Evaluation

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Country Assistance Program Evaluation for the People's Republic of China
Completed 1998

The country assistance program evaluation (CAPE) for the People's Republic of China (PRC) is ADB's first evaluation of an overall country assistance plan (CAP). It covers ADB's assistance program to PRC from 1987 to 1997.

The CAPE assesses the relevance of ADB's strategy with respect to the needs of the PRC and the constraints that narrow the choice of operational options. Against this backdrop, the CAPE examines the efficacy and effectiveness of ADB lending and technical assistance (TA) operations.

During their formative years (1986-1990), ADB operations in the PRC were guided by the Government's intention to borrow mainly for industrial development. The early projects were generally located in the more developed eastern coastal region. Over the years, as a result of dialogue between the ADB and the PRC, the lending program has become more diversified in terms of sectors as well as regions.

  Overall Assessment

The planning frameworks of ADB and the PRC have not been fully aligned and the dichotomy in their perspectives has rendered strategy formulation a complex task. The PRC authorities do not agree with ADB's project classification in which 'growth' and 'poverty' are mutually exclusive categories. The Government's insistence that executing agencies be responsible for loan repayment has significantly limited the choice of sectors for ADB lending and lending modalities.

This requirement, coupled with PRC's lack of access to Asian Development Fund (ADF) resources, has precluded ADB involvement in sectors such as health, education, and direct poverty reduction. Projects in these areas are not revenue generating and require support from the budget.

In terms of achieving the strategic objectives of improving economic efficiency, reducing poverty, and protecting the environment (as outlined in ADB's Country Operational Strategies [COS] for 1991 and 1997), the conclusions of the CAPE are summarized below:

• ADB did not make a major contribution to strategic reforms in the financial sector or in the area of enterprise reform. Reforms in these two key areas are a necessary pre-requisite to achieving macroeconomic efficiency improvements in the PRC economy.



• None of the loans approved from 1991 to 1997 had poverty alleviation as a primary objective. This was a result of PRC's lack of access to ADF resources. However, eight of the projects, mostly in the agriculture sector, had poverty alleviation as a secondary objective. Given the ADF constraints, this was a reasonable compromise between the positions of ADB and the Government.



• Substantial progress was achieved towards the objective of environmental improvement.

For TA operations, the areas of success have been the environment sector, fiscal sector, and private sector development. TA designed to support enterprise and financial sector reforms have experienced more mixed performance. The TA program was found to be too diverse and incoherent to achieve strategic objectives.

  Lessons for the Future

• The COS documents should be made more operational and should provide a better basis for success evaluation. The CAP documents should in turn reflect more fully the strategic directions of proposed operations. The linkage between the COS and CAP needs to be further strengthened. In defining the strategic objectives, there should be frank discussion with PRC authorities as to their feasibility in view of ADB's constraints and the PRC policies.
  
  
• There is a need to realistically assess the constraints faced by ADB operations in the PRC and resolve the differences of views between ADB and the PRC. Operations should focus more sharply on specific and strategic issues where ADB has a comparative advantage, for example, the environment and fiscal policy reform areas.
  
  
• ADB should aim to identify niches for itself, taking into account its limited resources and staff constraints, rather than trying to meet the PRC's needs over a wide spectrum.
  
  
• the Government has not made much headway in tapping some of the considerable wealth created by public investments in new or upgraded public roads and other transport facilities, which have increased the value of nearby privately owned land.
  
  
• ADB should pursue active policy dialogue with the PRC planning authorities and enable ADB's involvement in the early project formulation phase rather than at the post-feasibility study stage.
  
  
• TA resources can be very effective instruments to bring about capacity building and policy reforms. The ways and means of using ADB's TA resources more effectively should be considered more fully in COS and CAP documents.