East Asia

In East Asia, the thematic priorities of ADB’s program are to diversify operations to promote inclusiveness and improve the environment; meet client needs and expectations for quality knowledge products through new ideas and approaches and their better dissemination; actively participate in the Central Asia Regional Economic Cooperation and Greater Mekong Subregion (GMS) programs, and expand cooperation to regional public goods and other new initiatives in line with ADB’s new regional cooperation and integration strategy; and explore opportunities to catalyze funds and add value through private–public partnership operations and private sector transactions. ADB aims to continue the diversification of its People’s Republic of China (PRC) program beyond transport to agriculture and natural resources management, urban development and environmental management, and energy conservation. ADB’s Mongolia program is exploring assistance to address urgent problems in natural resources management, and promote private sector development including through expanding or replicating successful pilot projects financed by the Japan Fund for Poverty Reduction and other bilateral sources. Regional cooperation with neighboring countries—particularly the PRC—is receiving greater attention to leverage the significant investments Mongolia is making to develop its regional road network.

A multitranche financing facility is being pilot-tested in the PRC energy sector, and new approaches for energy conservation are being developed. ADB’s public sector operations are exploring avenues to promote private–public partnerships as in the Nanjing Qinhuai River Environmental Improvement Project in the PRC and introduce new approaches and innovative instruments.

ADB approved 13 sovereign loans amounting to $1.6 billion for the PRC and Mongolia (Table 13, Figure 3). The program included a multitranche financing facility project for the PRC’s Gansu Heihe Rural Hydropower Development Investment Program for $50.0 million. The first tranche of this facility is $22.0 million. In Mongolia, a customs modernization project is cofinanced with $0.5 million in grant funds from the Korea e-Asia and Knowledge Partnership Fund. ADB also provided $180.0 million in assistance to the private sector in the PRC including equity investments and B-loans. The nonlending program for the two countries included 31 technical assistance projects (including 2 supplementary technical assistance approvals) for $16.0 million. Of these, 15 ($8.7 million) were for project preparation and 16 were for advisory technical assistance($7.3 million). One Japan Fund for Poverty Reduction project for $1.0 million was processed for Mongolia to impart nonformal skills training to unemployed youth and poor adults. Cumulative lending for the region amounted to $18.6 billion (Table 14).

ADB is pursuing a more focused approach to producing and disseminating knowledge products by mainstreaming knowledge management into technical assistance and loans. The objective is to incorporate knowledge products into all loan and technical assistance operations to add value to ADB’s operations. This is considered essential and operationally relevant, particularly in the PRC, which is seeking high-quality international know-how and advice on good management practices. ADB has set up a knowledge management unit in its East Asia Department under senior staff supervision and is building a knowledge network. A knowledge management plan is being developed. ADB established a knowledge network on climate change in the PRC’s Tsinghua University.

Regional Cooperation

In line with the second medium-term strategy’s priorities and the regional cooperation and integration strategy, active support is being provided for the PRC’s participation in the GMS and Central Asia Regional Economic Cooperation programs, and Mongolia’s participation in the latter, particularly in cross-border infrastructure connections and trade facilitation that cover the PRC and Mongolia. The PRC hosted two senior officials’ meetings and the Fifth Ministerial Conference on Central Asia Regional Economic Cooperation in Urumqi, Xinjiang Uygur Autonomous Region. ADB provided technical support to help the PRC organize an in-country consultation workshop that brought together key decision makers from government agencies for in-depth discussions of issues related to regional cooperation. ADB also supported the inaugural forum of the Beibu Regional Economic Cooperation Program to promote regional cooperation between the PRC’s Guangxi Zhuang Autonomous Region and the Association of Southeast Asian Nations (ASEAN) and the GMS.

ADB is facilitating a number of cooperation initiatives between the PRC and Mongolia under a regional technical assistance project covering transport, trade facilitation, and capacity building for participation in regional cooperation.

Another approved regional technical assistance project on subregional cooperation in Northeast Asia focuses on mitigating transboundary air pollution from coal-fired power plants. The project’s major outputs will include closer environmental cooperation among countries of Northeast Asia on transboundary air pollution, increased technical capacity and knowledge transfer on prevention and management of transboundary pollution, and greater capacity for management of coal-fired power plant emissions in Mongolia.

Portfolio Management

A strong focus on portfolio management continued to yield good performance in the region. Portfolio quality continued to be relatively satisfactory; 2 of the 65 ongoing loans to the region were at risk (3.1%). The disbursement performance was also good, with $1 billion disbursed. Contract awards were $786.1 million. To improve project administration, the role of resident missions was strengthened through increased delegation of projects. Six additional loans were delegated to the PRC Resident Mission and one loan to the Mongolia Resident Mission. To further streamline project administration, the PRC Resident Mission assumed full disbursement functions for all loans it administers. Technical assistance administration improved significantly. Several technical assistance projects were financially closed and savings realized to augment the scarce resources.

Portfolio performance in the PRC continued to be good with only one project (2.1% of the portfolio) at risk. Disbursements (all for projects) totaled $984.8 million.

For Mongolia, contract awards totaled $52.5 million. Disbursements amounted to $28.6 million (Table 15).