China-DAC Study Group Infrastructure: The foundation for Growth and Poverty Reduction

International Donor’s Contribution to China’s Infrastructure Development

Hengshui-Shangqiu Railway Construction Project

September 19, 2010

Dr. Lin Jiabin, Deputy Director GeneralResearch Department of Social Development

Development Research Center of the State Council (DRC)

2　　　 JICA PROJECT(JAPAN) ADB PROJECT

Railway Projects supported by WB, ADB and JICA12.7 billion US$ (1979-2005)

Source: NDRC(2009) China’s Experience with the Utilization of Foreign Funds 1979-2005

Source: WB map, ADB and JICA Notes: Projects financed by WB and ADB during 2006-2010 are also shown on the map

Investment (bil.US$)WB 2.55ADB 2.64JICA 6.24Others 1.26Total 12.7

China’s Capital Investment in Railway Construction and the Role of Japanese ODA LoansOne hundred million yua

n Loan amount Share

Amount of capital construction investment

4

Japanese ODA Loans and Tech-nical Cooperation to Rail/Port Sector in Northern China

Qinhuangdao

Qingdao

Lianyungang

Rizhao

ODA Loan Projects Related to Trans-portation Systems for Coal and Other Cargo: 18 projects; total amount provided:581.3 bil. yenTechnical Cooperation:Three-Port Master Plan (Qinghuangdao, Qingdao, Lianyungang)

Huanghua

Qingdao EconomicDevelopment Zone

Hengshui

Shangqiu

5

Sanhe, Hebei

Baogang, ShanghaiEzhou,

Hubei

Hancheng, Shannxi

Importing large scale thermal power plants with high combustion efficiency

Hejing, Shanxi

6

Major Impacts of ODA Loans and Technical Cooperation to Rail/Port Sector in Northern China

1. Alleviating infrastructure bottlenecks for domestic demand of coal and export

2. 　 Promotion of industrial development and guiding regional development

3. Accelerating GDP growth→Poverty alleviation4. Provision of advanced technologies

　　→ Introduced a number of advanced system and equipment under the Japanese

ODA Loans through International competitive bidding such as electric locomotives and advanced coal handling equipment

5. Transfer of institutional framework Introduced ODA loan procedures to Chinese relevant agencies such as the

concept of feasibility studies, project cycles, procurement procedures, loan covenants, and ex-post evaluation

7

Project SummaryThe Project aims to expand the coal supply capacity to the southeast of China and its coastal industrial zones, and to strengthen the country's north-south transport capacity. As the Project had been in-corporated into a new trunk line from Beijing to Jiulong (Kowloon, Hong Kong), it came tobring about effects in inducing development along the route which were not anticipated before.

Hengshui-Shangqiu Railway Construction Projecta part of Beijing Jiulong Railway (Jingjiu Line)

・ Scope401km non-electrified, multi-track railway・ Loan Amount ¥23,603 million・ CompletionSeptember 1996

8

Operation and Maintenance・ The Regional Railway Administrations, with two to ten (depending on their size) Railway Sub-offices under them, directly carry out the operation of the railways under their jurisdictions. Under this project, the three Sub-offices handled operation and maintenance in their jurisdiction.・ The on-site agencies of each Sub-office and their functions are as described below in the hierarchical diagram of the operation and maintenance system.

9

Alleviating Infrastructure Bottlenecks- Capacity Improvement in Coal Transport System -

Hengshui-Shangqiu railway has played a significant role in improving coal transport and the energy situation in China.

10

Promotion of Industrial Development・ The creation of the Hengshui-Shangqiu railway, and especially its inclusion as part of the Jinjiu line, has been a major factor in developing industry in the regions along the line as these locations are now directly linked to major cites such as Beijing and Tianjin in the north and Guangzhou, Shenzhen and Hong Kong in the south. ・ The government in Hengshui has developed its “North: Beijing, Tianjin / South: Hong Kong, Shenzhen” strategy for market development such as raising of chickens and pigs and its cultivation of vegetables and soybeans as major industries. ・ The Liaocheng municipal government has been systematically sending labor to Shenzhen as part of its efforts to better develop human resources. The total number of people that have participated in this project topped 20,000 in recent years. The majority of the dispatched personnel are graduates from technical colleges and vocational schools.

11

Guiding Regional Development- Land Utilization Effect -

・ All of the municipal governments along the Hengshui-Shangqiu railway have used the construction and opening of the Jingjiu line as an opportunity to carry out city development projects centered around new train stations. ・ For example, the area of urbanization in Hengshui increased from 15 km2 before the opening of the train line to the current level of around 22 km2. The area of urbanization in Shenzhen, which is under the jurisdiction of Hengshui, was more than doubled from 7 km2 to close to 15 km2.・ The urbanization area in Shangqiu before the opening of the railway line was only 20 km2. However, the city government saw the opening of the Jingjiu line as a chance to further develop the city and invested 500 million yuan to construct eight roads within the city and increase the area of urbanization to 60 km2.

12

Accelerating GDP growth

GDP Growth Rate (Jiaoji Belt = 1.00)

　 Jiaoji Belt

Land Bridge Region

Belt

Jinjiu Line Belt

Yellow River Delta Belt

the 8th Five-Year

Plan (1991-1995)

1.00 0.95 0.84 0.75

the 1996-1998

period1.00 0.99 1.03 0.91

Economic growth in these regions was roughly 80% of that in the Jiaoji Belt prior to the opening of the Beijing-Jiulong railway line, but exceeded the Jiaoji Belt in some cases after the opening of this line.

13

　 1992 19971997/1992

Hebei Province 101 176 1.74 Hengshui 3.0 7.0 2.33Shandong Province 139 290 2.09

Liaocheng 2.9 8.5 2.93 Heze 3.4 7.6 2.15Henan Province 123 186 1.51

Shangqiu 3.9 7.2 1.85

All of the cities experienced growth rates in tax revenues exceeding those for their provinces.

Accelerating GDP growth→Increase in Tax Revenue