New World Bank Loan to Support Sustainable Development in Poor Rural Areas of China

June 10, 2010

WASHINGTON, June 10, 2010 Today the World Bank’s Board of Executive Directors approved a loan of $100 million to the People’s Republic of China to support sustainable development in poor rural areas in Chongqing Municipality, Henan Province and Shaanxi Province. The World Bank loan is supplemented by a grant of $4.265 million from the Global Environment Facility focused on improving sustainable land resource management and climate change adaptation.


China’s success in reducing extreme poverty has been remarkable. According to World Bank estimates, the number of poor in China consuming less than a $1.25 per day fell by more than 600 million from about 835 million in 1985 to 208 million in 2005.   However, China’s remaining poor still account for the second largest concentration of extreme poor in the world after India.  Overcoming rural poverty remains one of the top priorities of the Government of China, as it is developing a new Rural Poverty Alleviation and Development Program for 2011-2020.  


The Sustainable Development in Poor Rural Areas Project (“Poverty 5”) aims to support the Government’s efforts by exploring and piloting more effective and innovative ways to deliver assistance to the poorest communities and households through community driven development (CDD) and participatory approaches.


The core element of Poverty 5 is the CDD approach to be adopted in 770 extremely poor administrative villages in 25 project counties. Through this approach, the project will promote the active involvement of villagers in community development processes, enabling them to collectively identify and prioritize local needs, prepare and select local subprojects in a fair, equitable and transparent manner, and develop their own collective capacities for implementation, project management, monitoring and maintenance.  In addition, the project will (a) assist rural migrants residing in urban areas to overcome the dangerous working and living conditions and other difficulties they face in the urban environment, and (b) provide additional assistance to rural communities to identify and analyze climate change adaptation risks and address such risks through improved and more sustainable management of the surrounding natural and land resources.


The poor rural population in the project areas in Chongqing, Henan and Shaanxi will benefit from new or improved village access roads, drinking water supply systems, rural sanitation infrastructure, electrification, communication infrastructure, school buildings, small-scale agriculture production infrastructure such as cisterns and water storage systems, irrigation and drainage, and land terracing and other land improvements, and basic housing repair.  Vocational and other training will help expand their access to off-farm employment. The GEF grant will provide support to the poor farmers in improving their techniques and means for better land management, and assistance to the government in effectively linking the rural poverty reduction programs and environmental sustainability at national and local levels.


“Poverty 5 will empower extremely poor communities to determine for themselves how best to overcome poverty” said project leader and World Bank Senior Economist Alan Piazza. “China is widely recognized for its great success in poverty reduction over the last 30 years.  This project extends that legacy by adopting a new approach to poverty reduction and by providing assistance to extremely poor villages on a grant basis.”


This is the fifth direct poverty reduction project supported by the World Bank in China over the last 15 years, built on the success of the Southwest Poverty Reduction Project approved in 1995, Qinba Mountains Poverty Reduction Project approved in 1997, Gansu and Mongolia Poverty Reduction Project approved in 1999, and Poor Rural Communities Development Project approved in 2005.

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