| Project Rationale and Linkage to Country/Regional Strategy |
Located in northeast PRC, Liaoning Province's economic base is transitioning from state-owned heavy industries to light and service industries. State investment is aiding this transformation, but cities are finding it more difficult to harness employment opportunities and economic growth. Moreover, planners expect 85% of central Liaoning Province's population to be urbanized by 2020, largely through rural-urban migration. In the coming decade, the demands of tens of millions of rural migrants for urban infrastructure, municipal services, and employment, must be satisfied. Although Liaoning's key central townships have made substantial progress in facilitating economic growth, assistance is needed to combat heavy pollution, poor living conditions, inadequate public services, and comparatively high unemployment. Recognizing that current urbanization trends will place excessive pressure on the provincial capital of Shenyang, the Liaoning provincial government (LPG) intends facilitating urbanization of key central townships, by strengthening their infrastructure to support higher populations. Reflecting Asian Development Bank (ADB) advice , the Liaoning Urbanization Strategy and the Central Liaoning Cluster Development Strategy will support the Shenyang Metropolitan Area: State Pilot Zone for Coordinating New Industrialization Reforms. The Shenyang metropolitan area comprises eight cities and is a national pilot zone for revitalizing northeast PRC's industrial base. The concept is "one core, five corridors, and ten clusters". One core refers to the Shenyang economic zone, which will focus on supporting regionally-focused high-technology industries. New economic zones will be established along five converging, inter-city connection corridors. Ten industrial cluster pilot zones will be developed within the five corridors. The pilot is intended to inform regional development in the PRC, promote regional cooperation with northeast Asian countries, and support sustainable industrial transformation in line with the PRC's circular economy approach (reduce, reuse, recycle). This project will build on ADB's Liaoning small cities and towns project and is intended to demonstrate clustered urban agglomeration and integrated rural-urban development while incorporating environmental and social considerations in planning and development. The proposed project reflects two early lessons from the ongoing project. First, a project rather than a sector approach will be taken in recognition of constraints imposed by domestic procedures. Second, the selection of participating towns will be more tightly driven by clustering considerations. Further lessons will be identified and incorporated during implementation of the project preparatory technical assistance (PPTA). Issues for key central townships include poor infrastructure, severe pollution, significant poverty levels, non-integrated development management, and rural migrants with mismatched employment skills. The project aims to address these issues through interventions to support economic growth, environmental protection, infrastructure improvement, and rural-urban transition support. The main project components are water and wastewater, roads and associated services, district heating, and rural-urban transition support. Inadequate public transportation and central heating supply contribute to gender inequities in the burden of household work. To maximize project benefits, women will be given priority in employment and training opportunities during the project construction and operation phases. Environmental benefits are expected to include (i) improved water quality due to expanded wastewater treatment; and (ii) improved air quality through reduced traffic emissions and as inefficient coal-fired heating boilers and home heating stoves are abandoned. LPG is selecting participating key central townships through a competitive process. Selection considerations include (i) consistency with planning objectives, including being located in the central Liaoning urban cluster; (ii) ability to yield significant socioeconomic, environmental and financial benefits; (iii) status of preparatory activities; (iv) financial and institutional implementation capacity, including counterpart funds and loan-servicing capacity; (v) consistency of implementation timeframes; and (vi) non-participation in the ongoing project. The selection is expected to be completed prior to mobilization of the PPTA consultants. The project is consistent with the PRC's 11th Five-Year Plan (FYP) 2006-2010, which is promoting city development to provide higher living standards for rural migrants. Moreover, the ADB-financed Town-Based Urbanization Strategy Study, underpinned the PRC's national town development policy which calls for stronger linkages between major cities and peripheral settlements. The 12th FYP 2011-2015 is expected to further reinforce these directions. Recognizing ADB's commitment to private sector development, opportunities for private sector participation will be explored during project design. The project is aligned with ADB's Country Partnership Strategy for the PRC and conforms to ADB's Water Policy and Water Financing Program. It is consistent with ADB's urban sector strategy and the PRC's urbanization strategy which support rural-urban integration, infrastructure investments in settlements that are dynamic growth engines and sources of social services, and economic growth rebalancing. It also supports ADB's Climate Change Program , through reduced vehicle emissions per trip, enhanced water resources management, and reduced greenhouse gas emissions from coal-fired heating boilers. ADB's Sustainable Transport Initiative will inform the design of urban road components and related institutional and capacity development assistance, for instance through support to improve public transport. |