Countries and Regions

	Table of Contents
p. 12 of 21 BACK | NEXT I. Country Performance Assessment II. Country Operational Strategy III. Sector Strategies A. Agriculture B. Infrastructure C. Social Infrastructure and Environment D. Governance Dimensions of ADB Operations E. Gender Dimensions of ADB Operations F. Private Sector Operations IV. Subregional Economic Cooperation V. Donor Activities and Aid Coordination VI. Cofinancing and Catalyzing External Resources VII. ADB’s Operational Program VIII. Economic and Sector Work Program IX. Local Cost Financing

Country Assistance Plans - People's Republic of China : III. Sector Strategies

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C. Social Infrastructure and Environment

1. Urban Development

76. The ADB’s operational strategy for the water supply and urban development sectors aims to (i) address urban environmental problems; (ii) reduce existing bottlenecks that increase transaction and production costs and hamper the growth of the industry and service sectors; and (iii) improve urban living standards and health safety particularly for low income groups. The Urban Poverty Study that was approved recently will help to understand the various facets of urban poverty in PRC. ADB’s involvement in the urban sector will focus on refining and promoting market-oriented reforms to enhance their operational efficiency. Important principles of ADB operations will be to promote the principle of cost recovery through user charges and encouragement of private sector involvement. To address urban environmental problems and prevent contamination of drinking water, ADB will focus on reducing infrastructure bottlenecks in water supply, wastewater treatment, solid waste, and air pollution in order to rehabilitate urban residential districts and improve water quality/health safety. ADB will encourage private sector involvement throughout the water supply chain including wastewater treatment, solid waste management, water supply and distribution and thus improve the quality of water delivered to all urban income groups.

77. To address urban environmental problems, ADB encourages the use of market-based instruments for environmental management including tradable permits. ADB had a major impact on the level structure and calculation of water tariffs¹³ by assisting the Government in preparing the first ever National Guidelines for Water Tariffs (NGOWT) which was promulgated in September 1998. A second water tariff study¹⁴ is underway to help implement the NGOWT in selected case study cities. During the program period ADB’s urban policy dialogue will be broadened by undertaking work related to urban solid waste, wastewater management and the financial strengthening of water utilities.

78. The pressure on urban infrastructure and urban environmental problems are most evident in the rapidly growing coastal region. Therefore, the PRC Country Operational Strategy provides for ADB to help address such problems in cities on the east coast. ADB will also promote urban investments in the poorer inland provinces which would complement the Government’s “go west” strategy. However, the fiscal and managerial capacities in interior cities are generally weaker than along the coastal region. These factors will be carefully assessed and mitigated in project design to ensure good project quality. The Program includes projects for water supply, urban environment management, wastewater treatment, and capacity building. The project areas include Heilongjiang (Mudanjiang and Harbin) for water supply, Beijing, and Hebei Province, for small and medium cities development, Wuhan, Hebei, and Inner Mongolia (Hohhot and Baotou) for wastewater treatment. The work financed under the environmental cluster TA for Trans-Jurisdictional Environment Management will provide policy support for the water supply/waste water treatment projects included in the program.

2. Environment

79. ADB’s strategic thrusts in PRC’s environment sector include (i) improving the policy, legal and regulatory and management system; (ii) building institutional capacity; (iii) improving air and water quality; (iv) promoting cleaner technologies and (v) promoting sustainable and efficient practices in agriculture and natural resources utilization. ADB’s support for environmental activities in PRC has been closely aligned with Agenda 21, NFYP and the probable focus on environment under TYFP. ADB is a member of the China Council for International Cooperation on Environment and Development. Environmental initiatives in the Program are TA cluster for Trans-Jurisdictional Environment Management, Strengthening Industrial Compliance with Environmental Standards and Environmental and Natural Resources Accounting. ADB loans and/or TAs will address priority areas such as water pollution control for some major river basins and air and water pollution control in major cities and desertification. Ten of the 29 projects in the lending program address environment as a crosscutting concern.

80. Nearly one-fourth of ADB technical assistance in the 2001-2003 program will support broadly defined environmental interventions. ADB has assisted SEPA in building its institutional capacity through several projects, notably in developing the guidelines on environmental impact assessment (EIA) and training staff in EIA procedures. ADB is also assisting in the development of capacity in other sectoral agencies with environmental responsibilities and management functions (i.e., NPC-Environmental Protection Committee; State Development Planning Commission; Ministry of Science and Technology) and promoting clean production technology. ADB has broadened its environmental policy dialogue to cover the use of market–based instruments and tradable permits, strategic environmental assessments for region-based development initiatives in the poorer western provinces, and for environment compliance issues related to WTO accession.

81. The loan and TA program include several soil and water conservation projects that will contribute strongly towards easing poverty through reducing the risks of environmental degradation to poor communities (e.g. Ningxia Shapoutou Water; Resources and Irrigation; Fujian Soil Conservation and Rural Development II; Integrated Ecosystem Management Project in Northern Areas. In line with the Government’s request for ADB to take a major role in mobilizing GEF for land degradation and biodiversity conservation, ADB is working with the Government to identify appropriate projects to develop a pipeline of GEF eligible projects or adding GEF components to projects in the pipeline (e.g., Songhua River Basin Flood Management, Wetlands and Biodiversity Management; Yunnan Comprehensive Agricultural Development; Efficient Utilization of Agricultural Wastes for Sustainable Rural Development). These activities will allow ADB to broader its activities to address “green side” environmental issues, consistent with the recommendations in the CAPE.

82. Air and water pollution that directly impacts on the livelihood and health of the urban poor living close to polluting industries or using polluted water. ADB also addresses such as “brown side” issues in the Program by including projects that will improve water quality (e.g. Hebei Hai and Luan River Development) and curb air pollution directly or indirectly in targeted area (e.g. Acid Rain Control and Environmental Improvements).

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