Overview

  • Since initiating market reforms in 1978, China has shifted from a centrally-planned to a more market-based economy and has experienced rapid economic and social development. GDP growth has averaged nearly 10% a year—the fastest sustained expansion by a major economy in history—and more than 850 million people have lifted themselves out of poverty. China reached all the Millennium Development Goals (MDGs) by 2015 and made a major contribution to the achievement of the MDGs globally. Although China’s GDP growth has gradually slowed since 2012, as needed for a transition to more balanced and sustainable growth, it is still relatively high by current global standards.

    With a population of 1.4 billion, China is the world’s second largest economy. It has contributed around 30% of global growth in the past eight years.

    Although China has made impressive economic and social development gains, its market reforms are incomplete, and its per capita income remains that of a developing country and only about a quarter of the average for high-income countries. The country is on track to eliminate absolute poverty by 2020 according to China’s current poverty standard (per capita rural net income of RMB 2,300 per year in 2010 constant prices). However, there are still an estimated 372.8 million people below the “upper middle income” international poverty line of $5.50 a day.      

    Rapid economic ascendance has brought on many challenges as well, including high inequality (especially between rural and urban areas), challenges to environmental sustainability, and external imbalances. China also faces demographic pressures related to an aging population and internal labor migration.

    China’s rapid economic growth exceeded the pace of institutional development, and there are important institutional and reform gaps that it needs to address to ensure a sustainable growth path. Significant policy adjustments are required for China’s growth to be sustainable. Managing structural reforms and related risks will not be straightforward given the complexity, size, and global importance of China’s economy.

    China’s 13th Five-Year Plan (2016-2020) addresses these issues. It highlights the development of services and measures to address environmental and social imbalances, setting targets to reduce pollution, to increase energy efficiency, to improve access to education and healthcare, and to expand social protection. The 13th Five-Year Plan’s annual growth target is 6.5%, reflecting the rebalancing of the economy and the focus on the quality of growth while maintaining the objective of achieving a “moderately prosperous society” by 2020 (doubling GDP for 2010-2020).

    Last Updated: Oct 01, 2019

  • China and the World Bank have cooperated for almost 40 years. The current World Bank Group’s Country Partnership Strategy (CPS), issued in 2012 and updated in 2016, supports China’s goal of a harmonious society. It was informed by the joint study, China 2030, prepared by the World Bank and the Development Research Center of the State Council. The CPS focuses on three main areas of engagement:

    • Supporting greener growth, by helping China shift to a more sustainable energy path; enhancing urban environmental services; promoting low-carbon urban transport; promoting sustainable agriculture practices; piloting sustainable natural resource management approaches; demonstrating pollution management; and strengthening mechanisms for managing climate change.
    • Promoting more inclusive development, by increasing access to quality health services and social protection; strengthening skills development programs, including for migrant workers; enhancing opportunities in rural areas and small towns; and improving transport connectivity for more balanced regional development.
    • Advancing mutually beneficial relations with the world, by supporting China’s South-South cooperation and China’s role as a global stakeholder.

    The Bank Group’s most valuable contribution in China remains its role in bringing and applying ideas, innovation, and knowledge. The CPS emphasizes knowledge sharing and cooperation through advice and analytical products and through investments at the provincial level that introduce and demonstrate new approaches.

    Performance and Learning Review (PLR) of the CPS, prepared in early 2016, found good progress in the CPS implementation. A Systematic Country Diagnostic (SCD) published in early 2018 identified the challenges and opportunities for China to achieve the twin goals of ending extreme poverty and boosting shared prosperity in a sustainable manner. The World Bank Group is preparing a new Country Partnership Framework (CPF), which will be aligned with the goals of the 13th Five-Year Plan and the priorities of the 19th Party Congress as well as the WBG’s capital increase package approved in 2018. The CPF will be based on the SCD and will also be informed by the flagship reports, Urban China (2014) and Innovative China: New Drivers of Growth (2019), jointly prepared by the World Bank Group and the Development Research Center (DRC) of the State Council.

    As of June 30, 2019, Bank cumulative lending (IBRD and IDA) to China was more than $63.23 billion for 428 projects. The portfolio is concentrated in environment, transportation, urban development, rural development, energy, water resources management, and human development.

    In line with the government’s increased emphasis on growth that is balanced with social and environmental concerns, the focus of the Bank’s activities in China has shifted significantly.

    Today, more than 70% of the Bank’s portfolio has environmental objectives, many with global implications. The Bank also pays particular attention to the western and central provinces, where poverty rates are significantly higher than in coastal provinces. About two-thirds of active Bank projects are in interior provinces.

    New approaches are also being introduced to finance investments to improve energy efficiency, pilot and expand the use of innovative renewable energy sources, rehabilitate and modernize urban district heating systems, and address air pollution. Urban environmental management is being strengthened to help cities meet challenges such as rapid motorization. In all these areas, the focus of the Bank’s engagement is increasingly on strengthening China’s institutions to allow rapid economic and social progress to be sustained.

    As China develops, collaborative research and analysis are becoming an important part of the Bank’s engagement. For example, China 2030: Building a Modern, Harmonious, and Creative Society, a joint research report by the World Bank and the Development Research Center of China’s State Council, lays out six strategic directions for China’s future: completing the transition to a market economy; accelerating the pace of open innovation; going “green” to transform environmental stresses into green growth as a driver for development; expanding opportunities and services such as health, education and access to jobs for all people; modernizing and strengthening its domestic fiscal system; and seeking mutually beneficial relations with the world by connecting China’s structural reforms to the changing international economy.

    Urban China: Toward Efficient, Inclusive, and Sustainable Urbanization, also a joint research report by the World Bank and Development Research Center (DRC) of China’s State Council, recommends that China curb rapid urban sprawl by reforming land requisition, give migrants urban residency and equal access to basic public services, and reform local finances by finding stable revenues and by allowing local governments to borrow directly within strict central rules.

    Healthy China: Deepening Health Reform in China, Building High-Quality and Value-Based Service Delivery, a joint study on reforming China’s health system in collaboration with the Ministry of Finance, the National Health and Family Planning Commission, and the World Health Organization, recommends deeper healthcare reforms by creating a new model of people-centered quality integrated health care that strengthens primary care as the core of the health system; continuously improving health care quality; empowering patients with knowledge and understanding of health services; boosting the status of the health workforce, especially primary-care providers; allowing qualified private health providers to deliver cost-effective services; and prioritizing public investments.

    Innovative China: New Drivers of Growth, a joint report by DRC, the Ministry of Finance and the World Bank Group proposes that China addresses its productivity challenges by promoting the “three Ds” – removing distortions in the economy, accelerating diffusion of existing advanced technologies and innovations, and fostering discovery of new technologies, products, and processes so as to expand China’s productivity frontier. The report develops recommendations in seven areas to promote the “three Ds.” These recommendations focus on strengthening competition across product and factor markets and creating a level playing field for all investors, investing in human capital and improving the targeting of support for innovation and entrepreneurship, and adapting the model of economic governance to adjust the balance between the state and the market.

    To meet growing demand from other developing countries to learn from China, the Bank also plays the role of knowledge broker to support China in sharing its development experience.

    Last Updated: Oct 01, 2019

  • China began its partnership with the Bank in 1980, just as it embarked on its reforms. Starting as a recipient of support from the International Development Association (IDA), the Bank’s fund for the poorest, China graduated from IDA in 1999 and became a donor in 2007. It became the World Bank’s third largest shareholder upon completion of the capital increase approved in 2010, the 30th anniversary of its partnership. 

    Throughout this time, the nature of the Bank’s activities in China has changed to meet the country’s rapidly evolving needs. Initially, the Bank provided technical assistance to introduce basic economic reforms, modern project management methodologies, and new technologies. Later, the focus shifted to institutional strengthening and knowledge transfer. The Bank now encourages knowledge sharing to enable the rest of the world to learn from China’s experience.

    Here are some recent results of World Bank-supported projects in China:

    Two Fiscal Sustainability Development Policy Financing operations, approved in FY18, supported Hunan Province and Dadukou District of Chongqing Municipality in China in implementing reforms that have placed their public finances on a sound and sustainable path. This included the development of tools for debt/fiscal sustainability analysis, a new integrated approach to medium-term capital budgeting, enhanced budget transparency, improvements in the provincial-level monitoring and regulation of the financial health of local governments in Hunan, and greater clarity in the division of government budgets and public sector corporate entities in Dadukou. The reforms piloted in Hunan and Dadukou informed the on-going budget reform agenda in China.

    The Innovative Financing for Air Pollution Control in Jing-Jin-Ji Program, approved in FY17, supports the Hua Xia Bank to provide enterprises with financing to reduce air pollutants and carbon emissions by increasing energy efficiency, investing in clean energy, and tightening air pollution control, with a focus on Beijing-Tianjin-Hebei (Jing-Jin-Ji) region and the surrounding provinces of Shandong, Shanxi, Inner Mongolia and Henan. The program is contributing to the blue skies in Jing-Jin-Ji and helping combat climate change by reducing CO2 emissions by 1.54 million tons per year, equivalent to avoiding nearly 10 GW of new coal power plants over lifetime of the investments.

    The Hebei Air Pollution Prevention and Control Program, approved in 2016, has supported the province’s efforts to reduce air pollution and win the battle for blue skies, by implementing a combination of targeted measures including a continuous emission monitoring system, replacement of heavily-polluting diesel buses with electric vehicles, and a switch from coal-fueled cookstoves to clean gas stoves.

    The Ningxia Desertification Control and Ecological Protection Project, approved in 2012, helped improve living conditions and increase incomes while curbing desertification, land degradation and restoring vegetation. The experience was also shared with other countries facing similar challenges.

    The Sustainable Development in Poor Rural Areas Project (2010-2015) improved village roads, drinking water and other basic infrastructure, and increased incomes for 951,100 rural poor in China’s Henan and Shaanxi provinces and Chongqing Municipality through community-driven development and community development financing. The project also helped build resilience to climate change through sustainable land and water management measures.

    The Jilin Agricultural Product Safety and Quality Project (2010-2017) supported China’s efforts to ensure food safety by piloting and demonstrating ways and measures to improve agricultural product quality and reduce food safety risks. By introducing good agricultural practices, implementing agricultural product safety-related regulations, and developing an agricultural product safety monitoring system, the project benefited farmers, agro-businesses, consumers and society at large.

    After the devastating 2008 earthquake, the Wenchuan Earthquake Recovery Project (2009-2016) restored and improved critical infrastructure, health, and education services in the severely affected counties of Sichuan and Gansu provinces, directly benefiting 12.7 million people. The project helped build the capacity of local governments and laid the foundation for more sustainable development and improving the quality of life and resilience of communities. A report on the lessons learned from the reconstruction has been published for international dissemination and many of the lessons from the Wenchuan Earthquake reconstruction are being applied elsewhere.

    The Shandong Ecological Afforestation Project (2010-2016) planted trees on 66,915 hectares of barren mountainous slopes and saline coastal areas, increasing forest cover, reducing soil erosion, and improving the environment and biodiversity. The project developed and demonstrated effective and scalable afforestation models for environmentally degraded areas, generated additional incomes for 26,556 farm households, and provided an example for forest-based carbon sequestration.

    The Yunnan Technical and Vocational Education and Training Project (2012-2017) helped improve the quality and relevance of technical and vocational education and training to produce skills that respond to labor market demand by strengthening school-industry collaboration, developing competency-based training curriculums and teaching materials, training school managers and teachers, developing student and teaching assessment systems, upgrading key instructional facilities and equipment, and strengthening the provincial capacity in coordination, policy development, and monitoring and evaluation.

    The Guangdong Social Security Integration and Workers Training Project (approved in FY13) has supported the development of an integrated social security information system in this southern province with the largest number of migrant workers. Using state of the art technology, the new system makes access to services easier and more convenient and provides a model in China’s efforts to develop a nationally integrated social security information system.

    The Ningbo New Countryside Development Project (2010-2016) provided wastewater services to 45,500 households in 144 rural villages, and improved water supply, wastewater services and road access for 76,500 residents in Chunhu Town, ensuring a cleaner environment and a better life for the people in Ningbo Municipality. The project developed China’s first rural wastewater discharge standards and made Ningbo Municipality the first place to have rural wastewater discharge standards in the country. Based on Ningbo’s standards, Zhejiang Province developed provincial rural wastewater discharge standards—the first province in the country to do so.

    The Water Conservation Project II (2012-2017) helped improve agriculture water management and increase water productivity of crops in three water-scarce provinces of Hebei, Shanxi, and Ningxia in northern China. It supported the establishment of water users’ associations that empower farmers to manage irrigation water themselves and the development of an irrigation forecast system to guide farmers in using water more efficiently.

    The Kunming Urban Rail Project (2011-2018), as the first metro project financed by the World Bank in China, supported development of a multimodal urban transport system that integrates rail, bus and cycling, and promoted green, compact and transit-oriented urban development. 

    Last Updated: Oct 01, 2019

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LENDING

China: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD, GEF and IDA commitments


PHOTO GALLERY

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Healthy China

What's ailing China's health system? What Changes are needed? Read the report.

Urban China

By 2030, up to 70% of the Chinese population - some one billion - will be living in cities. How could China prepare for that?

Results Profiles

Take a look at the results the World Bank-supported projects have achieved in China.

Open Data

The World Bank provides free and open access to a comprehensive set of development data in countries around the globe, including China.

Additional Resources