WB to offer up to 1.5 billion USD loans annually to China in coming 5 years

The World Bank has promised in its new China strategy to lend up to 1.5 billion US dollars in loans to China annually during 2006 and 2010 through the International Bank for Reconstruction and Development, the bank said in a statement.

About 70 percent of the proposed projects using the loans will be in China's poorer inland provinces, the bank's China office said in a statement on its newly-endorsed China strategy for the five years.

According to the strategy approved last week by the World Bank, the bank will help China integrate itself into the world economy, address poverty and inequality, manage resource scarcities and environmental challenges during 2006 and 2010, according to the statement.

It will also help China strengthen the financial sector, and improve public and market institutions,.

World Bank President Paul Wolfowitz said the new strategy recognizes that helping China strengthen its economy, manage its resources and environment, and improve governance, are "important not only for the Chinese people but also for people all over the world."

China has grown rapidly since 1978, when it began to reform. Over the past 27 years, it has shifted from a centrally-planned to a market economy, maintained an average economic growth rate of about 9 percent per year, and lifted 400 million people out of poverty, the bank said.

Considerable progress has also been made in implementing the structural reform agenda and achieving the commitments made during China's accession to the World Trade Organization (WTO) in 2001. With a population of 1.3 billion, China recently became the world's fourth largest economy and third largest trading nation, it said.

Yet China remains a developing country, with its per capita gross domestic product at about 1,740 US dollars and more than 135 million people living on less than 1 US dollar a day -- mostly in rural areas in the lagging inland provinces, the bank said.

China also faces daunting challenges in maintaining rapid growth; managing the resource demands and environmental consequences of growth; and addressing the resulting inequalities in income and opportunity, which could otherwise undermine the consensus needed to undertake growth-oriented policy reforms, the bank said.

The bank said the strategy aims to support China in addressing these challenges.

The bank will help China deepen its participation in multilateral economic institutions, reduce internal and external barriers to trade and investment, and contribute to its overseas development efforts in order to help integrate China into the world economy.

To reduce poverty, inequality and social exclusion in China, the bank will join hands with China in promoting balanced urbanization, sustaining rural livelihoods, and expanding access to basic social and infrastructure services, particularly in rural areas;

It will help China manage resource scarcity and environmental challenges, through reducing air pollution, conserving water resources and optimizing energy use (partly through pricing reforms), improving land administration and management, and observing international environmental conventions;

Moreover, the bank will cooperate with China in deepening the country's financial intermediation by expanding access to financial services (especially among small and medium-sized enterprises), developing its capital markets, managing systemic risks, and maintaining financial stability, according to the statement.

The strategy includes a growing role for the International Finance Corporation (IFC), part of the World Bank Group, as the IFC's new investments in China are expected to exceed 500 million US dollars per year.

IFC's Executive Vice President Lars Thunell said one of China's strengths is the government's very strong emphasis on expanding the private sector."

"Many governments around the world talk about private sector development, but few do it as successfully as China. I also have been very impressed with the dynamism of the entrepreneurship and smaller businesses that I encountered on my recent visit," said Thunell.

"IFC will continue to provide technical assistance to help improve the business environment in China, while complementary investments help to strengthen the financial sector, shift assets into the private sector, and encourage the private sector to adopt international best practices," he said.

It said the strategy was prepared in close collaboration with the Government of China, and involved extensive consultations with the representatives of stakeholder groups, including central and local governments, the private sector, academia, civil society, and the donor community.

David Dollar, director of the bank's China mission, said that China will continue to receive assistance from the World Bank Group, and China begins to share its development thinking and experiences with the group and the rest of the world.

Source: Xinhua