China, People's Republic of : Heilongjiang Coal-Rich Cities Redevelopment Project

Multisector / ADB's corporate management, policy and strategy development

The project will continue ADB''s long-term partnership with Heilongjiang Provincial Government and take a strategic, holistic, and long-term approach to further develop and implement the Transformation Development Plan of Coal Cities in Heilongjiang (2014-2020), establishing a non-coal economic base, i.e., green food, pharmaceutical, renewable energy, and high-tech industries. The project will also contribute to the Songhua River Basin Water Pollution Control and Management Project by river rehabilitation and wastewater treatment along tributaries to the Songhua River.

The indicative project impacts are revitalized economy of East Heilongjiang subregion with non-coal industries in the cities of Hegang, Jixi, Qitaihe, and Shuangyashan; improved East

Heilongjiang smart city cluster cooperation; and improved living environment, safety, and public health in the cities of Hegang, Jixi, Qitaihe, and Shuangyashan. The indicative project outcome is improved enabling environment for non-coal economic and industrial transformation.

The project is expected to have four outputs: (i) key infrastructure and systems facilitating non-coal industrial transformation in the project cities improved; (ii) remediation and environmental cleanup of impacts from coal mining in the project cities improved; (iii) integrated basic urban infrastructure and services in the project cities improved; and (iv) capacity in project cities developed in areas of (a) economic diagnostic study and strategy, non-coal industry development planning, and smart city cluster cooperation; (b) prioritized investment program preparation; (c) project planning and management; (d) mining remediation management and environment cleanup; (e) labor force assessment and planning; and (f) infrastructure and services delivered through public-private partnerships.

The cities of Hegang, Jixi, Qitaihe, and Shuangyashan (project cities) are located in the east of Heilongjiang Province in the northeast of the People's Republic of China (PRC), bordering the Russian Federation to the east and to the north. The total combined population is 5.4 million with urban populations of 870,000 (Hegang); 1,180,000 (Jixi); 540,000 (Qitaihe); and 960,000 (Shuangyashan). The East Heilongjiang subregion and the four project cities have been an important coal base and electricity production hub delivering a cumulative total of more than 3.2 billion tons of coal to the country's economy. However, Heilongjiang and the project cities face serious economic decline and population loss due to severe price cuts of coal and changes in the PRC's energy and climate policy, with reduced revenues in these coal mining dependent economies. Urban poverty has become serious with declining wages combined with poor and unsanitary living conditions due to lack of proper urban infrastructure and services.

The project cities suffer from pollution of soil, water, and air caused by coal mining over the last 60 years. Risks to safety, health, and environment from mining impacts include (i)

geohazard risk of subsidence from below-grade mining; (ii) waste rock dumpsites that wash out toxic heavy metals into soil, and ground and surface water; and (iii) carcinogenic dust particles that pollute the air. Substantial funding for monitoring of contamination levels and various physical remediation measures is needed. Many rivers are polluted with sediments from mining, industries, and households that discharge untreated wastewater, and from chemical fertilizers and pesticides used in agriculture. Some rivers overflow and cause floods during heavy storms and snow melt in the spring. The combination of inadequate infrastructure and environmental pollution compromise urban livability and pose serious risks to human safety and health.

There is an urgent need to revitalize and transform the economy towards a sustainable non-coal future through (i) strategic planning for non-coal industries and key investments that

facilitate private investments in non-coal jobs; (ii) environmental cleanup and remediation of impacts from mining (not supporting mining itself); (iii) urban infrastructure, services, and

environmental improvement that help attract and retain modern companies and qualified workers; and (iv) capacity development to plan and implement a strengthened subregion as

smart, inclusive, competitive, and green East Heilongjiang Smart City Cluster with educated and skilled workers. Without the project, the economy will continue to decline, environmental safety and living conditions will worsen, and chances for improvements and investments will dwindle.

Through its strategic and holistic approach, the proposed project will support the (i) PRC's National New-Type Urbanization Plan (20142020), (ii) 13th five-year plans of Heilongjiang and project cities, (iii) Heilongjiang Provincial Government Master Plan for Economic Development (2014-2020), and (iv) urban and economic development master plans of the project cities. The proposed project is included as a standby for 2017 in the country operations business plan of the Asian Development Bank for the People's Republic of China and is aligned with (i) Strategy 2020 Midterm Review; (ii) upcoming country partnership strategy for the PRC, 2016-2020, supporting socially inclusive, environmentally sustainable, and economically

competitive development; and (iii) urban, water, and environment operational plans/directions.