The project aims to help promote balanced and environmentally sustainable urbanization; narrow the urban-rural gap; and improve production, employment, and living conditions in small cities and towns in Liaoning Province. It will support the development of selected small cities and towns in the province. The project was processed as a sector loan to allow the Liaoning provincial government (LPG) to respond to rapidly changing needs of cities and towns across the province. The project includes about seven subprojects, including three core subprojects: Donggang City, Kazuo Mongolian Autonomous County, and Linghai City. Subsequent subprojects will be selected, prepared, and appraised during project implementation following an agreed set of criteria and procedures. The Donggang City core subproject has three components: (i) roads and bridge, and associated services;
(ii) drainage and wastewater treatment; and (iii) river improvement and area upgrading. The Kazuo Mongolian Autonomous County core subproject has one water supply component. The Linghai City core subproject has one component for construction and upgrading of roads, and associated services.
|Project Rationale and Linkage to Country/Regional Strategy
The PRC Government is committed to developing small cities and towns as a way to generate jobs, narrow the rural-urban income gap, and increase national economic productivity. Growth of small cities and towns creates economic opportunities for farmers to move to urban areas and gain higher value-added employment; this is the key to realizing the PRC's vision of a harmonious society, in which the benefits of growth will be shared more equitably. The PRC's 11th Five-Year Plan (11FYP) 2006-2010 identified small city and town development as a means to provide a higher standard of living to rural migrants without exacerbating infrastructure fatigue and other problems afflicting large cities. Building on the conclusions of the ADB-financed Town-Based Urbanization Strategy Study, the national town development policy calls for strengthening physical and economic linkages between major cities in metropolitan areas or development corridors and the smaller settlements at their periphery, and stresses the development of small cities and towns by facilitating the development of larger urban agglomerations.
Liaoning Province, located in the southern part of the PRC's northeast, functions as a major hub between the PRC's northeastern economic region and the Pan-Bohai economic region. Historically a base for industrial materials and machinery, it has faced economic challenges related to industrial restructuring moving from state-owned heavy industries to light and service industries to promote balanced development and focus on growth based on economic demand. Many state firms have closed or are experiencing major losses. While state investment has aided the industrial transformation, local governments, particularly small cities and towns, have had difficulty finding catalysts for new employment and economic growth. Small cities and towns in the province have made progress in recent years in facilitating economic growth, but still lag the big cities. The rapid development and race to urbanize and industrialize have left many with significant pollution problems and correspondingly poor living conditions, and outstripped the capacity to provide services. More jobs are also needed to stimulate growth driven by domestic demand instead of relying on exports. While many small cities and towns have made significant investments in different types of urban infrastructure, few have developed an integrated approach to the development of various infrastructure sectors. LPG is promoting the development of small cities and towns in a more coordinated and cost-effective manner by encouraging more sustainable investments in physical and environmental protection infrastructure to improve the quality of life and create conditions favorable for a strategic shift of the rural labor force.
The project is a direct response to Liaoning's 11FYP to promote sustainable economic development, particularly in its small cities and towns, via construction and upgrading of road infrastructure, water supply, and environmental improvement. All components in the project are integral components of the 11FYP. The proposed subprojects focus on supporting sustainable urban development and comprise a number of sector interventions primarily targeted to support job creation, economic growth, environmental protection, improvement of infrastructure and municipal services, and industrial development, to address key infrastructure sector issues in the subproject cities and towns. The main sectors are roads and associated services, water and wastewater, solid waste management, river improvement and area upgrading, and district heating. ADB's experience and knowledge in urban environmental improvement and management, including supporting utility tariff reforms, will add value to the Project, especially for small cities and towns undergoing urbanization and economic transformation.
To allow greater flexibility during project implementation, the project uses a sector loan approach and develops subproject identification, selection, and appraisal criteria and procedures to achieve the objectives of sector policies and plans.