the growth of the economy with the strong demand for the schools' graduates.  -29- ANNEX B Financing of the VET System 16. In line with the government policy prevailing at the time the project was launched, the SAR for the project makes no explicit proposal for increasing cost sharing or diversification of fmancing sources. However, since 1993, the government has encouraged VET institutions to obtain funds from sources other than government allocation including tuition fees, contributions from enterprises, school run ventures and other donations. A survey conducted by SEdC and the Bank during preparation of the vocational education reform project showed that in a group of 75 large technical institutions such nongovemment sources accounted for about 50 percent of total operational expenditure. Although the survey was not aimed at the institutions in the present project, there is no doubt the findings apply to the entire VET system including the project schools. 17. The overall implementation experience of this component points to the fact that the project instituted changes have had a positive impact over the project institutions in their teaching, management and operational processes and the impact is likely to be sustained in their future operations and with high probability to be replicated if an effective dissemination strategy and system is put in place. Technical Teacher Training Component 18. In order to support the expansion and quality improvement in the Vocational Training Centers the project also provided assistance to the technical teacher education system. As most of the industrialized provinces have one TTC (Technical Teacher Training Center) or TTD (Technical Teacher Training Department, attached to a university) the project supported 12 TTCs or TTDs in project provinces. This support can be summarized as provision of civil works, procurement of workshop and laboratory equipment, other instructional equipment and teaching materials including books. In addition, the project assisted a technical assistance component consisting of an overseas and domestic staff development program. The overseas training program consisted of 42 one-year scholarships for key province staff in eight major industrial specialization and was complemented by 17 man-months of international consultant services to update the TTD/TTC faculties in pedagogy and institutional management. With regard to domestic staff training there has been provision for inservice teacher training as one year courses aiming at upgrading in both technical and pedagogical subjects benefiting about 400 teachers. Also, about 65 specialized teachers and workshop instructors have been exposed to industrial practice for about two months each to gain industrial experience. Finally, 60 domestic experts have provided advice to TTC/TTD trainers and administrators for an average period of three months each. 19. As a result of the resources provided for an expansion of the TTCs and TTDs, the enrollment of students have increased according to project plans and in many cases exceeded them. Preservice student enrollment in the key provinces has increased from 5,200 in 1988 to 10,784 in 1996, while in the other seven provinces it was 6,400 in 1988  -30- ANNEX B and has reached 14,477 in 1996. In terms of inservice training the key provinces recorded 1,300 in 1988 against 5,902 in 1996. At the same time, the enrollment of inservice training students in the remaining provinces went from 1,000 in 1988 to 3,828 in 1996. All in all, preservice enrollment was 11,500 in 1988 and was planned to have risen to 21,500 at the end of the project and in 1996 it is 25,261. Corresponding enrollment for inservice training was 2,300 in 1988 and was planned to have reached 10,000 in 1994 and is 9,730 in 1996. In addition the 12 projects, TTCs and TTDs have provided training for students in less developed provinces planned for about 5,000 annually in 1994 and has reached 4,900 in 1996. 20. In terms of physical expansion and procurement of equipment and materials this component has been successful. Also, the enrollment of students have mostly exceeded the plans laid down in the SAR. In the analysis of the technical education system in the SAR it is stated that technical teacher training needs upgrading and that a high percentage of the course work is conducted in classrooms and lecture halls as theoretical instruction and a rather small part is allocated to practices such as workshop and laboratory practices and very importantly industrial and teaching practices. It is obviously of crucial importance that those future teachers to be assigned to instruct and train skilled workers for industry have the practical skills to successfully carry out this assignment. It appears, though, that the provisions under the project have not substantially changed the mode of operation of the TTDc and TTCs and a curriculum reform to reflect the necessary practical elements of technical teacher training would be a very high priority. In this context, it would also be important that the "trainers of the trainers" have the adequate background and experience to follow a new curriculum that would be technically and practically oriented with much less academic and theoretical content. VET Research and Development Centers 21. The objective behind the research and development component was to develop a research capability that would address the problems and issues affecting the efficiency of the VET system. Under the Project was established a National Center in Beijing and a regional center in Shanghai. The third center originally planned for Tianjin as a regional center under Ministry of Labor, MOL, was later transferred to SEdC and located in Shenyang in Liaoning province. A steering committee for the research centers was established with membership besides SEdC also of MOL The roles and functions for the three centers were planned in great detail and the National Center in Beijing was to be the coordinating center. Major activities for the centers were inter alia linkages with industry in terms of trainee performance and general feed-back, curriculum review, job analysis, development of new programs and related materials, and studies of the effective utilization of workshop and laboratory equipment. At a rather late stage in the processing of the project, the then Federal Republic of Germany volunteered to finance the entire research and development component through parallel grant financing of about $7 million.  - 31 - ANNEX B 22. The implementation of the component has been delayed for a number of reasons including the fact that Ministry of Labor wished not to participate in the component as planned. Secondly, it proved difficult to recruit the necessary research staff for the centers and, at the end of the IDA project, the staffing complement was below what was planned during appraisal. Even so, the national center (Central Institute) has prepared the framework and details for a national vocational law which was approved by the Government in June 1996. The Central Institute is also responsible for preparation, with the VTE department, of annual report on Vocational Education. The first, for 1995, is published in both Chinese and English languages. The Institute also publishes a. monthly journal on Vocational Education with a circulation of 40,000 copies. It was also reported that the Institute has been given an increased role in national policy formulation and development in association with the VTE department. Most of the present research staff has been trained in Germany and the technical assistance team also comes from Germany. As a result, a substantial number of publications from the centers are published in German; however,: the central institute has started to publish important materials in English as well as in Chinese in order to have a wider spread and use of the research publications to benefit as many participants as possible in the Chinese VET system. The evaluation of the three centers is not complete as the mission was informed by GTZ that the German Government is making a thorough review of the progress of the research centers in March 1997 and will share its findings with the Bank. This information will constitute a very important input to the ICR. AGREEMENTS ON ICR 23. The revised guidelines prepared by the Bank (April 1994) were discussed between FILO/SEDC and the mission and the following respective inputs with submission dates were agreed upon. Operational Plan 24. It is expected that the Operational Plan to be prepared by SEdC in consultation with the project provinces and institutions will include steps to address the following: (a) continued upgrading and revision of teacher training and retraining; (b) continued strengthening and expansion of links with industry; (c) establishment of effective systems for moritoring and evaluation of vocational education, particularly evaluation of outcomes; and (d) continued upgrading and modernization of teaching content and method relevant to modem sector industrial employment, e.g., upgrading of the training in computer application. SEdC will prepare an interim OP by January 15, 1997 and final version by March, 1997.  -32- ANNEX B Key Indicators (ICR Tables 5A and 5B) 25. Draft table format of indicators are attached and SEdC agreed to update them and submit to the Bank by January 15, 1997. Financial Tables (ICR Tables 8A and 8B) 26. The two tables, Project Costs and Project Financing, include data related to Local Costs. The mission requested that a first draft or interim data be submitted as soon as possible, preferably before the mission's departure. Final Local Cost figures are to be submitted to the Bank following the closing of the project accounts and final disbursements made. ICR Preparation 27. Part I of the ICR will be completed by the Bank and sent to SEDC/FILO not later than March 15, 1997. Part II of the ICR, prepared by the Borrower, should be completed and sent to the Bank by April 30, 1997.  -33- ANNEX C ANNEX C: OPERATION PLAN Introduction 1. The Vocational and Technical Education Project has been completed successfully. The project assisted to create an expanded and improved infrastructure for the delivery of training of skilled labor and initiate improvements in technical teacher training and management at system and institutional level. This plan intends to outline- the government strategy and actions to sustain the project benefits and impact in the area of vocational education beyond the project period. 2. Vocational education constitutes one of the four important pillars of China's education system. As set out in its ninth Five-Year Plan (1995-2000), the Chinese government will continue to vigorously promote the development of vocational education including fuirther improvement in its secondary vocational system and plans to expand its tertiary vocational education system. In 1996, the last year of project implementation, a Vocational Education Law was enacted which provides a legal framework for the Government to guide the further development of vocational education in China. Action Plan A. FURTHER EXPAND VOCATIONAL EDUCATION 3. As outlined in its ninth Five-Year Plan, the Govermment has set out to further expand vocational education mainly at post-lower-secondary level with bifurcation occurring at post-primary, post-lower-secondary and post-upper secondary stages. A target set for total enrollment in all type of vocational schools is to pursue an average annual growth rate of 6.3 percent comprising about 60 percent of the total secondary enrollment. B. CONTINUE AND DISSEMINATE PROJECT INITIATED IMPROVEMENTS 4. Project initiated changes in qualitative improvements in management, teaching, curriculum and textbook development, teaching methodology and pedagogy will be continuously carried out beyond the project life in the project institution and expand to nonproject institutions in the project provinces and possibly into the entire vocational education system as part of a system reform effort. C. STRENGTHEN TECHNICAL TEACHER TRAINING 5. To improve the quality of technical teacher training, SEdC will launch a study on technical teacher training with a view to identify the issues and develop plans as how to  -34- ANNEX C further improve the training for technical teachers. The study will particularly focus on the institutions supported under the project which are the key institutions in vocational training in the country. 6. During the ninth Five-Year Plan period, the project supported 12 Technical Teacher Training Colleges/Departments will be further strengthened in quality improvements and quantitative expansion as to better equip teachers to address the issues in curriculum development, mode of training and industrial practice. These developments will not only aim at meeting current national guideline but also at re- orienting the training programs to reflect science and technology development and market needs for skilled human capital in economic development. D. FURTHER IMPROVE LINKs BETWEEN PROJECT INSTITUTIONS AND INDUSTRY 7. The project supported establishment of Industrial Liaison Committees and Board of Trustees will be maintained. The institutions will continue to seek the advice of these committees on the overall development and/operation of the institutions. These institutions will continue to develop as multifunction training institutions to provide training of skilled labor for the needs of local economic development. E. CONTINUE INVESTMENT IN PROJECT INSTITUTIONS 8. Following project completion and project evaluation, SEdC will develop guidelines and urge the local governments to continue and increase the investment through regular budgetary resources in these institutions as to capitalize the initial investment under the project and sustain them as models for other institutions.