Document of

The World BankFOR OFFICL USE ONLY

L ut . 7 O S- Ki//c,7-Report No. P-6552-CHA

HEMORANDUM AND RECOMMENDATION

OF THE

PRESIDENT OF THE

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

AND TEIE

INTERNATIONAL DEVELOPMENT ASSOCIATION

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED LOAN IN AN AMOUNT EQUIVALENT TO $25. 0 MILLION

AND A PROPOSED CREDIT OF SDR 16.8 MILLION

TO THE

PEOPLE' S 'REPUBLIC OF CHINA

FOR A

FISCAL TECHNICAL ASSISTANCE PROJECT

APRIL 3, 1995

This document has a restricted distribution and mav be used bv recipients onlv in the performance oftheir official duties- Its contents ma. not otherwise be disclosed without World Bank authorization.

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CURREiNCY EQUIVALENTS(as of February 1995)

Currency Unit = Yuan (Y)

$1.00 = Y 8.50Y 1.00 = $0.12

WEIGHTS AND MEASURES

Metric System

ABIBREVIATIONS AND ACRONYMS

ADB - Asian Development BankCs - ConsultanciesErr - Enterprise Income TaxGNP - Gross National ProductIBRD - International Bank for Reconstruction and DevelopmentIDA - International Development AssociationIMF - Intemational Monetary FundLTS - Local Tax ServiceMOP - Ministry of FinanceNTS - National Tax ServicePBC - People's Bank of ChinaPCT - Project Coordination TeamPIT - Personal Income TaxSAT - State Administration of TaxationSE - State-Owned EnterpriseSRC - Systems Reform CommissionTA - Technical AssistanceTOR - Terms of ReferenceUNDP - United Nations Development ProgramVAT - Value Added Tax

FISCAL YEAR

January 1 - December 31

FOR OFFICIAL USE ONLY

CHINA

FISCAL TECHNCAL ASSISTANCE PROJECT

LOAN/CR.EDrr AND PRoJEc SumARY

Borrower: People's Republic of China

Beneficiaries: Ministry of Finance, State Administration of Taxation

Poverty: Not Applicable

Amoumt: Loan: $25.0 million equivalentCredit: SDR 16.8 millior. ($25.0 million equivalent)

Ternms: For the Bank loan: Twenty years, incluiding a five-yeargrace period, at the Bank's standard variable interest rate.

For the IDA credit: IDA standard terms with 35 years'maturty

CommI Fee: For the Bank loan: 0.75 percent on undisbursed loanbalances, beginning 60 days aftei signing, less any waiver.

For the IDA credit: 0.50 percent on undisbursed creditbalances, beginning 60 days after signing, less any waiver.

Hnancing Plan: See Schedule A.

Economic Rate of Return: Not Applicable

Technical Annex: No. P-6552-CHA

This document has a restriced distinbution and may be used by recipients only in the performance of their|official duties. Its contents may not otherwise be disclosed without Word Bank authorization.

MIIEMORANDUM AND RECOMMENDATION OF THIE PRESIDENT OF THEINTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELP1MENT

AND TJHE INTERNATIONAL DEVELOPMENT ASSOCIATIONTO THE EXECUTIVE DIRECTORS

ON A PROPOSED LOAN AND CREDITTO THE PEOPLE'S REPUBLIC OF CHINA

FOR A FISCAL TECBNICAL ASSISTANCE PROJECT

1. I submit for your approval the follownng memorandum and recommendationon a proposed loan for the eauivalent of $25 million and an IDA credit for SDR 16.8million, the equivalent of $25 million, to the People's Republic of China to help financetechnical assistance to improve tax administration and fiscal management in China. Theloan would be at the Bank's standard variable interest rate, with a maturity of 20 years,ncluding 5 years of grace. The credit would be on standard IDA terms, with a maturityof 35 years. The proceeds of the loan/credit would be made available as grantcontibutions to State Admtation of Taxation.

2. Background. China's fiscal system has been under strain since the reformsbegan in 1978. The reforms initiated a major shift of the tax base away from the sectorstraditionally taed by the revenue system, and the share of government revenues in GNPfell from over 34 percent in 1978 to less fian 16 percent in 1993. The tax strucure wascomplex, with 33 taxes, a multitude of rates in many taxes, and enterprise income taxes(ElTs) that vaned by ownership and carried high margin rates. Competition amongenterprises was further distorted by tax contracting between govemment and sat-ownedenterprses (SEs), which also undermined buoyancy of tax revenues. Central governmentrevenues were increasingly eroded by the intergovernmental fiscal contracts that left anincreasng share of revenues to local governments, and by tax exemptions granted by localgovernments that controlled the tax administration. The effectiveness of the taxadministation has been restricted by inadequate procedures, organizational arrangements,and data processing systems. The budgetary system has not kept pace with the reformsin the rest of the economy. The budget coverage, classification and proceduresinsufficienty served policy analysis, intnal management, and control over budgetaryoutlays.

3. In 1993, China embarked on a major reform of its fiscal institutions andpractices in order to adapt them to a market-based economy. These reforms were endorsedin the 'Decisions of the Third Plenary Session of the Fourteenth Central Committee of theCommunist Party of Chinaw in November 1993. The reforms can broadly be divided intofour parts: (a) a major overhaul of the tax system, including a broadening andsimplificaton of the value added tax (VAI) and unification of domestic ETs; (b) thecreation of separate tax administrations for centaml and shared taxes (National Tax Service,NTS) and local taxes (the Local Tax Serice, LS); (c) a restructuring ofintergovernmental fiscal relations, designed to gradually increase the centmal govemment's

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revenue share; and (d) the passng of a Budget Law, which codifies procedures andresponsibilities in the budget process.

4. The Government has requested the Bank Group and IMF to assist inimplementing the fiscal refonns. In Tax Administration, the implementation of the NTSrequires the development of new procedures, new organizational arrangements, and modemconiputer systems. The tax administration reforms are led by the central StateAdministration of Taxation (SAT), a ministenal-level agency independent of the Ministryof Finance (MOF). SAT's strategy-developed with IMF assistanc-cals for theintroduction of reforns on a pilot basis before a phased nationwide implementation overa period of five to seven years. in Tax Policy, the reforms introduced in 1993 requirerefinement and expansion in the medium term, and, consequently, the Govenment intendsto develop its capacity for tax policy analysis. The State Council has assigned prmaryresponsibility for tax policy to MOF. The authonties are considering increased autonomyfor subnational governments in setting tax rates. They therefore intend to build tax policyanalysis capacty at the provincial level. in Intergovernmental Fiscal Relations, theGovenmnent's pTiority is to design and implement a grants scheme that redistrbutes theexpected increasing surplus of central revenues over expenditures to the provinces. Theauthonties are considering a grants scheme that would take both revenue capacity andexpenditure needs into account, and would be implemented on a pilot basis in 1997. TheGovernment's priority in ie area of Budget System and Procedures is to implement theBudget Law, which encompasses reforms m the treasury function, the budget accountingsystem, and budget preparation and implementation methods.

5. Project Objectives. The prcject would support the implementation of recentfiscal and tax refonns and the preparation of future reforms by: (a) developing andimplementing a new national tax administraton; (b) improving capacity for tax policy

analysis; (c) develoiping and implementing a central-provincial grants scheme; and(d) improving budgetary processes and practices. The project would increase theproductivity of the tadmistration, contribute to improvements in the management ofpublic resources, and promote more equitable distribution of fiscal resources amongprovinces.

6. Project Description. The project would finance consultancies (CS),taining, studies, and equipment at central and provincial levels. (The figures inparentheses are the base costs without contingencies.)

7. Tax Admiation ($76.3 million equivalent). This component wouldsupport the development of a national tax administration capable of implementing currentand futue tax reforms. The project would develop nevw administrative procedures,organizational angements, and information systems in four pilot cities (Phase 1), which,after evaluation, would be expanded to 18 cities (Phase D;) on the basis of a roll-out plandeveloped under the project The SAT will develop and implement the information systempnmarily in-house, with consultant's support for systems design. Data processing wouldbe concentrated at the district and oDunty levels, but city and national level systems arealso envisioned. The project would support (a) CS for tax aminion procedures and

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information systems development; (b) training in systems development, and in crucialadministrative and managerial functions; and (c) equipment and software for theinformation system in 18 cities, at the national office, and in a training center.

8. Tax Policy Analysis ($4.8 million equivalent). This component wouldimprove the tax policy analysis capacity of the Govemment. The project would supportthe gradual transfer of the tax policy function fiom SAT to MOP, and create tax policyanalysis capacity at the provincial level. The project would finance: (a) the design ofapproriate databases for tax policy analysis; (b) computer equipment for processing thedatabases; (c) training for government officials in tax policy analysis at the central and theprovincial level; and (d) studies to prepare future tax reforms. Among others, the studieswill address: (i) unification of foreign and domestic EITs; (ii) broadening of the tax basefor the personal income tax (PIT); (iii) tax assignment and local tax autonomy; and (Wv) thescope for environmental and resource taxes in China. The studies are included in the workprogram for the ninth five-year plan (1996-2000).

9. Intergovemental iscal Relations ($2.9 million equivalent). Thiscomponent would support the development and implementation of an efficient and equitablecentral-provncial grants scheme. The project would develop a detailed grants schemedesign, and administrative procedures and an infonnation system for its implementation.The grants scheme would be tested in six pilot provinces. The project would provide:(a) CS for the detailed design of the center-provincial grants scheme, and the developmentof an information system; (3) training for the implementation of the grants scheme; andgc) equipment for the information system.

10. Budget System ($4.3 million equivalent). This component would increasethe MOF's instittional capacity to admiister the Budget aw, and prepare a reformstrategy for the budget system. The component would improve budget accounting andaudit; trsury management; and budget analysis and implementation. The componentwould finance: (a) studies for the assessment of the current budget system; (b) study toursand workshops to compare the Chinese budget system with intenational best practice;(c) CS for improving budgetary procedures and practices; and (d) CS, training andcomputer equipment for improving the treasury's information network, managed by thePeople's Bank of China (PBC).

11. Project Costs and Financing. Total project cost including contingenciesis estimated at $105.5 million. In addition, the IMF will contribute staff resources for TAand supervison of the tax administration component Of the total expenditures,14.8 percent finances institutional development, 0.9 percent project implementation,2.5 percent policy support, 45.4 percent automation, and the remainder (36.3 percent)consists of (five-year) incremental operating costs financed by the Government. The BankGroup will finance 92 percent of foreign exchange costs, 5.3 percent of local costs, and47.4 percent of overall costs. Retroactive financing of SDR 3.1 million, or about $4.5million, is recommended for purchases since March 1, 1995, which would coverprocurement of Phase I equipment and the urgent needs in Consultancies and Training.

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12. Project Implementation. For overall project coordination, a ProjectCoordination Team (PCI) has been set up, consisting of representatives from SAT andMOF. The MOF World Bank Department will coordinate the implementation team, andadminister the project's Special Account. Three component-specific implementation teamshave been established under the PCT. SAT will be responsible for the tax administrationcomponent. SAT has set up a Steering Commitee to lead the reform efforts, and createda Tax Administration Reform Office to administer the component. The Tax PolicyDepartment of MOF and the Tax Reform and Legislation Department of SAT have set upa joint tax policy unit that will implement the tax policy component. The BudgetDepartment of MOF will be responsible for the intergovernmental fiscal component andthe budget systems component. A breakdown of costs and the financing plan are shownin Schedule A. Amounts and methods of procurement and of disbursements, and thedisbursement schedule are shown in Schedule B. A timetable of key project processingevents and the status of Bank Group operations in China are given in Schedules C and D,respectively. The Technical Annex, Report No. P-6552-CHA dated April 3, 1995, isattached.

13. The Bank Group and IMF will continue close cooperation in supervison ofthe prqject. The IMF plans to assist the Bank Group in supervising the substantive aspectsof tax administration and systems design and implementation. The Bank Group wouldretain overall supervision responsibility, including procurement and disbursements.

14. Project Sustainability. Total project costs are about 0.2 percent of annualtax collection, and about 2 percent of collection in the districts directly financed under theproject. Thus, only a marginal improvement in collection efficiency would make theproject sustainable and financially viable.

15. Lessons Learned from Previous BankIIDA Involvement. Bank Group andIMF involvement in tax administration projects suggests four key factors for success:(a) high political commitment; (b) a clear reform strategy; (c) a strong implementationteam; and (d) use of pilot projects to test new systems and procedures before nationwideimplementation. This experience also shows that procedural and organizational changeshould precede computerization, and that taxpayers' self-assessment combined witheffective organizational arangements are key to an efficient tax administration. BankGroup experience in budget systems reforms shows that such reforms require a long leadtime, and that a clear strategy for a revised budget system should precede implementationof reforms.

16. The Bank Group has no previous project experience in China's fiscalmanagement, but there have been seven technical assistance projects: two TechnicalCooperation Projects (Cr. 1412-CHA, Cr. 1664-CHA), a Planng Support and SpecialStudies Project (Cr. 1835-CHA), a Reform, Institutional Support and Preinvestment Project(Cr. 2447-CHA), a Financial Sector Technical Assistance Project (Cr. 2423-CHA), anEnvionmental Technical Assistance Project (Cr. 2522-CHA) and an Economic LawReform Project (Cr. 2654-CHA). Among the lessons learned are the need: (a) to ensure

- 5 -

pohitical commitment to the goals of the project; (b) to avoid excessive financing ofhardware; and (c) for finn implementation modalities, including for onlending.

17. The political commitment to fiscal reforms is high. The hardware is mainlyprocured for the tax administration, and is firmly supported by the overall reform strategyin that area. SAT's strategy aims to revise procedures and organization before newcomputer systems are developed, and includes pilot testing of the new tax administrationbefore roll-out. The budget systems component intends to develop a long-term strategyfor reforms in the budget system, and to build capacity to implement these reforns. ThePCT and component implementation teams would provide effective implementation. MOFhas provided assurances that it will allocate the required loan/credit funds to SAT and PBCfree of charge.

18. Rationale for Bank/IDA Involvement. The current fiscal reforms are ahigh priority for the authorities, and the Minister of Finance has directly requested BankGroup and HIF assistance in the implementation of the reforms. The proposed project isconsistent with the Bank's Country Assistance Strategy for China as presented to the Boardin August 1993. Fiscal reforms are central to the strategy: improveri fiscal managementwould serve as a catalyst for reforms in other sectors such as banking and SEs, becauseincreased and better-managed fiscal resources can relieve these sectors of governmentfunctions. Moreover, the Government's reform program corresponds closely with therecommendations the Bank Group has made in economic and sector work, and policydialogue. The tax adminstration and intergovernmental fiscal components directly aim toimplement current reforms. The project's tax policy and budget systems component wouldprepare future reforms complementary to the current refonns.

19. The Bank Group has significant expertise in the fiscal sector, and publishedtwo sector reports and a discussion paper on tax policy and tax adminishtation,intergovernmental fiscal relations and budget policy, and is working on studies in the fieldof Public Investment and Municipal Finance.

20. Environment Aspects. The project falls under environmental category C.

21. Project Benefits. The project would: (a) contribute to increased efficiencyin revenue generation and government expenditure; (b) enhance the productivity of the taxadministration and reduce burdens on the taxpayer; (c) increase the efficiency of the taxstucture; (d) improve the equitable distribution of govemment resources among provinces;and (e) improve allocation of budget resources.

22. Risks. The Government is very anxious to reform the tax administrationquickly, and SAT may be pressured to rush the implementation of the project. This riskhas been addressed by agreeing with SAT on a realistic timetable, and by the phasedproject design, which requires satisfactory implementation of one phase, before the nextphase starts. Poor coordination among participating Chinese agencies may delayimplementation. The structure of the implementaion teams would serve as a means toresolve potential conflict among these agencies, and minimize te risk. A third risk lies

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in overburdening key officials in MOF and SAT. This has been reduced by hiring localconsultants under the project to supplement the staff of the participating agencies, and byphasing the activities over time.

23. Agreements Obtained at Negotiations. During negotiations, the BankGroup obtained agreements with the Borrower on: (a) proper phasing and realisticplanning of the tax administration reforms; (b) systems assessment and improvementsbefore procurement of equipment for the PBC treasury; (c) Borrower allocation of thecredit/loan proceeds to the vaxious implementing agencies free of charge; (d) the modalitiesof project management, implementation and monitoring; and (e) adequate maintenance ofequipment procured under the project.

24. Recommendation. I am satisfied that the proposed loan and credit wouldcomply with the Articles of Agreement of the Bank and the Association, and recommendthat the Executive Directors approve them.

Sven SandstromActing President

Washington, D.C.April 3, 1995

Attachments

- 7 - Schedule A

CHINA

FISCAL TECINICAL ASSISTANCE PIROJECT

ESMATED CQsi AND F)NANaNG PLAN La($ million)

Local Foreign Total

TaM Administration 37.? 2mIInstitutional Development 4.6 2.0 6.5Project Implementation Support 0.4 0.4 0.8Automation 1.3 36.2 37.4Increnental Operating Costs 31.5 0.0 31.5

Tax Policgy 1 3 48Institutional Development 0.3 2.1 2.5Policy Support 0.7 0.9 1.6Automation 0.1 0.5 0.5Incremental Operating Costs 0.2 0.0 0.2

Intergovegnmental Fiscal Relations 1n 2.9 2.2Institutional Development 0.6 0.7 1.2Policy Support 0.1 0.2 0.3Automation 0.1 1.0 1.2Incremental Operating Costs 0.2 0.0 0.2

Budget CStes 2.0 2.2 4.2Insttutional Development 1.5 1.4 2.9Policy Support 0.2 0.1 0.3Automation 0.1 0.9 0.9Incremental Operating Costs 0.2 0.0 0.2

Total Bae Costs 42.0 46. BB 2

Price Contingencies 10.3 2.5 12.8Physical Contingencies 2.1 2.3 4.4

Total Costs 54.4 51. 5OL

Fmancing PIanGovernment and Participating Entities 51.4 4.0 55.4Bank/IDA 2.9 47.1 50.0

'RWd 54.4 5iA

La Totals may not add due to rounding.

- 8 - Schedule BPage 1 of 2

CHINA

FISCAL TECNICAL ASSISTAN1iE PROJECT

SUMMARY OF.PROPOSED PROCUREMENT ARRANGEMENTS($ million, including contingencies)

Procurement MethodICB NCB Other NBGF Total Cost

Consultancies - 3.7& 2.8 6.6(3.7) (3.7)

Traing, Study Tours, - - 8.1kc 7.1 15.3Seminars (8.1) (8.1)

Goods 40.7/z 0.8/b 0.6L - 42.1(36.7) (0.8) (0.6) (38.1)

ncremental OperatingCosts - - 41.6 41.6

T40:7 08 12.4 515 5.5(3s6j) (0.8) (12.4) (50.0)

NBGF: Not Bank Group-financed.

La Accoding to the procedures in Guidefines for Procurement wider JERD and IDACredis (January 1995).

& Smaller equipment needs; estimated at 4 contracts.& Consulting Services would be procured in line wiLth the Bank guidelines, 7he Use of

Consutants by World Bank Borrower and by the World Bank as an E&ecuing Agency(August 1981).

Ls Off-the-shelf items and mateials (faxes, copiers, etc.) procured by national shopping;esdmated at 6 contac.

Note: Figures in parentheses are the amounts financed by the Bank/IDA. Figures may notadd due to rounding.

- 9 - Schedule BPage 2 of 2

DiSnURSErME($ million)

Amount of the Loan/ Percentage of ExpenditureCategory Credit Allocated to be Financed

Goods 35.0 100% of foreign expenditures,100% of local expenditures(ex-factory) and 75% forother items procured locally

Consultants' services 3.2 100%

Training seminars, workshopsstudy tours 7.2 100%

Unallocated 4.6

Total 50

Estimated IBRD./IDA Disbursements

Bank/IDA FY 11997 i29 1999====-========----$ million

Annual 10 30 8 2Cumulative 10 40 48 50

- 10- Schedule C

CHINA

FISCAL TECHNICAL ASSISTANCE PROJECT

TIErTALE OF KEY PROPECT PROCESSING EVENTS

(a) Time taken to prepare the project: 12 months

(b) Prepared by: State Administration of Taxation and theMinistry of Finance, with IMF and BankGroup assistance

(c) First Bank Group mission: March 1994

(d) Appraisal mission departure: January 1995

(e) Negotiations: March 1995

(f) Planned date of effectiveness: August 1995

(g) List of relevant PCRs and PPARs: None

The project was prepared by: Bert Hofmnan (Economist, EA2CO; Task Maager), Ikelkramullah (Senior Technology Specialist, IENTI), Tamar Manuelyan (Senior Economist,EA2CO), Min Zhu (Economist, PRDPE), assisted by John Brondolo (Tax SystemsInformation Officer, EMT), Tony Pellechio (Economist, DIM), and Carlos Silvari(Advisor, DMF). The peer reviewers were Fernando Montes-Negret (Principal Economist,FDS), Christine Wallich (ead Economist, EC2DR), and Milka Casanegra-Jantscher(Division Chief, IMF). The lawyer is Nicolette Dewitt (Senior Counsel, LEGEA), theDivision Chief is Zafer Ecevit (EA2CO) and the Department Director is Nicholas C. Hope(EA2DR).

- 11 --

Schedule DPage 1 of 3

STATUS OF BANK GROUP OPERATIONS IN THE PEOPLE'S REPUBLIC OF CHINA

A. STATEMENT OF BANK LOANS AND IDA CREDITS(As of December 31, 1994)

Loan/ - Amount CUSS mitLion)Credit Bor- (net of cancelLations)Ntmber FY rower Purpose Bank IDA Undisb (a)

33 loans and 42 credits have been fully disbursed. 3,118.3 2,602.3 -Of which SECAL:

2967/1932 8B PRC RuraL Sector Adj. 200.a 93.2 -

2678/1650 86 PRC Third Railway 160.0 (70.0)(b) 10.42723/1713 86 PQC Rural Health & Preventive led. 15.0 65.0 12.9

1764 87 PRC Xinjiang AgricuLturaL Dev. - 70.0 1.92794/1779 87 PRC Shanghai Sewerage 45.0 (100.0)b) 6.6281111792 87 PRC Beijing-Tianjin-Tanggu Expressway 25.0 125.0 9.62512/1793 87 PgC Gansu ProvinciaL 0ev. (20.0)Cb) 150.5 17.2

1535 87 PRC Planning Support & SpeciaL Studies - 20.7 5.22852 87 PRC Uujing ThermaL Power 190.0 - 8.2

2877/1845 85 PRC Huangpu Port 63.0 125.O)Cb) 7.41885 8S PRC Northern Irrigation - 103.0 8.92943 8B PRC Pharmaceuricals 127.0 - 0a8

2951/1917 88 PRC Sichuan Highway 75.0 C500)Cb) 22.72955 88 PRC BeiLungang 1I 165.0 22.32958 a8 PRC Phosphate Dev. 62.7 -9.42968 88 PRC Railway IV 200.0 - 13.41984 89 PRC Jiangxi Pro-incial Highway - 61.0 3-51997 89 PRC Shaanxi Agricultural Dev. - 106.0 18.82006 89 PRC textbook Development - 57-0 0-42009 89 PRC Integrated Reg. Health - 52.0 14.43006 89 PRC Ningbo & Shanghai Ports 76. - 9.23007 89 PRC Xiamen Port 36.0 - 1.33022 89 PRC Tianjin Light Industry 154.0 - 42.1

3060/2014 89 PRC Inner MongoLia RaiLway 70.0 (80.0)(b) 9.03066 89 PRC Hubei Phosphate 137.0 - 47.1

3073/2025 89 PRC Shandong Prov. Highway 60.0 (50.0)(b) 21.83075 89 PRC Fifth IndustriaL credit 300.0 0 C.52097 90 PRC Jiangxi AgriC: Dev - 60.0 3.22114 90 PRC Vocationat & Tech. Educ. - 50.0 5.52145 90 PRC NarionaL Afforestation - 300.0 89.92159 90 PRC Hebei AgricuLrural Dev- - 150.0 45.72172 91 PRC Hid-Tangtze AgriculturaL Dev. - 64.0 17.7

3265/218Z 91 PRC RuraL Credit IV 75.0 200.0 39.63274/2186 91 PRC RuraL Indust Tech (SPARK) 50.0 64.3 28.03286/2201 91 PRC Medium-Sized Cities Dev. 79g4 52_9 40.5

2210 91 PRC Key Studies Developuent - 131.2 45.32219 91 PRC Liaoning Urban Infrastructure - 77.8 10.6

3316/2226 91 PRC Jiangsu ProvL. Transport 100.0 C53.6UCb) 30.22Z42 91 PRC menan Agricul. Dev. - 110.0 64.Z

3337/2256 91 PRC Irrig. Agricul. Intensif. 147.1 187.9 101.83387 92 PRC Ertan Hydroelectric 380.0 47.32294 92 PRC Tarim Basin - 125.0 66.62296 92 PRC Shanghai Metro Transport 60.0 20.53406 92 PRC RaiLways V 330.0 127-5

3412/2305 92 PRC 0aguangba Multipurpose 30.0 37.0 14.62307 92 PRC Guangdong ADP - 162.0 711.5

3415/2312 92 PRC Beijing Environment 45-0 80.0 76.02317 92 PRC Infectious and Endemic Disease Cont - 129.6 103.83433 92 PRC Yanshi Thermal Power 180.0 - 32.22336 92 PRC Rural Water Supply and Sanitation - 110.0 68.82339 92 PRC Educ. Development in Poor Provs. - 130.0 70.83443 92 PRC Regional Cement Industry 82.7 - 38.7

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Schedule DPage 2 of 3

Loan/ Amount CUSS milLion)Credit Bor- (net of cancellations)Number FY rower Purpose Bank IDA Undisb_(a)

3462 92 PRC Zouxian Thermal Power 310.0 - 229.33471 92 PRc Zhejiang Provincial Highway 220.0 - 137.32387 92 PRC Tianjin Urban Dent. & Envir. - 100.0 72.42391 92 PRC Ship Waste DisposaL - 15.0 15.92411 93 PRC Sichuan AgricuLtural Devt. - 147.0 93.23515 93 PRC Shuikou HydroeLectric II 100.0 - 68.52423 93 PRC Financial sector TA - 60.0 53.5

3530 93 PRC Guangdong Provincial Transport 240.0 - 178.03531 93 PRC Henan ProvinciaL Transport 120.0 - 83.02447 93 PRC Ref. Inst'L and Preinvest. - 50.0 43.53552 93 PQC Shanghai Port Rest. and Devt. 150.0 - 132.3

2457 93 PRC Changchun Water Supply & Env. 120.0 117.72462 93 PRC AgricuLture Support Services - 115.0 98.7

3560/2463 93 PRc Taihu Basin Flood Control 100.0 100.0 144.22471 93 PRC Effective Teaching Services - 100.0 98.2

3572 93 PRC Tianjin Industry II 150.0 - 150.03582 93 PRC South Jiangsu Envir. Prot- 250.0 - 235.92475 93 PRC Zhejiang Multicities Oevt - 110.0 97.43581 93 PRC Railway VI 420.0 - 362.43606 93 PRC Tianhuangping Hydroelectric 300.0 - 277.5

3624/2518 93 PRC Grain Distribution 325.0 165.0 475-5

2522 93 PRC EnvironmentaL Tech. Assist. - 50.0 45.9 -

2539 94 PRC RuraL Health Workers Devt. - 110.0 105_6

3652 94 PRC Shanghai Metro Transport 1I 150.0 - 74.03681 94 PRC Fujian Provincial Highways 140.0 - 122.63687 94 PRC Tetecammunicarions 250.0 - 250-02563 94 PRC Second Red Soils Area Oevt. - 150.0 140.8

2571 94 PRC Songliao Ptain Agric. Det. - 205.0 195.1_

3711 94 PRC Shanghai Envvironment 160.0 - 157-0

3716 94 PRC Sichuan Gas Devt & Conservatn. 255.0 - 255.03718 94 PRC Yangzhou Thermal Power 350.0 - 350.0

3727 94' PRC Xiaolangdi Multipurpose 460.0 - 400.62605 94 PRC Xiaolangdi Resettlement - 110.0 107.92616 94 PRc Loess Plateau Watershed Devt. - 150.0 144.22623 94 PRC Forest Resource Devt. R Prot. - 200.0 192.3

3748 94 PRC -Rational Highway 380.0 - 380.03773/2642 95 PRC Ent. Housing/Soc Sec Reform 275.0 75.0 351.93781 95 PRC Liaoning Environment Cc) 110.0 - 110CO3787 95 PRC Xinjiang Prov. Highways Cc) 150.0 - 150.0

2651 95 PRC Basic Ed for Poor/Minorities Cc) - 100.0 100.33788 95 PRC Shenyang IndustriaL Reform Cc) 175.0 - 175.0

2654 95 PRC Economic Law Reform Cc) - 10.0 10.0

2655 95 PRC Comp Maternal/Child HeaLth Cc) - 90.0 89.7

TotaL 12,118.6 8,026.2 8,697.6

of which has been repaid 1,005.7 14.2

Total now held by Bank and IDA 11,112.9 8,012.0

Amount soLd: Of which repaid - -

Total Undisbursed 5,735.1 2,962.5 8,697-6

Ca) As credits are denominated in SORs (since IDA RepLenishment VI), undisbursed SOR creditbalances are converted-to dollars at the current exchange rate between the dolLar and the SDR1

In some cases, therefore, the undisbursed balance indicates a dollar amount greater than theoriginaL principat credit amount expressed in dollars.(b) Credir fully disbursed.Cc) Not yet effective.

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Schedule DPage 3 of 3

S. STATEHENT OF IFC INVESTMENTS(As of Dece,ter 31, 1994)

Invest- Type of Loan Equity Toratment No. FY Borrower * Business (USS Million) --

813/2178 85/ Guangzhou Auto Automobile 15.0 4.5 19.5- 86/91

974 87/88 China Investment Co. DFCs 3.0 - 3.0

1020 88/ China Bicyctes Bicycte 17.5 3.4 20.992/94 BicycLes Co. Ltd. Manufacture

I066 a8 Crown ELectronics Electronics 15.0 - 15.0

1119 89 Shenzhen SoLar Electric 2.0 1.0 3.0Light/Power

3423 93 Shenzhen PCCP Manufacturing 4.0 1.0 5.0

3150 93 Yantai Cement Cement 28.7 2.0 30.7

3881 94 China Walden Mgt. Capitat Mkts. - 7.5 7.5

94 Dynamic Fund Venture - 20.0 20.0CapitaL

94 Nembridge Inv. Securities mk - 8.0 8.0Financing Instit.

95 Dalian Glass Glass 61.0 - 61.0

Totat Cross Commitments 146.2 47.4 193.6

Less canceLlations, tenainations, 57.3 . 57.3repayments, wrice-offs, and sates

Total Comaitmenms now Held by IFC 89.0 47.4 136.4

TotaL Undisbursed 17.5 28.4 45.9

1/20/95EA2DR