The Asian Development Bank (ADB) said Monday that it had granted China a technical assistance of 750,000 US dollars to help develop a town-based urbanization strategy.

The ADB said in a statement that the technical assistance would be used to research patterns of urban settlement that contribute to efficient growth, poverty reduction and improved urban environmental quality.

With the grant, the Chinese government will finish case studies on two provinces with different histories and patterns of urbanization, an analysis of problems in applying national and provincial town development policies, and recommendations based on international best practices in April 2005, the ADB said.

According to the bank, the Chinese government sees urbanization as a way to reduce inequalities in income opportunities between urban and rural areas and to sustain the country's transition to a market economy.

To manage the transition, the government tries to channel population movements away from large cities toward smaller settlements such as towns instead.

"The urbanization strategy for China should identify towns with development potential and determine how different types of towns can help achieve national and provincial economic development objectives," said Amy Leung, Social Sector Unit Head of ADB's Resident Mission in China.

She also noted that town development requires sound fiscal management and strong support from the private sector because of the large amount of capital investment it needs.

Environmental regulations also have to be implemented effectively to control possible environmental problems, such as those related to waste water collection and treatment, solid waste disposal, and pollution air from new industries, she added.

"Without a regional approach to guide the development of smaller centers within an urban region, the trends can lead to uncontrolled sprawl and extensive environmental pollution," says Leung.