Regions and Countries

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p. 3 of 4 BACK | NEXT I. Current Development Trends and Issues II. Implementation of the Country Strategy and Program III. Portfolio Management Issues IV. Country Performance and Assistance Level

Country Strategy and Program Update 2003-2005: People's Republic of China

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III. Portfolio Management Issues

A. Portfolio Performance

27. The 2002 Country Portfolio Review noted that ADB’s PRC portfolio continued to perform well on account of the PRC’s strong project implementation capability. In 2001, “at risk” projects constituted only 4.2% of the 48 ongoing loans, a share that is one of the lowest among ADB member countries (Appendix 1, Table A1.6). Compared to that of other ADB member countries, portfolio performance of the PRC was significantly better in terms of contract awards, disbursements, and project implementation indicators. The disbursement ratio improved from

22.8% in 2000 to 29.8% in 2001, while the contract award ratio, at 22.1%, was higher than the ADB average of 14.9%. However, there was some decline in performance in loan start-up indicators and submission of audited project accounts and financial statements. Substantial loan savings and cancellations are key portfolio issues, which are being reviewed by an ADB-PRC Working Group. Several proposed measures in the Joint 2000 PRC-ADB Action Plan to improve portfolio performance were implemented in 2001. PRCM carried out procurement reviews of two selected projects (transport and energy), a study on road sector portfolio performance, and a study on ways to harmonize the Government and ADB approval procedures to minimize project start-up delays. With the completion of the staffing and training phase, plans have been drawn up to delegate projects to PRCM for administration.

B. Performance Monitoring and Evaluation

28. Since the last CSP update, ADB has evaluated two more PRC project loans that were rated as successful with sustainable benefits.⁸ The evaluation report for the Heilongjiang Expressway Project recommended that highway design features should be reviewed more rigorously during appraisal and implementation to promptly address any technical and safety design deficiencies. A clear basis for monitoring and evaluating benefits should also be established. The evaluation of the Guangdong Tropical Crops Development Project concluded that the comparative advantage of agricultural crops must be adequately analyzed and the impact of policy changes, such as subsidies, on their financial viability carefully assessed.

29. The joint evaluation in 2001 of six ADTAs for urban development concluded that lessons from the first two unsuccessful TAs were used to improve selection and design of four successful TAs⁹ that focused on areas where ADB has a comparative advantage, such as water supply and sanitation. Improved data collection, dissemination of TA results, and TA supervision now benefit project preparation. An evaluation study on ADB¹⁰ investment fund operations in several countries, including the PRC, concluded that development impacts can be maximized if the fund managers have a good understanding of the regulatory and cultural environment, exercise professionalism in appraisal and risk management, and participate actively in project management.

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