Document of the International Development Association acting as Administrator of the Ini.erim Trust Fund FOR OFFICIAL USE ONLY Report No. P-7089-CHA MEMORANDUM AND RECOMMENDATION OF THE MANAGING DIRECTOR TO THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION ON A PROPOSED INTERIM FUND CREDIT IN AN AMOUNT OF SDR 51.4 MILLION TO THE PEOPLE'S REPUBLIC OF CHINA FOR A NATIONAL RURAL WATER SUPPLY PROJECT May 22, 1997 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (as of March 15, 1997) Currency = Renminbi Currency Unit = Yuan (Y) Y 1.00 = $0.12 $1.00 = Y 8.3 WEIGHTS AND MEASURES m = Meter (= 3.28 feet) km = Kilometer (= 0.62 miles) 1 = Liter (=0.264 US gallons) lcd = Liters per capita per day m = Cubic meter or ton of water (284 US gallons) ABBREVIATIONS AND ACRONYMS AWP - Annual Work Plan CPO - County Project Office CRWSTC - China Rural Water Supply Technical (nter ERR - Economic Rate of Return MOPH - Ministry of Public Health NPO - National Project Office NPHCC - National Patriotic Iealth Campaign Committee NPHCCO - Executive Office of the National Patriotic Health Campaign Committee NPV - Net Present Value OED - Operations Evaluation Department PHRD - Policy and Human Resources Development Fund PPO - Provincial Project Office RAP - Resettlement Action Plan RWSS - Rural Water Supply and Sanitation Project (Cr. 2336) GOVERNMENT FISCAL YEAR January 1 - December 31 Vice President Jean-Michel Severino, LAP Director Nicholas C. Hope. EA2 Division Chief Jane Loos. EA2EM Staff Member Lee Travers, Senior Environmental Economist, EA2EM FOR OFFICIAL USE ONLY CHINA NATIONAL RURAL WATER SUPPLY PROJECT INTERIM TRUST FUND CREDIT AND PROJECT SUMMARY Borrower: The People's Republic of China. Beneficiaries: The four provinces of Yunnan, Hebei, Hubei, and Jiangxi and the autonomous region of Nei Mongol. Poverty: Program of Targeted Interventions Amount: SDR 51.4 million ($70 million equivalent). Terms: Standard IDA terms, with 35 years' maturity including 10 years of grace. Commitment Fee: 0.50 percent on undisbursed credit balances, beginning 60 days after signing, less any waiver. Onlending Terms: From the Government of China to the project provinces and autonomous region: 17 years, including 5 years' grace, with a fixed service charge of 3 percent per year and a commitment charge of 0.50 percent per year on the undisbursed balance of the credit. Foreign exchange risk would be borne by the provinces and autonomous region. Financing Plan: See Schedule A. Net Present Value: For rural water supply: positive, but varies over the 1,500 piped systems; for sanitation and health education: not applicable. Staff Appraisal Report: 16380-CHA Map: IBRD 28662 Project ID Number: CN-PE-3637 This document hag a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. MEMORANDUM AND RECOMMENDATION OF THE MANAGING DIRECTOR TO THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION (THE ASSOCIATION ACTING AS ADMINISTRATOR OF THE INTERIM TRUST FUND) ON A PROPOSED INTERIM FUND CREDIT TO THE PEOPLE'S REPUBLIC OF CHINA FOR A NATIONAL RURAL WATER SUPPLY PROJECT 1. I submit for your approval the following memorandum and recommendation on a proposed credit of SDR 51.4 million ($70 million equivalent) to the People's Republic of China to help finance a National Rural Water Supply Project. The credit would be on standard IDA terms, with 35 years' maturity including 10 years of grace. The proceeds of the credit would be onlent to the project provinces of Yunnan, Hebei, Hubei and Jiangxi and the autonomous region of Nei Mongol (hereafter referred to as "provinces"), on the following terms: 17 years, including 5 years' grace, with a fixed service charge of 3 percent per year, and a commitment charge of 0.50 percent per year on the undisbursed balance of the credit. Foreign exchange risk during repayment would be borne by the provinces. 2. Sector and Project Background. On the whole, rural Chinese live longer and suffer less illness than they did two decades ago. Better nutrition and higher immunization rates have contributed to those gains; so also have substantial improvements in rural water supply. From 1985 to 1993, the number of rural residents with convenient access to safe water more than doubled, to some 520 million, or 57 percent of the 920 million rural people. Of these, approximately 400 million people presently drink piped water; about half of the 205 million relying on hand pumps can also be considered to have a safe supply. The remainder, using a variety of sources including springs, rivers, and ponds, remain at high risk. Poor hygiene and sanitation practices further contribute to the spread of water-related disease. Previous experience in this sector has shown that without adoption of better hygienic practices, the positive effects of improved water supply are diminished. 3. Four hundred million rural Chinese continue to suffer from unsafe or insufficient water supplies. Problems include raw water sources with high pathogen loads due to fecal or other contamination; water with high levels of naturally-occurring fluoride, arsenic, or salts; and seasonal water shortages. In China, as in other countries, the lack of safe water correlates highly with poverty. Also positively correlated with poverty are behaviors that worsen water-related disease. Examples include failure to protect wells from contamination, boil water before drinking, or wash hands before preparing or eating food. As a result, many poor rural people suffer from common diarrheal diseases and helminth infections and, more rarely, dysentery, hepatitis, typhoid and cholera. 4. The central government has made water supply a high priority since 1985, and improved water coverage in urban and in wealthier rural areas is now relatively high. For decades, the Chinese National Patriotic Health Campaign Committee (NPHCC) under the -2- Ministry of Public Health (MOPH) has run health education and action campaigns targeting a broad array of rural health problems. Early successes included reduction of schistosomiasis and insect-borne diseases. Efforts in sanitation and health education have been less successful. The NPHCC has also worked to expand the use of latrines, particularly composting latrines that promise high rates of pathogen destruction. However, both the relatively high cost of such latrines and the lack of targeted education messages to show the link with improved health have slowed adoption. 5. To meet its goal of 65 percent safe water coverage by the year 2000, the government must now focus on providing water supply and health/hygiene education and facilities to the poorer and more remote areas. The proposed project responds to this challenge by providing support for the construction of improved water supply facilities, the development of more effective health education strategies, and the strengthening of management in rural water supply operations. The project builds on experience under two previous IDA credits for rural water supply and sanitation in China, and is expected to benefit 4.6 million poor rural residents in 40 counties of five inland provinces. Sector Issues and Government Policy 6. Water Supply. To maintain momentum gained during the United Nations "International Drinking Water Supply and Sanitation Decade" (1981-90), in 1991 China set 1995 rural water supply goals at: 35 to 50 percent coverage of drinking water meeting international quality standards, including 35 to 40 percent of rural residents receiving piped water supplies. Both goals were met and even more ambitious goals established for 2000, with the government hoping to provide safe water to an additional 88 million people in the most water-scarce areas by the turn of the century. Those now needing assistance include 50 million suffering from long-term water scarcity, and 40 million drinking water with excessive levels of fluoride; the rest drink saline or alkaline water, or water carrying heavy loads of bacteria, viruses, and parasites. Although basically all of the piped water supplies have been deemed safe, hand pumps and other sources do not always reach that goal. 7. Intervention in the rural water supply sector ranges from household-specific solutions of rainwater collectors or shallow- and deep-well hand pumps, to single- and multivillage piped water systems. Of the total rural population that is currently adequately served, over 75 percent get their water through piped systems. Although construction and maintenance costs per person for piped systems are often higher than for hand pumps or similar facilities, they are usually preferred when financing can be arranged because their convenience is matched by the ease of controlling water quality. As long as adequate measures are taken to protect the sources, wells and rainwater collectors can also be used to provide safe drinking water. Hand pumps often serve communities where population is sparse and/or ground and surface water is scarce. Rainwater collectors are primarily used in mountainous regions, where rainfall is plentiful, but access to surface water is difficult. -3- 8. Sanitation and Health Education. Poor sanitary conditions in rural China exacerbate health problems created by a lack of clean water. Human wastes are collected and transported to the fields for use in agriculture, often without further treatment. The use of such waste for fertilizer is a traditional practice, and will undoubtedly continue. The main objectives of sanitation improvements are therefore to improve the standard of latrines and to make reuse practices more hygienic. By 1995, 80 percent of rural households had some sort of household latrine, but most of these facilities are rudimentary at best: they provide temporary storage of wastes and are unprotected from flies and other insect vectors of disease transmission. Sixteen percent of the rural population use "sanitary" latrines, usually defined as latrines with full walls and roof, odorless and insect-free; an additional 18 percent, primarily in county towns, have access to composting latrines that promise high rates of pathogen destruction. The availability of public and school latrines is low, and they rarely meet the "sanitary" standard. NPHCC efforts to expand the use of improved rural latrines have in the past been scattered and uncoordinated, with most improvements left up to individual provinces or townships. 9. In most rural areas, a network of NPHCC workers, Women's Federation representatives, local epidemic prevention stations, and schools has led health education campaigns encouraging a wide array of hygienic behaviors. That work, combined with a high literacy rate (even in poor areas), has led to widespread knowledge of many basic health behaviors, such as the importance of drinking boiled water. However, actual behavioral change has been slow to follow, especially in poor areas where fuel may be scarce and understanding of the link between raw water or unwashed hands and diarrhea is tenuous. Thus, the problem is more one of the effectiveness of health messages than of their dissemination: health education in most rural areas provides little concrete information to link hygienic behavior to improved health, and most provinces still lack specialized health education training. International experience has demonstrated the importance of careful targeting and very specific health messages, rather than general injunctions to behave well. 10. Bank Group Assistance Strategy and Rationale for Bank Group Involvement in the Project. The China Country Assistance Strategy, presented to the Board on March 18, 1997, highlighted human development as one of the five major themes in Bank support for China's development. Within that theme, poverty reduction plays a major program role. The poverty reduction program seeks to increase the resources controlled by the poor, be these income generating (such as improved agricultural land), contributing to future productivity (education), or protecting physical well being (health). Improving rural water and sanitation meets several of those goals. It typically releases labor for other purposes, can itself be a productive input, and by lowering pollutant and pathogen intake by the poor, helps protect their health. 11. Lessons Learned from Previous Bank Group Experience. The 15-year history of Bank Group involvement in the rural water and sanitation sector in China, coupled with a much longer and very rich history elsewhere, provide knowledge crucial to the -4- design of the proposed new project. The components of the new project are drawn from lessons learned in two earlier IDA projects [the 1985 Rural Water Supply Project (Cr. 1578, $80 million equivalent) and 1992 Rural Water Supply and Sanitation Project (Cr. 2336, $110 million equivalent)]. 12. With respect to water supply, both previous projects have established that Chinese villagers, even in poor areas, willingly contribute capital and pay tariffs sufficient to finance the construction and maintenance of safe and convenient water supply systems. Moreover, although collective farming has been abandoned in Chinese rural areas, the village collective management structure remains sufficiently robust to manage water systems. An Operations Evaluation Department assessment of the first project showed that design and construction quality continues to hold up some 10 years after initial construction. The second project will be completed in 1998 and water supply investments from that project also continue to perform well. Identified weaknesses in both projects include occasional miscalculation of demand, hence system overdesign. The more aggressive prior design review required under the proposed project should rectify that problem. 13. The current project also recognizes that beneficiary participation determines project success. In the IDA-financed projects, Chinese beneficiaries eventually pay the full cost of water supply. Bearing this financial burden, they also demand a large say in how they connect to and use the water systems, have a strong appreciation of its benefits, and expect to have a voice in continued operations. This project seeks to further increase that participation by requiring that systems designers provide participating villages with an analysis of alternative designs and their costs, permitting villagers to choose their preferred option. 14. Sanitation and health education efforts have fared less well than water supply. The Implementation Completion Report from the first project, which supported only water supply, noted that integration of water supply with health education and sanitation elements would substantially increase health impacts. The sanitation work in the second project sought to address this issue by replacing existing, nonsanitary latrines with composting latrines having high pathogen kill rates. However, these improved latrines usually cost much more than the willingness to pay, especially in the poor villages typically included in the rural water supply projects. The proposed project recognizes from Chinese and international experience that willingness to pay for improved latrines correlates highly with income. In the poor areas served by this project, if individual households with a high willingness to pay can be identified, they will be helped to build sanitary latrines through designs and other technical assistance. Construction of a very small number of composting latrines may be subsidized, but in communities lacking willingness to pay for improved latrines, program emphasis will be on the need for changing water and sanitation-related behavior through more carefully-targeted health messages. -5- 15. With respect to project management, the project recognizes the need to improve quality through increased project office supervision of water supply design and construction, and more central input into the health education and sanitation component. In the first project, weak support for the project offices led to delays in design approval and in the development of annual work plans. The proposed project strengthens the management capabilities of the project offices at all levels, through more intensive staff training in operations, procurement and financial management; a more comprehensive system for the prior review of annual work plans; and support for surveys to establish project baseline conditions and monitoring indicators. Increased emphasis is also placed on the need for aggressive supervision of water plant construction quality. 16. Project Objectives. The project supports government-led efforts to improve the well-being of rural people through better drinking water and sanitation conditions in poor and remote villages. The principal objective of the project is to provide access to safe, conveniently located water to 4.6 million poor rural people in Hebei, Hubei, Jiangxi, and Yunnan provinces and Nei Mongol Autonomous Region, and to improve related water and sanitation practices. A supporting objective is to provide the water at the lowest possible cost and to ensure its sustainability through good maintenance and accounting practices. 17. Project Description. The project design links physical investment in safe water supply systems, with the provision of related health education messages, and access to sanitation information and demonstration facilities, in order to maximize health and productivity improvements within the beneficiary population. The project would comprise the following: (a) Water Supply: provision of safe water, sustainably financed, to poor communities currently lacking such supplies. Project design would maximize community participation in the selection of service alternatives. Users would be expected to pay the full cost of the water. Water system operator and accountant training would be supported to ensure low-cost operation and project sustainability. (b) Sanitation and Health Education: assistance to ongoing village health education efforts. This component would work with primary school teachers, village doctors, Women's Federation representatives, and public health systems in their efforts to improve water use and sanitation practices in the villages. It would support demonstration programs to increase use of composting latrines; the preparation of health education messages aimed at expanding the adoption of improved sanitation and hygiene practices among the target beneficiaries, primarily housewives, school-aged children and decisionmakers in households; and training of health education specialists in delivery of those messages. (c) Project Management: support to increase project office capacity to provide services to beneficiary villages. This would include surveys and research on effective strategies to expand adoption of improved sanitation and convey health messages. It would also encompass training in project management skills. 18. The total project cost is estimated at about $134 million equivalent, including foreign exchange of $35.6 million. Interest during construction would require an additional $2.7 million. The proposed credit, totaling $70.0 million equivalent, would provide about -6- 52 percent of the project's total financing requirement. The remaining 48 percent would be funded by provincial, prefectural, and county governments and by the project beneficiaries, with the latter contributing no more than 25 percent of initial capital costs. Financing plans of individual provinces vary in accordance with their needs to borrow IDA funds and the local governments' and users' ability to contribute. The credit is expected to cover 100 percent of foreign costs and 36 percent of local costs. 19. A breakdown of costs and the financing plan are shown in Schedule A. Amounts and methods of procurement and the disbursement schedule are shown in Schedule B. A timetable of key project processing events is provided in Schedule C. Schedules D and E show the status of Bank Group operations in China and "China-at-a-Glance" tables. A map (IBRD 28662) is also attached. The Staff Appraisal Report, No. 16380-CHA dated May 22, 1997, is being distributed separately. 20. Project Implementation. The responsibility for project management and implementation is divided among national, provincial and county levels. At each level, Leading Groups have been established to provide policy guidance and advice of an intersectoral nature. Their responsibilities include: (a) formation and staffing of project offices; (b) oversight of project offices; (c) resolution of policy issues that arise during project implementation; and (d) coordination of project issues across project related government bureaus. The National Leading Group is headed by the deputy director of the NPHCC and the president of the Executive Office of the NPHCC (NPHCCO). At the provincial level, the Leading Groups are headed by standing vice-governors responsible for health matters, with at least two bureau directors as members. County-level Leading Groups are headed by county magistrates and such bureau directors as the magistrate deems important to project execution. 21. Project offices have been established at each level to carry out day-to-day project implementation. The project offices will be supported by sector institutions, design institutes and international and national consultants. Their general responsibilities include: (a) project design, guidance, coordination, supervision and evaluation at each administrative level; (b) designing training programs and conducting national-, provincial- and county-level training in health education and project management; and (c) preparing annual work plans, project progress and financial reports. Country project offices have the critical responsibility of ensuring that designs meet villager needs, then facilitating efficient village operation of completed systems. 22. The National Project Office (NPO), which was established to manage the Rural Water Supply and Sanitation (RWSS) Project, is attached to the NPHCCO and is part of the China Rural Water Supply Technical Center (CRWSTC). Provincial project office (PPO) staffing is drawn from such provincial departments as planning, finance, water conservancy and power, agriculture, urban construction, tax, and patriotic campaign commission offices; county project offices (CPOs) work under the guidance of county- level Leading Groups and have staff drawn from the same range of technical -7- backgrounds. Two of the PPOs, in Yunnan and Nei Mongol, were established in 1992 to manage the implementation of RWSS Project. 23. Project Sustainability. Local government funding and beneficiary financing through water tariffs provide a framework for project sustainability. The virtual absence of direct central government financing for the rural water supply and sanitation sector distinguishes China from most other developing countries. Water plants constructed under this project are maintained as independent systems, with tariffs set at a rate to cover the original investment and repay the loan. These tariffs make up no more than 4 percent of villagers' per capita income, and usually less than 3 percent. Benefiting villagers are expected to pay between 75 and 100 percent of the water supply capital costs: in-kind labor and materials contribution (typically 10 to 15 percent of the water facility investment costs), together with upfront cash payments collected prior to construction, make up 25 percent of capital costs. Through tariffs, the beneficiaries repay the county for the 50 percent of the capital costs covered by the IDA credit. The local government contribution (25 percent of capital costs) may also be recaptured through the water tariff, at the option of the local government. This arrangement under the first two projects has demonstrated high levels of sustainability. That would be enhanced under the current project through increased villager participation, better construction supervision and more intensive training of plant operators and managers. 24. Previous experience has shown that sanitation costs often exceed villagers' willingness to pay. This project will take steps toward ensuring replicability in this area by identifying higher-income households willing to invest in improved sanitation, and by using sanitation education to induce increases in willingness to pay. Health education financed by the project would be integrated with existing government-led programs, and would focus on sustainable behavioral change rather than on simply delivering messages to a target number of people. 25. On the institutional side, project training would provide the project offices with a foundation for efficient, cost-effective operation of the investment program. Efficient water supply system operation would benefit from training and institutional support in finance and water plant operation and management. Surveys to establish monitoring indicators and baseline conditions will provide valuable information, both for educators targeting health and sanitation messages and for measuring the benefits of this project. 26. Agreed Actions. At negotiations, assurances were obtained from China and the Provinces that: (a) the NPO, PPOs and CPOs will be adequately financed, and staffed with competent, experienced people throughout the project; (b) the provincial project annual work plans for the following year will be prepared and submitted to the NPO for review and approval no later than October 15 of each year, and the consolidated national annual work plans (AWPs) prepared and submitted to IDA for approval no later than November 30; and (c) the provinces will carry out or cause to be carried out the resettlement of persons affected by the project in a manner and according to the Resettlement Policy Framework satisfactory to the Association. -8- 27. Assurances were obtained on the following financial performance criteria: (a) the provincial governments will provide, or ensure that the prefectures and counties provide, the necessary counterpart funds for the execution of the project. The foreign exchange risk during the investment phase will be borne in proportion to the originally agreed counterpart contribution of each level of government, and during repayment by the provinces; (b) the water charges for all investments, commencing not later than the second full fiscal year of operations, would be set annually to cover operations and maintenance costs, administrative costs, taxes, and the greater of depreciation or debt service; (c) annual audits of project expenditures and of statements of expenditures and Special Account maintained by the Ministry of Finance will be submitted to the Association by the NPO no later than six months after the end of the fiscal year; (d) provincial and county-level annual audits will be carried out and maintained at the Provincial Finance Bureau for Association review; (e) water plant facilities with total investment greater than Y 5 million will be audited at the conclusion of their first full fiscal year of operation by qualified private sector auditors, such audit to be submitted to IDA for review; and (f) large, medium, and small-scale water supply investments will be appraised by the NPO, PPOs, or CPOs, respectively, for the quality of their engineering and financial preparation and for their overall feasibility. For all water systems with total investment above Y 0.5 million, the county quality assurance office will be retained to verify that construction practices and standards have met design specifications. 28. Environmental Aspects. The balance of the environmental impact is substantially positive; however, potential adverse impacts from construction or a failure to protect water supply sources require the classification of the project as Category B in terms of the Operational Directive on Environmental Assessment. The project relies on a thorough review and supervision process to ensure that these environmental concerns are addressed. Feasibility studies for water system designs include measures for water source protection, and frequent water quality testing during implementation will ensure early identification of any problems. 29. Resettlement. When water supply schemes supply more than one village, the water plant requires the collective land of one of the villages. The typical area for each treatment plant would be no larger than 4-8 mu (4/15 to 8/15 hectares). To ensure that land acquisition is minimized, the county will be required to obtain PPO no-objection where planned or actual land acquisition for any water system exceeds 3 mu (1/5 of a hectare), and NPO no-objection where planned or actual land acquisition exceeds 5 mu (1/3 of a hectare), or where residential buildings will be acquired. Where acquisition of cultivated land cannot be avoided, the current users will be compensated in a fashion that maintains or improves their standard of living. 30. The total amount of land that would be acquired for all schemes over the five year period is estimated at less than 120 ha. This land would be acquired in approximately 1,500 different sites over the 40 counties, or an average of about 0.08 ha per scheme. Reflecting the modest impact in any affected village (typically no more than two households affected), and the expectation that actual impacts will be known only on a -9- year-to-year basis, the Bank Group did not seek an overall Resettlement Action Plan (RAP) for the project. Rather, a Policy Framework for Compensation, Resettlement and Rehabilitation of Project-Affected Persons was agreed with the government during negotiations. The Framework requires each CPO to prepare an annual Resettlement Inventory if fewer than 150 people are affected and otherwise to prepare a RAP. Each annual Inventory or RAP will be reviewed by the respective PPO and the NPO for conformity with the Framework, and provided for Association review. 31. Program Objective Categories. The primary Program Objective Category is environmentally sustainable development, with poverty alleviation and women in development as secondary objectives. The beneficiaries under the project are located within some of China's poorest communities, though not necessarily in the most poverty- stricken villages. As discussed above, ultimately, the costs of the project investments are borne by the beneficiaries. The Credit will allow the beneficiary upfront capital contribution to fall from 60 percent to 25 percent of total investment, considerably broadening the number of villages able to invest in safe water supply. A higher share of IDA financing would allow even poorer areas to join, but reduce the total number of beneficiaries. The chosen balance is sufficient to ensure targeting of poor areas, while maximizing beneficiary numbers. 32. In most Chinese rural communities, women occupy the key position in family hygienic practices, through preparing food, educating and caring for children, and caring for sick family members. Thus, the health and sanitation education efforts under this project will be targeted on them, using institutions such as the Women's Federation that are able to more effectively reach women. The previous two IDA-financed rural water projects have generated village-level reports on benefits to women, but no consistent impact evaluation has been undertaken. The monitoring work under the proposed project will allow a more concrete evaluation to be done. 33. Project Benefits. Project investments in rural water supply and in better health and sanitation behaviors would result in significant improvements in the health of many rural residents. Improved water supply has been shown to have a broad array of benefits: freeing labor time, reducing waterborne diseases, and providing an input to production. OED review of experience under the Rural Water Supply Project validated that finding. In terms of health, an international literature review of similar projects has shown that moving to safe water reduced diarrheal morbidity by 16 percent, and substantially increased water quantities reduced morbidity 25 percent, with a joint effect of 37 percent if both conditions were met. Hygiene education also offers documented improvements in health outcomes. 34. The project investment strategy targets benefits on poor villages, while ensuring an adequate net present value (NPV) of investments. Because economic demand for safe water is positively correlated with income, NPV from private water demand would have been maximized by targeting unserved, yet high-income, villages. Instead, the project strategy recognizes that important health and social welfare externalities are not captured -10- in private demand, and concern with the latter centers on having adequate returns to ensure project financial sustainability. Those returns will vary over the nearly 1,500 piped systems, but are expected to yield positive system NPVs. The financial covenant, which requires that water tariffs cover all operations and maintenance costs and the greater of depreciation or debt service, combined with a 25 percent initial villager capital contribution, serves as a key decision variable for village participation in the project. The corresponding tariff is estimated during feasibility studies and villagers choose whether or not to participate, and choose among system alternatives, based on those estimated costs. The tariff alone meets the financial sustainability requirement, and would yield at least a 3 percent ERR even in the absence of consumer's surplus. The 12 percent discount rate established for Bank Group projects in China, and yielding a positive NPV, would be met through private demand alone under conservative assumptions about the shape of the demand curve. The positive externalities associated with improved public health and social welfare, although not explicitly estimated, reinforce the expectation of a positive NPV from the investments in safe water. 35. Risks. Three main types of project risks exist, relating to implementation and operations, regulation, and long-term sustainability. Implementation and operations risks arise in counterpart financing and water system design, construction, and operations. In earlier projects, counterpart funding delays have slowed implementation. Government contributions have also adjusted slowly to increased financing demands due to foreign exchange rate changes. Explicit inclusion of that risk, when estimating counterpart contributions for this project, alerts all levels of government to the possible need early in project implementation. Even when adequately financed, current water systems frequently offer opportunities for better design, construction, and operations that would help ensure sustained, efficient operations. This project would meet that opportunity through increased supervision and training at every project management level. 36. A regulatory risk is possible from local price bureau resistance to timely implementation of the new tariff structure for water. To mitigate this risk, tariff estimates are an explicit part of the feasibility study. These, and the agreed pricing formula, will be reviewed by price bureaus prior to an investment being made. If the price bureau cannot accept the agreed approach, investments will be redirected to other counties. 37. Two perceived risks to long-term sustainability are environmental and behavioral. The environmental risk arises in the need to protect water sources from pollution or overextraction. Either outcome could increase costs sufficiently to exceed benefits. Feasibility studies consider environmental risks, and if adequately done, and needed source protection measures are taken, the risks will be minimized. A more modest risk to long- term sustainability would arise from a failure of the health and sanitation program to induce significant change in those behaviors. The project faces great uncertainty over whether the existing Chinese approach to health and sanitation work can be improved upon. If not, project areas would not realize gains from this component relative to nonproject areas. The project seeks to mitigate this risk through the use of a knowledge-attitude-practice study to launch the work, complemented by monitoring to provide feedback during the - I1 - implementation period, allowing the program to be modified throughout the implementation period. 38. Recommendation. I am satisfied that the proposed Interim Fund Credit would comply with Resolution No. 184, adopted by the Board of Governors of the Association on June 26, 1996, establishing the Interim Trust Fund and I recommend that the President approve it. Gautam S. Kaji Managing Director Washington, D.C. May 22, 1997 Attachments - 12- Schedule A CHINA NATIONAL RURAL WATER SUPPLY PROJECT ESTIMATED COSTS AND FINANCING PLAN ($ million) Local Foreign Total ESTIMATED COSTS A. Rural Water Supply Yunnan 11.6 4.1 15.7 Hebei 13.4 7.9 21.3 Hubei 16.9 5.9 22.8 Nei Mongol 10.3 3.1 13.4 Jiangxi 15.0 6.2 21.2 Subtotal 67.3 27.2 94.5 B. Sanitation and Health Education Yunnan 1.4 0.4 1.8 Hebei 1.8 0.4 2.2 Hubei 1.9 0.5 2.4 Nei Mongol 1.1 0.2 1.3 Jiangxi 1.8 0.5 2.3 Subtotal 7.9 2.0 9.9 C. Project Management Yunnan 1.0 0.1 1.0 Hebel 1.2 0.0 1.2 Hubei 1.1 0.1 1.2 Nei Mongol 0.6 0.1 0.7 Jiangxi 1.2 0.0 1 2 Subtotal 4.9 0.4 5.3 Total Baseline Costs 80.1 29.6 109.7 Physical Contingencies 10.5 3.9 14.4 Price Contingencies /a 7.8 2.1 9.9 Total Project Costs 98.4 35.6 134.0 Interest during construction Lb 2.7 0.0 2.7 Total Financing Required 101.1 35.6 136.7 FINANCING PLAN Provincial governments 5.3 0.0 5.3 Prefecture, county and township governments 28.1 0.0 28.1 Communities and individuals 33.3 0.0 33.3 IDA 34.4 35.6 70.0 Total 101.1 35.6 136.7 La Price contingencies as a percentage of base costs are 18 percent on the Renminbi value of the project, including the expected inflation and exchange rate changes. /b Interest during construction is based on: (i) onlending rates for projected disbursements of Credit proceeds; and (ii) payment of commitment charges. Note: Totals may not add due to rounding. - 13 - Schedule B Page 1 of 2 CHINA NATIONAL RURAL WATER SUPPLY PROJECT PROCUREMENT ARRANGEMENTS ($ million, including contingencies) Procurement Method Project Component ICB NCB Other NIF Total Civil Works 0.0 17.4 60.0 0.0 77.4 (0.0) (7.0) (24.0) (0.0) (31.0) Equipment and Materials 44.0 0.0 0.5 0.0 44.5 (35.2) (0.0) (0.4) (0.0) (35.6) Technical Assistance and Training 0.0 0.0 4.2 0.0 4.2 (0.0) (0.0) (3.1) (0.0) (3.1) Surveys and Monitoring 0.0 0.0 0.3 0.0 0.3 (0.0) (0.0) (0.3) (0.0) (0.3) Land Acquisition 0.0 0.0 0.0 2.7 2.7 (0.0) (0.0) (0.0) (0.0) (0.0) Project Management 0.0 0.0 0.0 5.0 5.0 (0.0) (0.0) (0.0) (0.0) (0.0) Total 44.0 17.4 65.0 7.7 134.0 (35.2) (7.0) (27.8) (0.0) (70.0) Notes: (1) Other procurement methods include national shopping, force account, consultant services and financing of incremental costs. (2) NIF: Not IDA-financed. (3) Figures in parentheses are amounts to be financed by IDA. (4) Figures may not add due to rounding. - 14 - Schedule B Page 2 of 2 DISBURSEMENTS IDA Credit Amount Category ($ million equiv.) Expenditures to be Financed (percent) Civil Works 29.0 Yunnan: 36 percent of expenditures Hebei: 33 percent of expenditures Hubei: 42 percent of expenditures Jiangxi: 42 percent of expenditures Nei Mongol: 45 percent of expenditures Goods, Equipment, 33.8 100 percent of foreign expenditures, 100 percent Materials of local expenditures (ex-factory, net of VAT), and 75 percent of other items procured locally Training and Study 2.7 100 percent of incremental expenditures Tours Consultant Services 0.4 100 percent of expenditures Incremental Costs 0.3 100 percent of expenditures Unallocated 3.8 Total 70.0 ESTIMATED DISBURSEMENTS ($ million) IDA Fiscal Year 1998 1999 2000 2001 2002 2003 Annual 9.6 12.7 16.4 16.2 10.2 4.9 Cumulative 9.6 22.3 38.7 54.9 65.1 70.0 -15- Schedule C CHINA NATIONAL RURAL WATER SUPPLY PROJECT TIMETABLE OF KEY PROJECT PROCESSING EVENTS Time taken to prepare the project: 11 months Prepared by: Governments of Yunnan, Hebei, Hubei and Jiangxi Provinces and Nei Mongol Autonomous Region, with consultant assistance funded by PHRD funds First Bank mission: June 1996 Appraisal mission departure: April 12, 1997 Negotiations: May 1997 Board Presentation: June 17, 1997 Planned date of effectiveness: September 1997 List of relevant ICRs: Project Completion Report on China-Rural Water Supply Project (Credit 1578-CHA): 09/30/92 This report is based on the findings of an appraisal mission that visited China in April 1997. Project team members included Mr. Lee Travers (Senior Environmental Economist and Task Manager), Mr. George Plant (Principal Operations Officer), Ms. Ellen Schaengold (Senior Sociologist), Ms. Dawn Vermilya (Financial Analyst), Mr. Huang Ping (Sociologist, Consultant), Ms. Alison Kaufman (Project Assistant), and Ms. Sharon Hu (Administrative Assistant). Assistance was also provided by Ms. Meredith Dearborn and Ms. Barbara Bitondo (Report Processing), and Ms. Chen Tianshu (Interpreter). Peer reviewers for the project were Messrs./Mmes. May Yacoob (Medical Anthropologist, Research Triangle Institution), Mary Judd (ASTHR) and Mike Garn (TWUWS). - 16 - Schedule D STATUS OF BANK GROUP OPERATIONS IN THE PEOPLE'S REPUBLIC OF CHINA A. STATEMENT OF BANK LOANS AND IDA CREDITS (As of March 31, 1997) Loan/ Amount (US$ million) Credit (net of cancellations) Number FY Borrower Purpose Bank IDA Undisb.(a) 52 loans and 51 credits have been disbursed 5,702.8 3,822.8 - of which SECAL: 2967/1932 88 PRC Rural Sector Adj. 200.0 93.2 - ActiveLan 1885 88 PRC Northern Irrigation - 103.0 1.0 2968 88 PRC Railway IV 200.0 - 2.8 1997 89 PRC Shaanxi Prov. Agriculture - 106.0 0.1 2009 89 PRC Integrated Reg. Health - 52.0 0.6 3022 89 PRC Tianjin Light Industry 154.0 - 4.4 3073/2025 89 PRC Shandong Prov. Highway 60.0 (50.0)(b) 6.7 2145 90 PRC National Afforestation - 300.0 6.8 2159 90 PRC Hebei Agricultural Dev. - 150.0 4.0 2172 91 PRC Mid-Yangtze Agricultural Dev. - 64.0 1.4 3265/2182 91 PRC Rural Credit IV 75.0 200.0 0.1 3274/2186 91 PRC Rural Indust Tech (SPARK) 50.0 64.3 2.1 3286/2201 91 PRC Medium-Sized Cities Dev 79.4 89.0 3.5 2210 91 PRC Key Studies Development - 131.2 7.8 2219 91 PRC Liaoning Urban Infrastructure - 77.8 4.8 2242 91 PRC Henan Agricul. Dev. - 110.0 10.8 3337/2256 91 PRC Irrig. Agricul. Intensif. 147.1 187.9 6.0 2294 92 PRC Tarim Basin - 125.0 1.1 2296 92 PRC Shanghai Metro Transport - 60.0 7.8 3406 92 PRC Railways V 330.0 - 33.7 3412/2305 92 PRC Daguangba Multipurpose 30.0 37.0 4.6 2307 92 PRC Guangdong ADP - 162.0 57.0 3415/2312 92 PRC Beijing Environment 45.0 80.0 37.7 2317 92 PRC Infectious and Endemic Disease Cont. - 129.6 71.5 3433 92 PRC Yanshi Thermal Power 180.0 - 1.3 2336 92 PRC Rural Water Supply and Sanitation - 110.0 20.3 2339 92 PRC Educ. Development in Poor Provs. - 130.0 9.5 3443 92 PRC Regional Cement Industry 82.7 - 4.1 3462 92 PRC Zouxian Thermal Power 310.0 - 27.2 3471 92 PRC Zhejiang Provincial Highway 220.0 - 70.1 2387 92 PRC Tianjin Urban Devt. & Envir. - 100.0 46 2391 92 PRC Ship Waste Disposal - 15.0 6.3 2411 93 PRC Sichuan Agricultural Devt. - 147.0 41.5 3515 93 PRC Shuikou Hydroelectric II 100.0 - 43.9 2423 93 PRC Financial Sector TA - 60.0 43.3 3530 93 PRC Guangdong Provincial Transport 240.0 - 33.1 3531 93 PRC Henan Provincial Transport 120.0 - 19.9 2447 93 PRC Ref. Inst'I and Preinvest. - 50.0 26.3 3552 93 PRC Shanghai Port Rest. and Devt. 124.3 - 10.7 2457 93 PRC Changchun Water Supply & Env. - 120.0 69.8 2462 93 PRC Agriculture Support Services - 115.0 21.2 3560/2463 93 PRC Taihu Basin Flood Control 100.0 100.0 93.8 2471 93 PRC Effective Teaching Services - 100.0 53.5 3572 93 PRC Tianjin Industry II 134.0 - 90.1 3581 93 PRC Railway VI 420.0 - 178.2 3582 93 PRC South Jiangsu Envir. Prot. 250.0 - 50.2 2475 93 PRC Zhejiang Multicities Devt. - 110.0 64.9 3606 93 PRC Tianhuangping Hydroelectric 300.0 - 156.6 3624/2518 93 PRC Grain Distribution 325.0 165.0 435.0 2522 93 PRC Environmental Tech. Assist. - 50.0 24.1 2539 94 PRC Rural Health Workers Devt. - 110.0 63.0 3652 94 PRC Shanghai Metro Transport II 150.0 - 15.6 3681 94 PRC Fujian Provincial Highways 140.0 - 85.6 3687 94 PRC Telecommunications 250.0 - 145.0 2563 94 PRC Second Red Soils Area Devt. - 150.0 54.9 - 17- Schedule D Page 2 of 3 Loan/ Amount (US$ million) Credit (net of cancellations) Number FY Borrower Purpose Bank IDA Undisb.(a) 2571 94 PRC Songliao Plain Agric. Devt. - 205.0 92.8 3711 94 PRC Shanghai Environment 160.0 - 111.0 3716 94 PRC Sichuan Gas Devt & Conservatn. 255.0 - 176.1 3718 94 PRC Yangzhou Thermal Power 350.0 - 201.8 B103 94 PRC Yangzhou Thermal Power 57.2 - 56.1 3727 94 PRC Xiaolangdi Multipurpose 460.0 - 134.7 2605 94 PRC Xiaolangdi Resettlement - 110.0 59.3 2616 94 PRC Loess Plateau Watershed Devt. - 150.0 67.1 2623 94 PRC Forest Resource Devt. & Prot. - 200.0 132.4 3748 94 PRC National Highway 380.0 - 207.4 3773/2642 95 PRC Ent. Housing/Soc Sec Reform 275.0 75.0 287.0 3781 95 PRC Liaoning Environment 110.0 - 84.0 3787 95 PRC Xinjiang Prov. Highways 150.0 - 101.4 2651 95 PRC Basic Ed for Poor/Minorities - 100.0 46.0 3788 95 PRC Shenyang Industrial Reform 175.0 - 145.8 2654 95 PRC Economic Law Reform - 10.0 7.8 2655 95 PRC Comp Maternal/Child Health - 90.0 46.7 3846 95 PRC Zhejiang Power Development 400.0 - 361.4 B105 95 PRC Zhejiang Power Development 64.3 - 61.5 3847 95 PRC Technology Development 200.0 - 195.0 3848 95 PRC Sichuan Power Transmission 270.0 - 262.3 3873/2709 95 PRC Fiscal TA 25.0 25.0 43.2 3874/2710 95 PRC Yangtze Basin Water Res Devt 100.0 110.0 98.2 3897 95 PRC Railway VII 400.0 - 400.0 3906/2744 95 PRC Southwest Poverty Reduction 47.5 200.0 173.2 3910 95 PRC Inland Waterways 210.0 - 184.4 3914/2756 95 PRC Iodine Deficiency Dis. Control 7.0 20.0 21.8 3929 96 PRC Shanghai-Zhejiang Highway 260.0 - 193.8 3933 96 PRC Ertan 11 Hydroelectric 400.0 - 137.7 B106 96 PRC Ertan II Hydroelectric 50.0 - 48.3 2794 96 PRC Disease Prevention - 100.0 87.2 3966/2799 96 PRC Hubei Urban Environment 125.0 25.0 142.2 3967/2800 96 PRC Labor Market Development 10.0 20.0 26.6 3980 96 PRC Henan (Qinbei) Thermal (c) 440.0 - 440.0 3986 96 PRC Second Shaanxi Prov. Highways 210.0 - 200.0 3987 96 PRC Second Shanghai Sewerage 250.0 - 248.0 2831 96 PRC Third Basic Education - 100.0 73.2 2834 96 PRC Shanxi Poverty Alleviation - 100.0 78.6 4001 96 PRC Animal Feed 150.0 - 150.0 4027 96 PRC Second Henan Prov. Highway 210.0 - 210.0 4028/2870 96 PRC Gansu Hexi Corridor 60.0 90.0 137.4 4044/2886 96 PRC Seeds Sector Commercialization 80.0 20.0 96.7 4045 96 PRC Chongqing Ind. Pollution Control 170.0 - 170.0 4055/2892 96 PRC Yunnan Environment 125.0 25.0 149.0 4063/2898 97 PRC Vocational Education Reform 10.0 20.0 19.1 4099 97 PRC Second Xinjiang Highway (c> 300.0 - 300.0 4124 97 PRC Second National Highway (c) 400.0 - 400.0 Total 8,913.6 9,452.5 17,090.8 of which has been repaid 1,711.1 53.8 Total now held by Bank and IDA (a) 15,379.7 8,859.8 Amount sold: Of which repaid - - Total Undisbursed 7,549.3 1,903.2 9,452.5 (a) As credits are denominated in SDRs (since IDA Replenishment VI), undisbursed SDR credit balances are converted to dollars at the current exchange rate between the dollar and the SDR. In some cases, therefore, the undisbursed balance and total credit amount held indicate a dollar amount greater than the original principal credit amount expressed in dollars. (b) Fully disbursed. (c) Not yet effective. - 18- Schedule D Page 3 of 3 B. STATEMENTOF IFC's COMMITTED AND DISBURSED PORTFOLIO (As of March 31, 1997, in US$ million) Committed Disbursed FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 1985 Guangzhou Auto 1.88 3.23 0.00 0.00 1.88 3.23 0.00 0.00 1987 China Bicycles 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1988 Crown Elec 2.09 0.00 0.00 0.00 2.09 0.00 0.00 0.00 1992 China Bicycles 8.50 2.44 0.00 0.00 8.50 2.44 0.00 0.00 1992 Guangzhou Auto 0.00 1.32 0.00 0.00 0.00 1.32 0.00 0.00 1993 Shenzhen PCCP 3.76 .99 0.00 0.00 3.76 .99 0.00 0.00 1993 Yantal Cement 17.69 1.95 0.00 9.44 17.69 1.95 0.00 9.44 1994 China Bicycles 0.00 .95 0.00 0.00 0.00 .95 0.00 0.00 1994 China Walden JV 0.00 7.50 0.00 0.00 0.00 3.79 0.00 0.00 1994 Dalian Glass 20.50 2.40 0.00 40.50 20.50 2.40 0.00 40.50 1994 Dynamic Fund 0.00 12.35 0.00 0.00 0.00 9.46 0.00 0.00 1994 China Walden Mgt 0.00 .01 0.00 0.00 0.00 .01 0.00 0.00 1994 Plant. Timber 10.00 1.00 0.00 20.00 10.00 1.00 0.00 20.00 1995 Dupont Suzhou 24.92 3.85 0.00 52.00 11.34 3.85 0.00 23.12 1995 Nantong Wanfu 5.63 2.41 0.00 0.00 0.00 0.00 0.00 0.00 1995 Newbridge Inv. 0.00 10.00 0.00 0.00 0.00 5.04 0.00 0.00 1995 Suzhou PVC 0.00 2.48 0.00 0.00 0.00 2.48 0.00 0.00 1996 Beijing Hormel 5.00 .50 0.00 5.50 1.00 .50 0.00 0.00 1996 Fairyoung Ports 0.00 4.98 0.00 0.00 0.00 4.98 0.00 0.00 1996 Jingyang 40.00 0.00 0.00 100.00 18.57 0.00 0.00 46.43 1996 Nanjing Kumho 16.00 3.81 0.00 45.50 7.59 3.81 0.00 21.57 1996 Weihai Weidongri 4.32 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Pending Commitments 1996 * CALTEX OCEAN 31.33 0.00 0.00 66.00 1996 * NANJING HUINING 4.00 0.00 0.00 0.00 1997 * NINGBO 0.00 2.00 0.00 0.00 1996 * SHANDONG SAND 17.00 0.00 0.00 25.00 1995 * SUZHOU PVC 14.10 0.00 0.00 15.80 1996 * TIANJIN 9.10 0.00 0.00 9.10 1996 * TIANJIN KUMHO 23.50 0.00 3.00 47.00 1996 * XIAMEN XIAN 10.00 0.00 0.00 0.00 -19- Schedule E Page 1 of 2 China at a glance POVERTY and SOCIAL East Low- China Asia income Development diamond Population mid-1995 (millions) 1,211 2 1,709 3,188 GNP per capita 1995 (US$) 620 830 460 Life expectancy GNP 1995 (billions US$) 751.0 1,418 1,466 Average annual growth, 1990-95 Population (%) 1.2 1.3 1.8 Labor force (%) 1.1 1.4 1 8 GNP Gross per - primary Most recent estimate (latest year available since 1989) capita enrollment Poverty: headcount index (% of population) 11 Urban population (% of total population) 30 31 29 Life expectancy at birth (years) 69 68 63 Infant mortality (per 1,000 live births) 29 36 58 Child malnutntion (% of children under 5) 17 17 38 Access to safe water Access to safe water (% of population) 83 77 75 Illiteracy (% of population age 15+) 19 17 34 Gross primary enrollment (% of school-age population) 118 117 105 China Low-income group Male 120 120 112 Female 116 116 98 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1975 1985 1994 1995 Economic ratios* GDP (billions USS) 160.3 304.9 540.9 697.6 Gross domestic investment/GDP 30.3 37.8 39.9 40.5 Exports of goods and non-factor services/GDP 5.2 9.9 22.0 21.0 Openness of economy Gross domestic savings/GDP 30 6 33.7 41.2 42.0 Gross national savings/GDP 306 34.0 41.2 40.5 Current account balance/GDP -0.2 -3.9 1.3 0.2 Interest payments/GDP . 02 0.7 07 Savings 4 Investment Total debt/GDP .. 55 186 169 Total debt service/exports .. 8.3 8.9 9.9 Present value of debtGDP .. 158 Present value of debtlexports . .. 68.5 I Indebtedness 1975-84 1986-95 1994 1995 1996-04 (average annual growth) GOP 7 7 9.6 12.6 10.5 B.5 __ GNP per capita 7.1 .0 11 7 9 76 China Low-income group Exports of goods and nfs 17.9 133 28.1 9.6 8.5 STRUCTURE of the ECONOM 1975 1985 1994 1995 Growth rates of output and investment (%) (% of GDP) Agriculture 32.0 28.4 20.3 206 25 Industry 428 43.1 48.0 48.4 20 Manufacturing 31.6 35 4 37.6 37.6 s Services 252 28.5 31 7 31.1 1 Private consumption 61.9 53.1 459 45.7 1 90 91 92 94 5S General govemment consumption 76 13.2 128 12.2 Imports of goods and non-factor services 50 140 206 194 00D -0-- GOP 1975-84 1985-95 1994 1995 Growth rates of exports and imports (%) (average annual growth) Agriculture 5.1 4.2 4.0 5.0 40 Industry 100 12.8 18.4 14.1 30 Manufacturing 13.1 123 18.4 13.3 20 Services 8.8 9.4 9.3 79 Is Pnvate consumption 73 8.3 9.7 63 o - -- -. - - - General govemment consumption 8.5 9.5 7.8 -10 91 92 5 4 95 Gross domestic investment 89 9.7 10.5 19.1 -20 Imports of goods and non-factor services 21.1 9.0 9.3 5.0 Gross national product 8.5 9.5 12.6 90 Exports Imports Note: 1995 data are preliminary estimates. The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete - 20 - Schedule E Page 2 of 2 China PRICES and GOVERNMENT FINANCE Domestic prices 1975 1985 1994 1995 Inflation (%) (% change) 25 Consumer prices 0.2 9.3 24.1 17 1 20 Implicit GDP deflator -0.9 10 1 19.5 13 1 1 10 Government finance 5 (% of GDP) 0 Current revenue - 255 120 11 6 90 91 92 93 94 95 Current budget balance .. 6.7 0.4 0 4 - GDP def ----CPI Overall surplus/deficit .. -0.5 -1 6 -1 6 TRADE (millions US$1975 1985 1994 1995 Export and import levels (mill. US$) Total exports (fob) .. 27,350 121,006 148,770 1o00oo Food .. 3,803 10,015 9,954 140000 Fuel . 7,132 4,069 5,335 120,000 Manufactures .. 13.522 101,298 127,283 100000 Total imports (cif) . 42,252 115,614 132,078 80000 Food .. 1,881 5,014 9,126 0000 Fuel and energy .. 172 4,035 5,127 o Capital goods .. 18,694 55,624 57,481 o Export price index (1987=100) .. 92 123 133 a9 90 91 92 03 94 5s Import price index (1987=100) .. 78 122 132 Exports it imports Terms of trade (1987=100) .. 118 101 101 BALANCE of PAYMENTS (millions US$) 1975 1985 1994 1995 Current account balance to GDP ratio (%) Exports of goods and non-factor services 7,828 28,163 118,811 142,000 4 Imports of goods and non-factor services 8,097 41,149 111,472 127,600 3 Resource balance -269 -12,986 7,339 14,400 Net factor income 0 932 -1,018 -14,300 Net current transfers 0 171 836 724 Current account balance, O 94 95 before official transfers -269 -11,883 7,157 824 -1 Financing items (net) .. 9,443 23,370 21,376 -2 Changes in net reserves .. 2,440 -30,527 -22,200 Memo: Reserves including gold (mill. US$) .. 13,214 53,560 75,760 Conversion rate (locaL/US$) 1.9 2 9 8 6 8 4 EXTERNAL DEBT and RESOURCE FLOWS 1975 1985 1994 1995 (millions US$) Composition of total debt, 1995 (mill. US$) Total debt outstanding and disbursed 0 16,696 100,457 118,090 IBRD 0 498 5,933 7,209 IDA 0 431 6,097 7,038 A 7209 G 22325 B 7038 Total debt service 0 2,478 11,135 15.065 IBRD 0 26 679 810 D 2055 IDA 0 4 50 63 E 19980 Composition of net resource flows Official grants 0 117 337 326 Official creditors 0 1,117 3,121 7,203 Private creditors 0 2,867 6,690 5,683 Foreign direct investment 0 1,659 33,787 38,000 Portfolio equity 0 0 3,915 2,807 F 59483 World Bank program Commitments 0 1,092 4,020 2,850 A - IBRD E - Bilateral Disbursements 0 565 2,063 2,269 B - IDA D - Other multilateral F - Pnvate Principal repayments 0 0 324 364 C - IMF G - Short-term Net flows 0 565 1,739 1,905 Interest payments 0 29 405 509 Net transfers 0 536 1,334 1,396 Intemational Economics Department 12/6/96 Note: The dollar estimate for China's GNP per capita is taken from the World Development Indicators and is a preliminary figure based on an on-going World Bank study of China's GDP. It was calculated to facilitate inter-country comparisons Official statistics are used as the basis for all other economic analysis contained in this document. IBRD 28662 70 \ 0' 100 - 110 120 30° RUSSIAN FEDERATION 50.. KAZAKSTAN ..r. 1 -" - Y/ -UZBEKISTAN O N G 0 1 1 A J.y K KYRGYZ Urum NE1 MONGOL - REPUBLIC i XINJIANG LIAONING- DEM. . - - Sea of PEOPLE's Japa v- REP. OF ~1-Inhof~KOREA3 -L GANSU7KR - EB B. H.i REP. OF ohuan un 0s ~ > KOREA d- -d -WHANXn NANDONG ~h I world Ba,k Grop QNGH I ANS 'tt,-n of ty SHAANX - SHANGHA -30-- -ICHefN 30 XIANG SCHUANHUBEl EWAysn - - -Hångz u Ch ,a ChängduG NEPAL \, ~ - 9 Chan- Nang HUNAN ChNAGUIZHOU FUANO Fuzhu NATIONAL RURAL WATER SUPPLY PROJECT 5 eb.iyani un9TA 1WA N SLYUN G(A X UANGDONG-- PROJECT COUNTIES -I - Guangzl,ou (D PROVINCE CAPITALS -ONanning - 1HONG KONG, U.K. NATIONAL CAPITAL ' MACAO, PORT 20' COUNTY (XIAN) BOUNDARIES VETNA 0 100 200 300 400 500MILES PROVINCE BOUNDARIES 0 20 400 60 8 KILOMETERS INTERNATIONAL BOUNDARIES -i-1 LAO PEOPLE'S ~ So uth Cn-~na 'DEM REP HINAN Sea THAILAND PHILIPPINES APRIL 1997 IMAGING Report No.: P 7089 CHA Type: MOMD