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Project Overview

Background

The PRC economy grew rapidly during the past decade, averaging around 10% per annum, and is expected to continue growing rapidly in the foreseeable future. Despite this good progress, the Government's fight against poverty is far from over. Average gross domestic product (GDP) per capita is about $1,000. Living standards of millions of people in rural and urban areas, particularly in the western region, must be raised.

Economic growth has resulted in increasing traffic volume. The motor vehicle fleet is growing at 15-30% per annum, creating a huge demand for more road space. In 2001 the vehicle fleet totaled 15.5 million trucks, cars, and buses; and 46.5 million other motorized vehicles. The privately owned fleet of motor vehicles increased more than 30 times in 1985-2002, from 300,000 vehicles to 10 million. In 1990-2000 road traffic grew at 9.7% per annum for passenger traffic, and 5.9% per annum for freight. In 2001 road traffic accounted for 54.8% of the total passenger traffic. Given the PRC's rapid economic growth, low vehicle ownership rates, increased automobile manufacturing capacity, lower car prices as tariff barriers fell after World Trade Organization accession, and increasing access to loans to finance automobile purchases, the vehicle fleet is expected to continue to grow rapidly in the coming years.

Rural PRC needs a good road network to grow and prosper. The poor have limited mobility beyond their immediate communities because of geographic isolation and the high cost of motorized transport. As a result, the poor view roads as the key infrastructure needed to accelerate socioeconomic development, improve quality of life, create jobs, bring in stable income, and provide access to social services.

The economy's changing structure and increasing diversification have altered transport demand. Demand for road transport has risen faster than that for other transport modes. To meet the growing demand for improved access to markets and services, the Government has made major efforts to increase road capacity. Roads are classified into expressways, and local (classes I-IV) and unclassified roads. The backbone of the network is the NTHS, a 35,000-kilometer (km) system of interprovincial expressways and high-class highways to be constructed by 2010. Village and farm roads, which are normally either class IV or unclassified, are the lowest level of the network. In 2000 the Government adopted the Western Region Development Strategy to enhance economic development where most of the poor reside, and gives high priority to the road sector to promote economic growth and reduce poverty.

Actions

To remove major transport bottlenecks, the Government implemented a large investment program of the road sector, totaling CNY924 billion during 1996-2000, compared with CNY242 billion during 1991-1995. The road network grew from 1.16 million km in 1995 to 1.76 million km in 2002, and expressways increased from 2,141 km to 25,200 km. The second stage of the road development program (2003-2020) will increase the network to over 3 million km, or 68,000 km annually. Expressways will increase to 70,000 km, or 2,650 km annually. In 2003 the Government launched 5,300 rural road projects, covering 78,000 km and costing CNY78 billion.

Constraints

Despite the huge amount of investment, the PRC's road transport network has many weaknesses, which are particularly evident in the poor rural western areas. Roads and traffic management fall under the responsibility of various agencies. Information is not coordinated or exchanged. Expressways and class-I highways account for 3% of the total road network, and class-2 highways for 11%. About 70% of the county and township roads are gravel or earth roads; 340 townships and 67,000 villages have no road connection. Public transport services (buses) are unavailable in 1,000 townships and 160,000 villages, most of which are in the western region . Expressways are built on the outskirts of key urban areas but connections to the city center are insufficient. Roads without adequate traffic signals, signs, or markings constitute about 86% of the total network. Domestic market development has been hindered by the lack of transport integration and high logistics costs. For example, transporting grapes from Sichuan Province to Beijing costs more than importing them from Chile.

Rapid traffic growth has increased road network congestion and the number of road accidents. In 2003, 667,507 road accidents caused 104,372 fatalities, or 1 fatality every 5 minutes-the highest rate in the world. Without appropriate measures, fatalities could reach 200,000 per annum by 2010. Economic losses from accidents are 1-3% of GDP per annum. A disproportionate number of fatalities are the poor, usually pedestrians, nonmotorized transport users, and public bus users.

Purpose

The TA aims to improve planning of road network investments and operations in the PRC, which will benefit the poor and increase overall economic benefits from road network investments through better linkage between local roads and NTHS. In view of the tremendous growth expected and current obstacles , the TA will help the Government prepare a road network strategy that promotes, in an integrated manner, expressways and local roads to meet communities' needs and support economic growth. The TA will provide road agencies with the cross-disciplinary skills and tools to incorporate poverty- and stakeholder-related issues in various stages of road project planning, implementation, and operation.

Cost and Financing

The total cost of the TA is estimated at $1.4 million equivalent, comprising $631,700 of foreign exchange cost and $768,300 equivalent of local currency cost. ADB will provide $1 million equivalent to cover the entire foreign exchange cost and a portion of the local currency cost amounting to $368,300 equivalent. The TA will be financed on a grant basis from the Poverty Reduction Cooperation Fund and administered by ADB. Government will finance the remaining $400,000 equivalent to cover the costs of office accommodation and support services, communications, local transport, office supply, and other facilities and services required to implement the TA.

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