ADB Extends $100 Million to Cut Urban-Rural Inequality in PRC's Chongqing

News Release | 1 July 2010

MANILA, PHILIPPINES - The Asian Development Bank (ADB) is extending a $100 million loan for rural infrastructure improvement projects in Chongqing municipality in the People's Republic of China (PRC) that will reduce the income gap between urban and rural areas and provide a potential model for national replication.

ADB's Board of Directors has approved the Chongqing Urban-Rural Infrastructure Development Demonstration Project. It will provide new and improved roads and potable water supplies, resulting in improved health and expanded livelihood opportunities for about 377,000 people in eight poverty-stricken districts and counties.

"This planned urban-rural transformation will make Chongqing an important growth pole in western PRC and will allow the municipality to become the first provincial pilot area for integrated and equitable urban-rural development," said Theresa Villareal, Senior Urban Development Specialist in ADB's East Asia Department.

Chongqing's rural areas, particularly the Three Gorges Reservoir catchment area in the northeast and the ethnic minority areas in the southeast, suffer from poor infrastructure, with just 75% of villages accessible by road, and many communities suffering water shortages, or having limited access to safe, potable water.

The project will build or renovate around 362 kilometers of roads, and construct and improve nine water supply facilities, including treatment plants and pipelines. The road rehabilitation is especially critical after the Sichuan earthquake in May 2008, which underscored the need to improve road access during natural calamities.

The project will provide training for staff carrying out operation and maintenance work, and support innovative measures such as water tariff reforms to ensure cost-effective services for the poor and climate-proof designs for roads that incorporate drainage, erosion control, and slope protection.

"In addition, a pilot demonstration activity grant of $50,000 will be provided to a women's federation to support and expand a health and hygiene program, benefiting women and children in four villages of Yunyang and Youyang counties, including four schools with 2,300 students," said Ms. Villareal.

ADB's Ordinary Capital Resources loan covers about 47% of the total project cost of $213.4 million. The loan has a 25-year term, including a grace period of 5 years, with interest determined in accordance with ADB's LIBOR-based lending facility. District and county governments will provide the balance of the funds.

Chongqing Municipal Government is the executing agency for the project, which is due for completion in December 2015.