Document of The World Bank FOR OFFICIAL USE ONLY Report No. 117875-CN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL FINANCE CORPORATION MULTILATERAL INVESTMENT GUARANTEE AGENCY COUNTRY PARTNERSHIP FRAMEWORK FOR THE PEOPLE’S REPUBLIC OF CHINA FOR THE PERIOD FY2020-2025 November 11, 2019 International Bank for Reconstruction and Development China, Mongolia, and Korea Country Management Unit East Asia and Pacific Region International Finance Corporation East Asia and Pacific Region Multilateral Investment Guarantee Agency This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank Group authorization. Last Country Partnership Strategy: October 11, 2012 (Report No. 67566) CURRENCY EQUIVALENTS (as of October 30, 2019) Currency Unit = Renminbi (RMB) US$1.00 = RMB 7.06 ABBREVIATIONS AND ACRONYMS ADB Asian Development Bank MOF Ministry of Finance ASA Advisory Services and Analytics MP Montreal Protocol CHUEE China Utility-Based Energy Efficiency MSME Micro, Small, and Medium Enterprise Finance Program (IFC) NDC Nationally Determined Contribution CO2 Carbon Dioxide NDRC National Development Reform Commission CPS Country Partnership Strategy NGO Non-Governmental Organization CPF Country Partnership Framework NPS Non-Point Source (Pollution) CLR Completion and Learning Review ODS Ozone-Depleting Substances DPF Development Policy Financing OECD Organization for Economic Cooperation and DRC Development Research Center of the State Development Council PFM Public Finance Management EAP East Asia and the Pacific PforR Program for Results ECE Early Childhood Education PLR Performance and Learning Review EE Energy Efficiency PM Particle Matter E&S Environmental and Social PMO Project Management Office ESCO Energy Service Company POPs Persistent Organic Pollutants ESF Environment and Social Framework PPP Purchasing Power Parity ETS Emissions Trading Scheme PPP Public-Private Partnership FY Fiscal Year RAS Reimbursable Advisory Service FYP Five-Year Plan R&D Research and Development GDI Graduation Discussion Income RMB Renminbi (China’s currency) GDP Gross Domestic Product SCD Systematic Country Diagnostic GEF Global Environmental Facility SME Small- and Medium-sized Enterprise GHG Greenhouse Gas SO2 Sulfur Dioxide GNI Gross National Income SOE State-Owned Enterprise HCFC Hydrochlorofluorocarbons S&T Science and Technology HFC Hydrofluorocarbons TA Technical Assistance IBRD International Bank for Reconstruction and TVET Technical and Vocational Education and Development Training IDA International Development Association UDIC Urban Development Infrastructure IFC International Finance Corporation Cooperation IMF International Monetary Fund UN United Nations MARA Ministry of Agriculture and Rural Affairs UNICEF United Nations Children’s Fund MCDF Multilateral Center for Development Finance US United States MDGs Millennium Development Goals WBG World Bank Group MIGA Multilateral Investment Guarantee Agency WHO World Health Organization IBRD IFC MIGA Vice President Victoria Kwakwa Snezana Stoiljkovic S.Vijay Iyer (Acting EVP) Director Martin Raiser Vivek Pathak Merli Baroudi Task Team Leader Kathryn Funk / Nico Randall Riopelle / Eugeniu Croitor / von der Goltz John Nasir / Alexei Sandro Diez-Amigo Volkov COUNTRY PARTNERSHIP FRAMEWORK FOR THE PEOPLE’S REPUBLIC OF CHINA Table of Contents I. Country Context and Challenges ............................................................................................1 A. Economic and Social Developments ................................................................................1 B. China’s Medium-Term Challenges and Strategy .............................................................5 II. The World Bank Group Track Record and Lessons Learned .............................................13 III. The World Bank Group Strategy .......................................................................................17 A. Framework for World Bank Group Engagement in China ............................................17 B. Engagement Area One: Advancing Market and Fiscal Reforms ...................................23 C. Engagement Area Two: Promoting Greener Development............................................26 D. Engagement Area Three: Sharing the Benefits of Growth ............................................33 E. Cross-Cutting Theme: Cooperating on Global Knowledge and Development ..............36 IV. Delivering the World Bank Group Program......................................................................39 V. Managing Risks ..................................................................................................................40 Boxes Box 1: Poverty and Inequality in China ....................................................................................4 Box 2: Key Development Priorities, Underlying Institutions, Reform Challenges .................10 Box 3: Examples of Climate Change-Related Results During the 2012 CPS .........................14 Box 4: FY19 China Country Survey .......................................................................................16 Box 5: IBRD Lending to China ...............................................................................................19 Box 6: One World Bank Group in China ................................................................................21 Box 7: The 3 “D’s—Reducing Distortions, Accelerating Diffusion, Fostering Discovery.....24 Box 8: China as an IDA Contributing Partner .........................................................................37 Box 9: The China-WBG Partnership Facility Trust Fund .......................................................38 Tables Table 1: China: Selected Economic and Social Indicators and Projections, 2015-2021 ...........2 Table 2: Selected Targets in the 13th Five-Year Plan ..............................................................11 Table 3: Key Advisory Services and Analytics by Area of Engagement ................................22 Table 4: Engagement Area 1--Institutional Constraints ..........................................................23 Table 5: Engagement Area 2--Institutional Constraints ..........................................................27 Table 6: Engagement Area 3--Institutional Constraints ..........................................................34 Table 7: Summary Risk Table .................................................................................................41 Annexes Annex 1: China Country Partnership Framework Results Matrix ...........................................42 Annex 2: WBG Completion and Learning Review .................................................................58 Annex 3: Selected Indicators of Bank Portfolio Performance and Management ..................103 Annex 4: Operations Portfolio (IBRD/IDA and Grants) .......................................................104 Annex 5: Statement of IFC’s Committed and Outstanding Portfolio ....................................107 Annex 6: China -- Indicative IBRD Financing, FY20-22 .....................................................109 Executive Summary Following four decades of high growth and poverty reduction, China has entered a new stage of development. Since the start of China’s reform and opening up in the late 1970s, GDP growth has averaged almost 10 percent a year and more than 850 million people have lifted themselves out of poverty. China today is an upper middle-income country and its economy has global importance. However, over the past few years, growth has moderated in the face of structural constraints, including declining labor force growth, diminishing returns to investment, and slowing productivity. The challenge going forward is to find new drivers of growth while addressing the social and environmental legacies of China’s previous development path. Governance and institutional reforms are at the core of addressing China’s remaining development challenges, as noted in the World Bank Group Systematic Country Diagnostic for China and China’s own strategic policy documents. China’s rapid economic growth exceeded the pace of institutional development, and there are important institutional and reform gaps that China needs to address to ensure a high-quality and sustainable growth path. The role of the state needs to evolve and focus on providing stable market expectations and a clear and fair business environment, as well as strengthening the regulatory system and the rule of law to further support the market system. Given its size, China is central to important regional and global development issues. China is the largest emitter of greenhouse gases, and its air and water pollution could affect other countries. Moreover, maintaining economic growth at reasonable levels has important spillovers for the growth of the rest of the world economy. Many of the complex development challenges that China faces are relevant to other countries, including transitioning to a new growth model, rapid aging, building a cost- effective health system, and building resilience to climate and natural disasters. China is a growing influence on other developing economies through trade, investment, and ideas. The China-World Bank Group (WBG) relationship, which will complete 40 years in 2020, is also entering a new phase. Given that China is now an upper middle-income country and above the IBRD “graduation discussion income” (GDI), this Country Partnership Framework (CPF) for fiscal years 2020-2025 reorients WBG engagement to remain strong yet be increasingly selective as lending declines, with a focus on China’s remaining institutional gaps and the country’s contribution to global public goods. This shift is consistent with the country’s own development strategy. To implement this approach, new WBG financing will be subject to selectivity criteria, and IBRD financing will gradually decline. Future IBRD lending will primarily focus on China’s remaining gaps in policies and institutions for sustainable IBRD graduation. WBG operations will also emphasize at least one of the following four criteria: addressing regional or global public goods, fostering the private sector, supporting critical services in lagging regions, and strategic piloting of approaches to address key development priorities, especially in areas relevant to other developing countries. IBRD lending will average about US$1.0-$1.5 billion per year and gradually decline during the CPF period. Knowledge cooperation, including through Reimbursable Advisory Services (RAS), is expected to grow. IFC will apply a rigorous additionality assessment to its program. IFC will continue to concentrate on propagating best practice international standards and on developing a competitive private sector. However, its sectoral and geographic focus will shift to align with China’s evolving development needs. IFC’s program will support CPF objectives by focusing on (i) strengthening environmental sustainability and resilience; (ii) deepening inclusion and reducing inequality in lagging regions; and i (iii) crowding in private investment to create a more competitive market environment. The IFC program will complement IBRD’s program and remain roughly stable in volume. Investment commitments are expected to be US$800-1,200 million per year (including mobilization). MIGA could potentially support projects in the lesser developed west or ones that help expand public-private partnerships and mobilize private finance, although China’s improving investment climate is expected to continue to hold down the demand for inbound political risk insurance. The CPF will focus on three areas of engagement, consistent with China’s key development and institutional challenges and with the importance of China to achieve regional and global public goods: • Engagement area 1: Advancing market and fiscal reforms, by improving the environment for competition and private sector development; and achieving more efficient and sustainable subnational fiscal management and infrastructure financing. • Engagement area 2: Promoting greener growth, by facilitating the transition to a lower carbon energy path; reducing air, soil, water, and marine plastic pollution; demonstrating sustainable agriculture practices and improving food system quality and safety; strengthening sustainable natural resource management; and promoting low-carbon transport and cities. • Engagement area 3: Sharing the benefits of growth, by increasing access to quality health and social services; and improving the quality of early learning and skills development programs. Cooperating on global knowledge and development will be a cross-cutting theme. China’s support to the WBG has been growing, including through rapidly increasing financial contributions to IDA and other programs, while its global development finance and assistance have been rising. The CPF will take a more strategic and coordinated approach, focusing on two areas: (i) harnessing China’s development experience and knowledge to benefit other developing countries, and (ii) strengthening China’s institutions and standards for high quality overseas development finance and assistance. Progress in implementing the CPF will be assessed at midterm. This is the first CPF since China’s gross national income (GNI) per capita exceeded the GDI. At CPF midpoint, the WBG will prepare a Performance and Learning Review, which will assess progress in CPF implementation, including the key elements of the graduation policy, notably the strengthening of key institutions for economic and social development. ii COUNTRY PARTNERSHIP FRAMEWORK FOR THE PEOPLE’S REPUBLIC OF CHINA 1. China and the World Bank Group (WBG) have built a strong and dynamic partnership in the 40 years since China initiated reforms in the late 1970s. The WBG strategy has evolved over time as China’s needs and level of development have changed. In the early years, the WBG brought international experience to help design economic reform strategies, improve project management, and address key bottlenecks to growth. More recently, a two-way relationship has developed—the WBG offers international expertise to help address China’s key development challenges and pilot reforms through projects and programs; and China’s development experiences enhance the WBG’s global knowledge and capacity to help other developing countries. 2. This Country Partnership Framework (CPF) for fiscal years (FYs) 2020-2025 reflects an evolution to a more selective engagement appropriate for China’s level of development. It is aligned with China’s own development priorities, which emphasize better quality, more balanced, and environmentally sustainable growth. The CPF focuses on strengthening policies and institutions, addressing regional and global public goods, fostering the private sector, supporting critical services in lagging regions, and strategic piloting of approaches to address key development priorities, especially in areas relevant to other developing countries. It is informed by the WBG’s Systematic Country Diagnostic (SCD) and other WBG studies. I. COUNTRY CONTEXT AND CHALLENGES A. Economic and Social Developments China’s Development over 40 Years 3. 2018 marked the 40th anniversary of China’s “reform and opening up”—a period of high growth and poverty reduction. China’s rapid development was made possible by a wide range of reforms that worked to transform a state-dominated, planned, and closed economy into a more market- based, and open economy using a gradual learning-by-doing approach described by Deng Xiaoping as “crossing the river by feeling the stones.” Gross domestic product (GDP) growth has averaged almost 10 percent a year since 1991; and per capita gross national income (GNI Atlas Method) reached US$9,470 in 2018, classifying China as an upper-middle income country.1 At market exchange rates, China is the second largest economy in the world. 4. China has made major social development gains although per capita income and other economic and social indicators still lag those of advanced economies. More than 850 million people were lifted out of poverty as China’s poverty rate fell from 88 percent in 1981 to 0.7 percent in 2015.2 China reached all the Millennium Development Goals (MDGs) and made a major contribution to the achievement of MDGs globally (the first MDG target—to halve the proportion of people in the world whose income is less than US$1.25 a day—was achieved five years ahead of schedule due to China). At the same time, China’s per capita income is still only about a quarter of the average for high-income countries and ranked about 71st in the world.3 China also lags in labor productivity and human capital. For example, when Chile and Korea obtained high-income status (in 2011 and 2001, respectively), 1 Upper middle-income economies are those with a GNI per capita (2018) between US$3,996 and US$12,375. 2 http://iresearch.worldbank.org/PovcalNet/povOnDemand.aspx 3 Among World Bank member countries. World Development Indicators, The World Bank. 1 their labor productivity levels were, respectively, almost 2 and 2.5 times that of China in 2015. 4 Human capital levels in Chile and Republic of Korea were a quarter and a third higher, respectively. 5 China’s Shift to a New Growth Model 5. China has now entered a new stage in its development—a transition to slower but more balanced and sustainable growth. China’s double-digit growth based on resource-intensive manufacturing, exports, and cheap labor has largely reached its limits and has led to economic, social, and environmental imbalances. Reducing these imbalances requires shifts in the structure of the economy from low-end manufacturing to higher-end manufacturing and services, and from investment to consumption. 6. Growth has gradually slowed since 2012. Over the past five years, growth decelerated from 7.8 percent in 2013 to 6.6 percent in 2018. Growth is projected to slow down further to 6.1 percent this year and fall below 6 percent during the remainder of the forecast period (see table 1). The slowdown primarily reflects structural constraints to growth. China’s labor force growth is slowing, the gains from reallocation of labor from agriculture to industry and services are increasingly exhausted, and productivity growth has fallen since the 2008 Global Financial Crisis. China partially offset this slowdown through high levels of public investment, but this was associated with rapidly growing debt and declining returns on infrastructure investment. Between 2017 and 2018, the authorities tightened credit policy to deleverage and contain growing financial risks. Since mid-2018, and in response to weaker external and domestic demand, China’s fiscal policy has become more proactive, as reflected in a widening of the augmented fiscal balance. Table 1: China: Selected Economic and Social Indicators and Projections, 2015-2021 2015 2016 2017 2018 2019f 2020f 2021f Real GDP growth, at constant market prices 6.9 6.7 6.8 6.6 6.1 5.9 5.8 Private Consumption 7.4 8.6 6.4 9.1 6.8 6.8 6.7 Government Consumption 9.9 8.8 9.5 9.4 8.4 8.2 8.1 Gross Fixed Capital Formation 7.0 6.8 5.2 4.9 4.5 4.3 4.2 Exports, Goods and Services -1.5 1.8 8.9 4.0 2.5 1.7 1.8 Imports, Goods and Services -1.3 5.7 6.6 7.5 1.0 1.2 1.3 Real GDP growth, at constant factor prices 6.9 6.7 6.8 6.6 6.1 5.9 5.8 Agriculture 3.9 3.3 3.9 3.5 3.3 3.3 3.3 Industry 6.2 6.3 5.9 5.8 5.5 5.2 5.0 Services 8.2 7.7 7.9 7.6 7.0 6.7 6.7 Inflation (Private Consumption deflator) 1.4 2.0 1.6 2.1 2.4 2.5 2.5 Current account balance (% of GDP) 2.8 1.8 1.6 0.4 0.7 0.6 0.5 Financial and capital account (excl. reserves) (% of -4.0 -3.7 0.9 1.0 0.9 0.9 0.9 GDP) Net Foreign Direct Investment (% of GDP) 0.6 -0.4 0.2 0.8 0.9 1.0 1.1 Fiscal Balance (% of GDP) a -2.4 -3.1 -2.5 -3.9 -5.9 -5.5 -5.4 Primary Balance (% of GDP) a -1.3 -2.0 -1.2 -2.7 -4.7 -4.2 -4.1 Official Government Debt (% of GDP) 37.1 36.9 36.5 37.1 39.9 42.5 44.9 GDP per capita (current US$) 8,033 8,079 8,759 9,771 9,958 10,318 10,889 Source: World Bank staff estimates. Notes: f = forecast. (a) World Bank staff calculations. The augmented fiscal balance (narrow definition) adds up the public finance budget, the government fund budget, the state capital management fund budget, and the social security fund budget. The primary balance is the difference between revenue and non-interest expenditures. The Government publishes data for the public finance budget deficit, which was 2.4%, 2.9%, 2.9% and 2.6% between 2015-2018 and is expected to reach 2.8% in 2019. 4 World Bank. 2019. A Resurgent East Asia. 5 ibid 2 7. There has been some progress on rebalancing towards a more sustainable economic structure. External rebalancing has been rapid, with the current account surplus shrinking from almost 10 percent of GDP in 2007 to less than 1 percent in 2018. At the same time, domestic rebalancing has progressed more gradually. On the supply side, services have replaced industry as the largest contributor to growth, accounting for nearly 60 percent of GDP growth in recent years; and the share of services in employment increased from 32 percent in 2007 to 45 percent in 2017. Services now likely account for most employment in China given their high share in informal jobs. On the demand side, a transition from investment-led growth to consumption-led growth is also underway, with real consumption growing in the range of 7-9 percent in recent years, as opposed to 6 percent fixed capital investment growth. Final consumption as a share of GDP has grown steadily to 54 percent in 2018. Nonetheless, compared to peers, China still stands out for an exceptionally high share of investment in GDP (45 percent) and a relatively underdeveloped and restricted services sector. 8. Tensions in relations with some major trade and investment partners have added headwinds to China’s growth prospects. Resolution of these tensions will be important for the economic prospects of China and its partners alike. Likewise, a smooth shift to sustainable and higher- quality growth is important for China—and the world economy. As the world’s second-largest economy and largest external trading nation, China’s economy has global importance, contributing around 30 percent of global growth in the past eight years. Trends in Poverty, Inequality, and Environmental Sustainability 9. Reducing poverty and inequality remain important challenges (see box 1). As of 2015, there were still about 10 million Chinese living below the US$1.90-a-day per capita international poverty line (in 2011 PPP terms).6 China is on track to eliminating the “last mile” of extreme poverty by end of 20207, although many of the remaining poor are dispersed in rural and remote areas. In addition, while a large number of people has been lifted out of absolute poverty, many remain vulnerable. In 2015, there were 95.5 million people below a poverty line of US$3.20 a day (in 2011 PPP terms) and 372.8 million people below US$5.50 a day.8 Income inequality has improved since around 2010 but remains relatively high. 10. Inequality mainly reflects significant spatial disparities and the associated disparities in access to public services. Urban-rural inequality accounts for the largest share of total inequality, and disparities between regions and provinces are also high—the average income per capita in the richest province is almost four times that of the poorest province.9 The quality of public services in rural and lagging regions is often significantly worse than in coastal urban areas, reflecting different fiscal capacities. Moreover, the hukou household registration system has barred the migrant population from access to the same social (health and pension) insurance and public services than those available to permanent urban residents. While the hukou system has been partially relaxed and some progress has been made in pooling social insurance systems at the provincial level, the poor would benefit from greater opportunities to access quality education and health services. 11. Economic and social gains have come with the problem of pollution and natural resource depletion. And while pollution and resource scarcity affect all citizens, the poor are usually most affected and least able to cope. China’s environmental performance is also of global importance—due 6 World Bank. 2018. Poverty and Shared Prosperity 2018: Piecing Together the Poverty Puzzle. 7 Official data shows that poverty in rural areas continued to decline from 5.7 percent in 2015 to 3.1 percent in 2017. See 2018 China Statistical Yearbook, National Bureau of Statistics. China’s official poverty threshold (known as the “2010 standard”) corresponds to a rural poverty line of 2,300 yuan per person per year at 2010 prices. 8 World Bank Poverty and Equity data portal: http://povertydata.worldbank.org/poverty/country/CHN 9 Data for 2017. 2018 China Statistical Yearbook, National Bureau of Statistics. 3 to its size and high share of coal in its energy mix, it is the largest emitter of greenhouse gas (GHG) emissions in the world. Box 1: Poverty and Inequality in China China’s economic reforms, starting with the introduction of the household responsibility system in agriculture in 1978, have lifted more than 850 million Chinese people out of poverty. 1 From 1979 to 1997, the flow of labor from agriculture to manufacturing and services was accompanied by rapid urbanization, increased labor productivity, higher living standards, and a significant boost in incomes. China’s poverty rate fell from 88. 1 percent in 1981 to 0.7 percent in 2015, an achievement unprecedented in scope and scale.2 The absolute number of poor people over this period fell from 877.8 million to 10 million, accounting for about 70 percent of global poverty reduction.3 The Chinese government has continued to prioritize poverty reduction. In 2015, the government announced the goal of eliminating extreme poverty by 2020. Most of those remaining in extreme poverty in China are likely to be rural inhabitants—it is estimated that the incidence of poverty in urban areas fell from 59.1 in 1981 to 0.3 percent in 2015, while it fell from 95.4 to 1.3 percent in rural areas. The remaining poor are harder to reach, given that many are dispersed in remote areas. Nevertheless, eliminating extreme poverty by 2020 is within reach. Vulnerability to poverty may remain a significant problem. If vulnerability is defined as living between US$1.90 and US$3.20 a day, there would have been 85.5 million people vulnerable to poverty in 2015. The main income shocks are thought to be illness, unemployment (for urban households), and natural disasters. The aging of the population is likely to increase vulnerability to poverty. There is a need to better understand how households face and manage risks to better protect vulnerable households from falling back into poverty. Improving the understanding of urban poverty, particularly among the migrant population, is also important. China’s growth has not benefitted all income groups equally. Median consumption per capita in China grew at an average of 6.3 percent per annum during 1990-2010, slightly below the corresponding growth rate of mean consumption per capita (7.0 percent). During 2010-2015, median consumption grew by 10.2 percent per annum, faster than the 8.7 percent annual growth in mean consumption. The persistence of income inequality reflects disparities between urban and rural areas and among provinces. Data from China’s National Bureau of Statistics indicate that per capita disposable income in rural areas in 2017 was 37 percent of the urban level. The eastern coastal region has enjoyed rapid growth owing to its geographical location and early introduction of reforms. As a result, the eastern coastal region, home to 38 percent of the population, has a GDP per capita of at least 68 percent higher than that of the central, western, and northeastern regions. The poorest province has a per capita income of a quarter of the richest province.4 _____________ 1 The household responsibility system allowed farm households to freely dispose of their surplus production, resulting in productivity increases. It was gradually scaled up, becoming the prototype for China’s “learning-by-doing” approach to reform. 2 Using the international poverty line of US$1.90 per day in 2011 PPP. 3 Data from Poverty and Shared Prosperity 2018: Piecing Together the Poverty Puzzle; World Bank, 2018. 4 Data for 2017. 2018 China Statistical Yearbook, National Bureau of Statistics. Access to External Markets 12. China has favorable access to capital markets and is able to borrow at reasonable terms. The stock of official central and local government debt has remained stable from the end of 2013 to the end of 2018 at about 37 percent of GDP, of which official government debt owned by external creditors is equivalent to just 1.4 percent of GDP. While the stock of direct government debt is moderate and foreign exposure very low, off-budget borrowing by some local governments remains an issue. In 2017, S&P and Moody’s lowered China’s credit rating to A+ and A1, respectively (Fitch has maintained A+ since 2007), citing increasing risks from a rapid build-up in debt. Borrowing costs rose with the increase in financial risks, with the 10-year government bond yield up 100 basis points (bps) between the end of 2015 and the end of 2017. Since then, yields have declined by about 70 bps to 3.2 percent for the 10-year maturity. As the authorities undertook measures to rein in credit growth, local government bond spreads also rose, peaking at 80 bps in mid-2017. They have since declined to 4 slightly below 50 bps. Since 2015, China’s US dollar-denominated Credit Default Swap spread has declined by more than 50 bps to 52 bps on June 12, 2019. B. China’s Medium-Term Challenges and Strategy Development Challenges and Institutional Assessment 13. The WBG’s SCD for China identified challenges and opportunities for achieving the “twin goals” of ending extreme poverty and boosting shared prosperity in a sustainable manner.10 The priorities identified by the SCD centered on managing the transition to slower growth, including economic and social instabilities that may result from the transition to a new growth model; promoting greener growth and more efficient use of natural resources, and reducing disparities in accessing quality public services and between rural and urban areas. 14. As the SCD notes, governance and institutional reforms are at the core of addressing China’s development priorities. China’s exceptionally rapid growth exceeded the pace of institutional development, and there are important institutional and reform gaps that China needs to address to ensure a high-quality and sustainable growth path. China views institutional reform as an important element of its further development. The IMF has also emphasized the need for institutional reforms and reforms in policy frameworks as the key challenge for China in its next phase of development. 11 The World Economic Forum, which ranks countries on factors determining their competitiveness, ranks China overall 28th out of 140 countries, while it ranks the country’s institutional strength at 65th. 12 The institutional assessment below is organized around the three priority areas identified in the WBG’s SCD. In addition to the SCD, the assessment draws on recent studies and analytical work, including Innovative China: New Drivers of Growth and analysis from outside the WBG. The main institutional and policy reform priorities are summarized in box 2. 15. China’s key medium-term challenge is to manage an orderly transition to slower but more balanced and sustainable growth. This requires the development of institutions that support more market-driven, productive, sustainable, and equitable growth. In the past 40 years, China has developed institutions that have been effective in fostering growth by mobilizing financial and human resources and in fostering structural transformation. Now, China needs to focus on strengthening those institutions that will enhance productivity and innovation of the economy and support an economy in which the market plays the decisive role in the allocation of production factors. This requires a different role of the government—one that is more market supportive and less market interventionist. Given that China wants state-owned enterprises (SOEs) to retain an important role in China’s economy, fair competition between SOEs and non-SOEs would be needed to ensure that the markets select the most productive enterprises regardless of their ownership structure by exposing SOEs to competitive pressure. While China has made progress, much remains to be done on this complex and wide-ranging reform agenda, the success of which, because of China’s sheer size, has important implications for the rest of the world. 10 In 2013, the World Bank Group adopted “twin goals” to guide its work: ending extreme poverty (reducing extreme poverty in the world to less than 3 percent by 2030) and boosting shared prosperity (fostering income growth of the bottom 40 percent of the population in each country). 11 International Monetary Fund. 2017. Modernizing China: Investing in Soft Infrastructure. Washington, DC. 12 World Economic Forum. 2018. The Global Competitiveness Report. https://www.weforum.org/reports/the-global- competitveness-report-2018. 5 Transition Toward More Sustainable Growth 16. China’s macroeconomic management is already well developed, but important institutional challenges remain. Since the global financial crisis, high investment rates have resulted in rapid accumulation of domestic debt. Given the large role that subnational governments play in government spending and borrowing, current reforms aimed at containing off-budget debt accumulation and achieving greater fiscal sustainability at the subnational level are key to controlling the growth in debt. While the 2015 budget law aims among others at better regulating local government borrowing, implementation needs to be further improved. The confluence of on- and off-budget borrowing has also complicated the evaluation of China’s overall fiscal stance. China’s fiscal policies can gain a more prominent role in macroeconomic management by further developing automatic fiscal stabilizers and stronger national social safety nets. To manage the tradeoff between economic growth, public service delivery, and prudent debt policy, China needs to build institutional mechanisms and capacity to coordinate policies both vertically and horizontally. Key institutional priorities include: hardening budget constraints, linking development plans with finance, more clearly separating government and non-government entities, implementing medium-term expenditure frameworks, and developing accounting and reporting systems that fully capture government activities and contingent liabilities. 17. In monetary and exchange rate policies, China has made progress in developing a more market-based system, but further increasing exchange rate flexibility and moving to a price-driven system for implementing monetary policies remain important goals. Further gradual opening up of the capital account would allow for higher yields on China’s abundant domestic savings and for diversification of funding for domestic investment. Financial sector liberalization (including interest rates and the elimination of loan-to-deposit ratios) has advanced significantly over the past few years. At the same time, a rapidly changing financial landscape and rapid development of new financial products create vulnerabilities. While China has made good progress since 2016 in curbing the risks from growing commercial bank exposures to sub-standard shadow bank products, stronger financial sector regulation and better coordination and information sharing among regulatory agencies remain a priority.13 18. In the short term, addressing the vulnerabilities that have built up in recent years, remains a priority. Accelerating reforms to address financial vulnerabilities and implementing the new supervisory arrangements in the financial sector to prevent new vulnerabilities from arising would help avoid the risk of financial turbulence and a greater slowdown in growth. As part of this challenge, the government’s efforts to reduce excess capacity in some industries needs to continue. In doing so, it will be critical to address the social implications of industrial restructurings through targeted temporary income support, active labor market programs, and robust social protection programs (see below). 19. China’s economy can further gain efficiency by increasing market competition in hitherto restricted sectors. China has moved to a “negative list” system of sectors with restrictions or prohibitions for investment from private and foreign investors. Investments in most manufacturing is liberalized, and remaining restrictions, such as joint venture requirements, are being phased out. Average import tariffs are low with further reductions announced. The new foreign investment law consolidates these advances and will reduce uncertainty for foreign investors. However, regulations on service trade continue to be restrictive. According to the OECD Services Trade Restrictiveness Index, China’s restrictions in service trade are higher than the OECD average. 13 IMF 2017 op. cit. 6 20. Further improving the business environment is key to fostering entrepreneurship and competition. Since the “Mass Entrepreneurship” policy announced in 2014, China has implemented reforms to improve the ease of doing business. As a result, the number of new enterprises registered increased from 3.7 million in 2014 to 6.7 million in 2018. On average, 18,900 enterprises registered daily in the first half of 2019, compared to 2,376 in 2013. China’s Doing Business ranking improved from 78 in 2017 to 31 in the 2020 DB Report, and reforms to further improve are underway. Yet weaknesses remain, as illustrated by China’s performance on paying taxes (105), getting credit (80), and trading across borders (56). Also, the exit of inefficient firms is key for productivity gains, and although the use of the bankruptcy act is increasing, China’s rate of insolvent firm exits from markets is still lower than most developed economies. To ensure that noncompetitive firms exit markets, China needs a more active market-led bankruptcy and corporate restructuring regime that distinguishes viable and unviable companies and addresses them accordingly by reorganizing the former and liquidating the latter, including zombie firms. 21. Continued state enterprise reforms will be important for raising productivity in China’ s economy. SOEs play a major role in key areas of the economy, and, for a variety of reasons, many have been less efficient than the private sector. By some measures, SOEs still enjoy advantages in access to finance and more direct government support. China had more than 170,000 SOEs in non- financial sectors in 2016, and the financial sector is dominated by state-owned financial institutions. Together, financial and non-financial SOEs accounted for around a quarter of GDP and 15 percent of employment in 2017.14 Among industrial enterprises with annual revenues of 20 million yuan or more, SOEs accounted for 39 percent of total assets, 23 percent of revenues from main business operations, and 18 percent of employment in 2017. China is moving towards a system of “state capital management” that would require SOEs to deliver market-compatible rates of return on capital invested. Further liberalizing the economy and opening up markets will allow more growth and private-sector investment in some key sectors, such as oil and gas, electricity, finance, and telecommunications, and could strengthen SOE performance by exposing them to greater competition. Following the principle of competitive neutrality to ensure equal treatment to enterprises under different ownership would further support a level playing field and help address concerns of China’s trading partners. 22. China’s innovation policies need to become market-enhancing rather than market- replacing. In the past few decades, China has rapidly developed its innovation capabilities, and it spends already a larger share of GDP on R&D than the average OECD country. At the same time, China needs to better target government support for innovation to those areas for which no market finance is available. It also needs to develop the institutional framework that prevents inefficient competition among regions. And it needs to further strengthen protection of intellectual property for domestic and foreign enterprises alike. Greener Growth 23. China faces a range of environmental and climate change challenges unique in scale, complexity, and global significance. Though much progress has been made in the past two decades, environmental damage continues to harm China’s economy through several channels—it affects health, degrades ecosystems and natural resources, and causes losses to agriculture and industry. The government introduced the Air Pollution Prevention and Control Action Plan in 2013 and has reported declines in the average PM10 and PM2.5 concentrations in many municipalities and cities. Going forward, the government can leverage markets and use market-based tools, such as pricing and taxes, to boost green innovation and further reduce environmental costs and waste. In addition, private sector 14 World Bank staff estimates, based on official Chinese government data, show that SOEs account for a range of 23- 28 of GDP and 5-16 percent of employment. 7 innovations could be harnessed to combat air, water, and soil pollution, and creative structures such as PPPs and green finance could be used to crowd in private financing to help reduce GHG emissions or reclaim polluted areas. China accounts for over a quarter of annual global CO2 emissions 15 ; thus, implementing China’s Nationally Determined Contribution (NDC) targets will help achieve the goals of the Paris Agreement and will also have significant local benefits in reducing air pollution, the costs of natural disasters, and boosting agricultural productivity. 24. Strengthening China’s environmental institutions and management capacity is key to meeting the country’s objectives. China needs to further develop a comprehensive system of environmental charges and taxes. Operationalizing the national carbon market and expanding its application beyond the energy sector is key to achieving China ’s climate goals. Developing a more efficient energy market and expanding the institutional infrastructure for renewable energy, including pricing, storage, transmission, and distribution of renewables would further increase access to and production of renewable energy and reduce China’s carbon footprint. China has developed a large green finance market and has adopted corresponding policies and regulations, including “Green Credit Guidelines,” “Green Credit Statistics System,” and “Key Green Credit Performance Indicators.” China’s green credit system has leveraged significant private investment for renewable energy and energy efficiency. However, some aspects of the green finance system are still under development, including a coherent institutionalized system for standard setting and verification of environmental impact. Strengthening the capacity of the Ministry of Ecology and the Environment and regional institutions for monitoring, preventing, and controlling pollution is needed. Accelerating the reduction in coal use in line with China’s objectives would additionally require policies and strategies to mitigate the social impact in China’s coal-producing regions. 25. A particular challenge in improving the management of natural resources and the environment arises from China’s decentralized governance arrangements. The central government has the authority to define policies and regulations and set targets for local administrations. However, few institutions exist to help coordinate policy implementation across jurisdictions. Such coordination is vital to managing common resource pools, such as watersheds, but also critical in planning, building, and maintaining infrastructure, such as advancing low-carbon urban mobility and logistics solutions in China’s greater metropolitan areas and city clusters. Beyond the improvement in local governments’ technical capacity to monitor and enforce resource and environmental regulations, regional institutions and regional coordination mechanisms need to be developed. China would also benefit from increased public participation in monitoring and from investing in the capacity of city and county offices to gather and publicly report accurate natural resource, ecological, and environmental information. More Equitable Growth 26. Reducing income inequality and the "opportunity gap" are important for both social stability and sustainable growth. While some of the rural-urban and regional disparities are a natural consequence of rapid development, institutional factors also play a large role in inequality. In recent years, China has provided urban residency to an increasing number of rural migrants who are able to find stable employment opportunities and live in urban areas. Further reforms to the hukou household registration system would increase labor mobility and offer greater job opportunities for rural migrants, who are poorer than the average citizen. Improvements in the intergovernmental fiscal system to enhance fiscal equalization across all levels of government and reforms to the social security system and social safety net would need to underpin further hukou reforms. The private sector also has an important role to play in reducing income inequality. By investing in projects that promote 15 https://data.worldbank.org/indicator/EN.ATM.CO2E.KT?view=map. 8 inclusiveness and in lagging regions, the private sector can help develop human capital and increase incomes of those who have not yet fully benefitted from China’s development. Narrowing the rural- urban gap also requires reforms to increase farm productivity while emphasizing more sustainable and greener agricultural development. 27. An opportunity gap exists in the education sector. Increasing education attainment played a critical role in the reallocation of labor from China’s agricultural sector to nonagricultur al sectors and the development of a thriving private sector. However, reducing the inequities in access to quality education will be important for the country’s future prosperity. The education sector requires a paradigm shift where the government should consider learning outcomes as part of its policy objectives and financing should focus on learning-enhancing investments and addressing inequitable learning outcomes. 28. China has made remarkable progress in expanding its social insurance and social protection system. However, the system is still fragmented, split in urban and rural components, and public spending remains relatively low by international standards. China has made major progress in health insurance coverage, and more than 95 percent of the population is now covered. Out-of-pocket health spending has been reduced to below 30 percent, but catastrophic health events remain a major cause of poverty. Total health spending stood at 6.4 percent of GDP in 2018, but cost pressures are rising and will require continued reforms. China has established two major basic pension insurance schemes, one for urban employees and one for rural and urban residents respectively, which together cover 86 percent of the labor force. Given the rapid aging of China’s population, one of the most pressing challenges over the coming decades will be to develop a fiscally sustainable and less fragmented pension system with wider coverage, particularly for rural, migrant, and urban informal- sector workers. Systemic reforms are needed to create the right incentives, which would help expand coverage, improve portability of benefits, establish an appropriate mechanism for increasing pension benefits, and maintain affordability and financial sustainability. Developing an efficient, equitable, and sustainable aged care system is also a priority for China, and the experience in developing such a system could yield useful lessons for other aging countries. 29. China’s urban and rural dibao (means-tested social assistance) program has become the backbone of social protection in China and plays an important role in poverty alleviation, with some 45 million recipients (or 3.2 percent of the population in 2018). Overall, the program is strong in minimizing inclusion errors, but has some way to go in reducing exclusion errors and in outreach, given that income thresholds have increased significantly in recent years. In particular, eligibility for certain social benefits depends on place of hukou, not residence. Moreover, coordination with other means-tested benefits could be improved and eligibility thresholds may come under review as China’s average income increases. The social assistance system should be modernized to strengthen its role in reducing income inequality and absolute and relative poverty. 9 Box 2: Key Development Priorities, Underlying Institutions, Reform Challenges Underlying Key Development Priorities Reform Challenges Institutions Transitioning towards more Institutions for • Move from growth targets towards indicative growth projections sustainable growth Macroeconomic • Address the significant overhang of debt in the financial and corporate sector; Management control local government off-budget borrowing Market Structure and • Improve regulation and supervision of financial sector, diversify ownership of Competition financial institutions • Harden budget constraints on state enterprises and improve bankruptcy framework • Promote market entry in all competitive sectors, level the playing field and reduce red tape • Promote innovation and strengthen the protection of intellectual property rights Public Sector • Harden local government budget constraints—strengthen fiscal and debt Governance management frameworks and capacity, improve transparency, and separate government and non-government entities; eliminate unfunded expenditure mandates • Shift local government performance criteria towards sustainable development • Strengthen local government accountability for consistent enforcement of regulations, top-down and bottom-up (through information disclosure and participation channels) • Improve local government revenue mobilization, in part by introducing taxes controlled by local governments Institutions for Social • Address excess labor from SOE reforms with social security and active labor Inclusion market policies Move towards greener growth Market Structure and • Continue market reforms and promote competition in energy sector Competition • Promote greater use of market instruments to combat pollution and climate change • Adjust resource and energy prices to reflect environmental costs • Establish efficient and sustainable climate-smart agriculture systems with subsidies targeting green/ecological benefits • Mobilize private financing and encourage private sector participation in green growth, including pollution clean-up and restoration; improve standard setting and verification to enhance impact of green finance Public Sector • Strengthen focus on environmental sustainability in cadre management system, Governance including defining trade-offs with economic growth targets • Strengthen public participation, governance, and institutions for environmental management, including stronger enforcement of laws and regulations • Improve availability of critical environmental information for planning, decision making, and public disclosure Infrastructure and • Improve coordination of and create integrated management of land, water and air Regional resources across jurisdictions Development • Improve integrated planning of transport and urbanization to minimize carbon emissions and environmental impact Pursue more equitable growth Market Structure and • Continue reform of hukou system and reduce barriers to labor mobility Competition • Develop system of rural land transfers, increase farm scale and allow for specialization and professionalization of agriculture to improve productivity and close urban-rural income gap • Promote application of new technologies, including ICT to agriculture Public Sector • Make inter-governmental fiscal transfers more progressive and needs-based and Governance clarify and rebalance revenue and expenditure assignments • Create incentives for local governments to focus on service delivery and human capital investments, not just on economic growth and physical capital Institutions for Social • Deepen coverage and extend benefits of social safety net Inclusion • Reduce disparities in spending on education and improve capacity for quality education including ECE; implement quality assurance system • Improve availability of quality healthcare, especially in rural areas, and strengthen health insurance for the poor; increase efficiency of health care delivery through integrated system management • Build comprehensive policy and institutional framework for elderly care Source: SCD and other analysis 10 China’s Development and Reform Strategy 30. China’s 13th Five Year Plan (FYP, 2016-2020) and other strategy documents address many of the challenges and institutional constraints outlined above. Ratified by the National People’s Congress in March 2016, the FYP seeks to remedy China’s “unbalanced, uncoordinated, and unsustainable growth” and create a “moderately prosperous society in all respects.” It outlines a “comprehensive deepening of reforms” to support rebalancing, innovation, and more inclusive an d greener growth. It aims to meet these objectives while still maintaining average annual GDP growth of 6.5 percent. It calls for a development philosophy of innovative, coordinated, green, open, and shared development. (Selected quantitative indicators of the 13th FYP are shown in table 2.) Table 2: Selected Targets in the 13th Five-Year Plan Indicator Actual Target Target 2015 2020 Type1/ Economic Development GDP growth rate (%, 5-year average) -- >6.5 A Share of services in GDP (%) 50.5 56 A Labor productivity (10,000 RMB per employed person) 8.87 >12 A Urbanization rate (permanent urban residents) (%) 56.1 60 A Innovation-Driven Development Research and development expenditures (% of GDP) 2.1 2.5 A Innovation patents per 10,000 people 6.3 12 A Nine-year compulsory education completion rate (%) 95.0 93.4 O Senior secondary school gross enrollment rate (%) 90.0 87.5 A Resources and Environment Reduction of water use per unit of GDP (%) -- 23 O Reduction in energy use per unit of GDP (%)2/ 5.6 15.0 O Share of non-fossil energy in total energy consumption (%) 12.1 15 O Reduction in CO2 emissions per unit of GDP (%)2/ -- 18.0 O Reduction in emissions of major environmental pollutants: -- -- Sulphur dioxide - SO2 (%)2/ -- 15.0 O Chemical oxygen demand (%)2/ -- 10.0 O Ammonia nitrogen (%)2/ -- 10 O Nitrogen oxides - NOx (%)2/ -- 15 O Total forest cover (%) 21.66 23.04 O Wellbeing of the People Growth in household disposable income per capita >6.5 A Average years of schooling of working-age population 10.23 10.8 O Increase in urban employment in 5 years >50 A Rural poverty reduction (million) 55.75 O Coverage ratio of basic pension insurance (%) 82 90 O Re-built housing in run-down urban areas (million) 2/ -- 20 O Sources: China's authorities, National Bureau of Statistics, and staff estimates. 1/ A = Anticipated; O = Obligatory 31. Based on these core strategy documents, the government’s development and reform strategy prioritizes several key themes that are consistent with the Bank’s SCD and institutional assessment. First, the government recognizes the importance of improvements in innovation and economic efficiency to underpin growth sustainability. The WBG and the Development Research Center of the State Council collaborated on the study Innovative China—New Drivers of Growth to develop policy options to promote productivity-led growth based on innovation, entrepreneurship, and market competition during the 14th FYP period. Second, improving the environment and reducing pollution and GHG emissions are top priorities for the government and have global importance. The 13th FYP includes dual binding targets (targets for quantity and intensity) for key environmental parameters. 16 Third, the government has prioritized eliminating absolute poverty by 2020 and 16 The 19th Party Congress further highlighted the importance of environmental sustainability, calling for an “ecological civilization.” 11 deepening reforms to improve access to quality services—including health and education—for all citizens.17 32. China’s policy directions provide strong entry points for the WBG’s strategic engagement with China. China’s leadership recognizes the centrality of institutional change to achieving sustained progress toward the objectives in the 13th FYP. The WBG is providing input into the 14th FYP to suggest options for further institutional reform. 33. China is also playing an increasing role in global development. China is increasing its engagement abroad, including support for other developing countries, engagement in international organizations, engagement in global governance, and through the Belt and Road Initiative. In 2018, China set up the China International Development Cooperation Agency, which is responsible for formulating strategic guidelines, plans, and policies for foreign aid; coordinating and offering advice on major foreign aid issues; and identifying major programs and supervising and evaluating their implementation (specific foreign aid programs will still be implemented by the relevant agencies in accordance with their respective mandates). 17 The FYP also emphasizes gender equality. For the first time, the 13th FYP included a separate chapter (chapter 66) to safeguard the basic rights and interests of women, minors, and persons with disabilities. China is implementing the Plan for Women’s Development in China (2011 -2020) and will work to eliminate discrimination and bias and to ensure that women enjoy equal rights and opportunities, including with respect to education, employment, and land- related rights of women in rural areas. 12 II. THE WORLD BANK GROUP TRACK RECORD AND LESSONS LEARNED 34. The 2012 Country Partnership Strategy (CPS) supported China’s efforts to put the economy on a more sustainable growth path. It emphasized knowledge sharing, including through projects as platforms for knowledge exchange. Many IBRD projects and IFC investments introduced innovations or piloted new approaches and advisory services and analytics (ASA) helped introduce policy reforms. The WBG program also placed a major emphasis on the environment and climate change (see box 3). 35. The Completion and Learning Review (CLR) rated WBG program performance as satisfactory. (For the full CLR, see annex 2). The WBG focused its financial resources and ASA on two strategic themes—supporting greener growth and promoting more inclusive development —and one cross-cutting theme—advancing mutually beneficial relations with the world. The WBG also provided client-driven knowledge services to help underpin reforms needed to reenergize the drivers of growth. Six of the ten CPS objectives, as revised and updated in the Performance and Learning Review, were achieved and four were mostly or partially achieved. 36. Overall, the CPS period was marked by deepening cooperation in analytics, financing, and global cooperation. Cooperation deepened in producing joint studies linked to China’s reform program. During the last few years of the CPS period, annual IBRD financing increased to address reform priorities, such as energy conservation and renewable energy, urban air pollution, subnational fiscal reform, and health service delivery; and IBRD lending included Program-for-Results (PforR) and Development Policy Financing (DPF) for the first time. There was also increased cooperation in the global arena and China established a China-WBG Partnership Facility Trust Fund. 37. IBRD portfolio performance has remained strong. As of September 20, 2019, China had the largest number of active IBRD-financed projects (79) and the second largest amount, after India, of net IBRD commitments (US$12.3 billion). IBRD investment from FY13 to FY19 amounted to US$12.5 billion for 80 new investment operations, averaging US$1.79 billion per year over the seven years. The Independent Evaluation Group (IEG) evaluated 60 of the 65 projects that exited the portfolio from FY13 to FY18 and rated 88 percent of them moderately satisfactory or above for outcomes achievement, above Bank and regional averages. Trust fund resources helped leverage IBRD impact, especially for environmental objectives. 38. ASA included joint flagship studies linked to China’s reform program, underpinning investments and setting the course for the Bank’s future engage ment. The experience of jointly producing China 2030 led to a high-level government request for a flagship study on urbanization. Urban China was prepared jointly with the Development Research Center of the State Council (DRC) in 2014, and many of the recommendations have been adopted by the government. A third flagship study, Healthy China: Deepening Health Reform in China, Building High Quality and Value-based Service Delivery, was completed in 2016, in partnership with the Ministry of Finance, National Health and Planning Commission, Ministry of Human Resources and Social Security, and World Health Organization. A fourth flagship study produced jointly with DRC—Innovative China: New Drivers of Growth—was launched in September 2019. 39. IFC’s sizable and strong portfolio focuses on the green economy, balanced and inclusive growth, and increasing access to capital for private sector growth. As of the end-FY19, IFC’s committed exposure in China had reached US$3.6 billion (of which US$298 million in syndications with participant banks) across 104 active client companies. IFC’s portfolio in China ranks third among countries by both committed and outstanding exposure, and second in both committed and outstanding equity ($1.5 and $1.4 billion, respectively). IFC’s equity portfolio in China has been the largest contributor to IFC’s capital gains historically, with US$2.3 billion over the last ten years in realized 13 capital gains, 21 percent of IFC’s total. IFC’s loan portfolio in China remains strong, with a low level of non-performing loans. The composition of the portfolio reflects IFC’s strategic focus on green growth, balanced and inclusive development focused on lagging regions, and a strong drive to promote international standards and access to capital for the private sector. The share of investments supporting green growth in IFC’s portfolio as of end-FY19 exceeded one-third. The share of investments aiming to promote greater inclusion and helping address rural-urban divide and inequality across provinces (including access to finance for MSMEs, agribusiness, utilities, health and education) are estimated at around two-thirds of IFC’s total portfolio in China. Reflecting China’s increasing role as IFC’s financing partner, syndications by Chinese banks in IFC’s global syndicated portfolio surged from US$92 million at end-FY2013 (corresponding to one percent of IFC’s total syndicated portfolio) to US$2.6 billion or 16 percent of IFC’s total, placing China as the top source country in IFC’s global syndicated portfolio. 40. IFC’s advisory program was very active during the CPS period, including expanding the China Utilities Energy Efficiency program (CHUEE) to provide billions of dollars of commercial bank financing for green projects, and working with the People’s Bank of China to help establish the world’s largest credit registry (covering 950 million people by 2017) and a database of secured transactions and movable assets, which helped facilitate financial transactions worth trillions of dollars. 41. During the 2012 CPS period, the improving investment climate in China limited the demand for inbound political risk insurance, but MIGA supported one investment in the water sector—the Aqualyng Cangzhou Seawater Desalination Project, approved in December 2015 for US$10 million. Box 3: Examples of Climate Change-Related Results During the 2012 CPS Mitigation • 7 million tons of coal equivalent (cumulative) saved and nearly 22 million tons of GHG emissions avoided through complementary World Bank and IFC programs to promote energy efficiency and green energy lending in the banking sector. • 31 successful low-carbon urban transport corridors in 17 cities implemented, increasing public transit ridership, reducing travel time, and improving safety. • Pollution clean-up measures implemented to reduce persistent organic pollutants (POPs), non-point source (NPS) pollution, phase out ozone-depleting substances (ODS), emissions of greenhouse gases by 88 million tCO2 equivalent. • 400,000 ha forest and range-land area rehabilitated and restored through successful demonstration of sustainable forest management models. Adaptation • Agricultural productivity and farmers’ incomes increased while reducing GHG emissions through pilots of climate-smart agriculture practices in six provinces. • 40 percent of pilot villages in Henan, Shaanxi, and Chongqing have successfully completed village assessments and resource mapping and identified adaptation needs. • Reconstruction and appropriate expansion of infrastructure services in 16 counties in Sichuan and 7 counties in Gansu with 100 percent of facilities built to applicable government standards for flood and seismic hazards. • Reduction of water use by 29 million cubic-meter/year in 20 industrial facilities, which include more than 100 factories. This would translate into a reduction of more than 500,000 tons of GHG per year. 14 Lessons Learned 42. The FY20-25 CPF takes into consideration lessons identified in the CLR and during CPS consultations. Key lessons include: (i) Joint studies can be important for deepening the dialogue on policies and Bank programs, but there is room to improve the overall strategic planning of ASA. China 2030, Urban China, and Healthy China helped deepen policy dialogue and provided a solid foundation for lending. The approach has inspired joint studies in other countries, such as Vietnam 2035. But care needs to be taken that the time and resources required for joint studies do not crowd out other relevant analytical work. (ii) IBRD lending is leveraged when it helps introduce and test new approaches for replication using the government’s own resources. Since the 1980s, China had deployed a pragmatic, learning-by-doing approach to development, testing reforms at the village or provincial level before rolling them out. Provincial authorities are encouraged to experiment. China has intentionally used IBRD-financed projects to pilot new approaches—such as health care reform and subnational fiscal reform during the CPS period. Respondents to the China Country Survey in FY19 identified the WBG’s greatest value as piloting innovations that can be scaled up (see box 4). Reform pilots have tended to proceed step by step, building on one another to develop a comprehensive reform path. (iii) There is synergy between projects and ASA. In some cases, ASA have led to lending—such as in aged care and early childhood development. In other cases, lending has led to ASA; for example, the Bank’s engagement in the transport sector led to analytical work on railway governance (Transport Paper Series) and sustainable low-carbon city development. Lending provides the Bank with an inside view of policy and institutional constraints and also helps establish trust and credibility conducive to effective ASA. (iv) DPF and PforR instruments, which were used during the CPS period for the first time, helped deepen cooperation around policies and reforms. For example, although the World Bank had long engaged with subnational governments on budget reforms through ASA, the two subnational fiscal sustainability DPF approved in FY17 far exceeded the ASA in generating knowledge and having impact. Both DPF were implemented successfully, helping Hunan Province and Chongqing Municipality place public finance on a more sustainable path. In addition, they enhanced the Bank’s own knowledge, deepening the Bank’s ability to engage with the central government on budget reform. A number of the practices pioneered in the operations as well as policy recommendations made by the Bank informed by the operations have been echoed in budget reform initiatives of the central government. (v) Systematic use of social assessments helped mainstream gender in the lending and analytical work program. As a result, 98 percent of all projects approved during the CPS period (55 projects) addressed gender in at least one of the following dimensions: analysis, design, and/or monitoring and evaluation framework; and 65 percent of projects addressed gender in all three of these dimensions, compared to 33 percent at the start of the CPS in FY12. Social assessments are systematically carried out during project preparation to analyze a range of potential social impacts—including gender impacts—and relevant findings are used to inform project designs. For example, social assessments for several rural road projects led to new design measures to address road safety issues involving women and children. In addition, the Bank undertook five gender assessments, funded by the EAP Umbrella Facility for Gender Equality, to inform ongoing and pipeline operations and the policy dialogue, including in aged care, forestry, urbanization, and transport. These studies also contributed to WBG global knowledge. 15 (vi) The structured process used to develop the IBRD pipeline worked well in the past, but a more flexible and iterative process is now needed. Each year, the National Development and Reform Commission (NDRC) solicits project proposals from China’s provinces, vets them against government priorities, and discusses them with the World Bank. The World Bank, NDRC, and the Ministry of Finance (MOF) then agree on a three-year lending program, which is submitted to the State Council (China’s cabinet) for approval, after which the projects are prepared and implemented without material changes. This bottom-up process results in a stable three-year rolling lending program with strong government ownership, especially at the local government level, but makes it more difficult to develop projects that address national-level institutional reform priorities. Going forward, a more flexible and iterative process that allows more engagement with national-level institutions is needed to ensure that IBRD lending meets national priorities, strengthens management and policy implementation capacity, and is consistent with the capital package policy commitments. (vii) Support for South-South knowledge exchange would benefit from a more programmatic approach. The WBG provided substantial support for South-South learning, but its ad hoc nature made it difficult to track and evaluate. A programmatic approach would help ensure that activities take place within a more strategic framework and are appropriately coordinated, supported, tracked, and evaluated. Box 4: FY19 China Country Survey A China country survey in FY19 invited 535 stakeholders to provide their opinions on the WBG’s work, of which 157 stakeholders (29 percent) responded. The largest number came from project management offices at the local level (21 percent), followed by academia (20 percent), and local government officials (13 percent). Other respondents included central government officials, consultants, and representatives of media, NGOs, and SOEs. Overall, the FY19 survey findings suggest that views among this small sample of opinion leaders have remained fairly consistent since the last survey in FY15. Survey Results • Development Priorities. Nearly half of the survey respondents point to governance/government effectiveness as the top development priority in the country. Environmental improvement/sustainability continues to be the second most important priority (25 percent), but has shifted downward since FY15, when more than a third viewed this as the top development priority. However, 86 percent of respondents see climate change as either a somewhat serious or very serious problem. Economic growth, the quality of growth, and access to education were identified as the next biggest development priorities (17 percent each). • WBG Role. The areas that stakeholders believe would most benefit from WBG support include environmental improvement (30 percent) and poverty reduction (29 percent), followed by reducing inequality and access to education (20 percent each), and governance (19 percent). Respondents indicated that the WBG should continue to play a significant role in China’s development in the next five years (7.8 on a 10 -point scale, with 1 being not a significant role and 10 being very significant role). • Perceived Value of the WBG’s Work. Respondents indicated that the WBG’s greatest value to China was to bring new concepts and innovations, pilot innovations that can be scaled up and transfer international best practices. When looking forward and considering how the WBG can add value in China, more than half said that the quality of experts should be improved and the WBG should offer more innovative knowledge services. • WBG Effectiveness. Views on the WBG’s overall effectiveness remain high (8.0 on a 10-point scale with 1 being not very effective and 10 being very effective). The WBG is seen as a long-term partner (a rating that has been consistently high in China country surveys over time), straightforward, and honest. Its collaboration with civil society and private sector (7.2 and 6.9) are rated the lowest across the survey, but even these rates are relatively high. Nearly half of respondents report that the WBG’s greatest weakness is that it s processes are too complex, followed by one fifth of respondents who reported that the processes are too slow. Concerns about complexity have increased significantly since the FY15 survey. 16 III. THE WORLD BANK GROUP STRATEGY 43. The WBG’s FY20-25 CPF reflects a reorientation of the WBG program to pursue a strong yet increasingly selective engagement as lending declines. This is appropriate for China’s level of development.18 A. Framework for World Bank Group Engagement in China Prioritizing WBG Engagement 44. The WBG program will support China’s development priorities aligned with the identified institutional constraints and in areas where the WBG has the capacity and knowledge to engage. The relationship between SCD priorities, the institutional assessment, government demand, and WBG comparative advantage is shown in figure 1. The CPF program is aligned with China’s development and reform strategy; and it is informed by the WBG’s SCD and other analytical work that identifies areas where reforms and institutional strengthening are needed for China’s sustainable growth and graduation from IBRD. The CPF was further informed by consultations with government, academia/think tanks, CSOs, and development partners to review the results of the previous CPS and discuss priorities for future WBG engagement. Figure 1: Prioritizing WBG Engagement Areas of Engagement 45. The CPF is organized around three engagement areas that correspond to China’s key development challenges identified in the SCD. The priorities identified by the SCD centered on managing the transition to slower growth; promoting greener growth and more efficient use of natural resources; and reducing disparities in accessing quality public services and between rural and urban areas. As discussed in section I.B., there are critical institutional and reform gaps underlying these challenges. Accordingly, the CPF engagement areas are: (i) advancing market and fiscal reforms; (ii) 18 It is also consistent with the Sustainable Financing for Sustainable Development: World Bank Group Capital Package Proposal, prepared by the WBG for the April 21, 2018, Development Committee Meeting. 17 promoting greener growth; and (iii) sharing the benefits of growth. In addition to the three engagement areas, the CPF includes a cross-cutting theme: cooperating on global knowledge and development. 46. The WBG program will focus on nine objectives linked to China’s institutional constraints. (The links between the objectives and main institutional constraints are summarized in tables 4, 5, and 6.) The CPF objectives cover both the ongoing and planned programs—as with all CPFs, a considerable share of the results achieved by the end of the CPF period will be derived from projects and investments approved during the previous strategy period. Going forward, however, IBRD and IFC financing will be subject to selectivity criteria (see section below). Figure 2 lays out the CPF engagement areas and objectives. A CPF Results Matrix (annex 1) lays out the logical relationship between WBG interventions (ongoing and planned), outputs, and outcomes, including milestones and indicators to measure progress. Figure 2: CPF Engagement Areas and Objectives Selectivity Criteria for New IBRD and IFC Financing 47. New IBRD and IFC financing will be subject to selectivity criteria. IBRD will primarily focus on China’s remaining gaps in policies and institutions for sustainable IBRD graduation . WBG operations will also emphasize at least one of the following four criteria: addressing regional and global public goods, supporting critical services in lagging regions, fostering the private sector, and strategic piloting of approaches that address development priorities, especially in areas relevant to other developing countries. IBRD financing for infrastructure will be minimized and used to deliver institutional reform and strengthening or innovative solutions to poverty and shared prosperity that generate lessons for other countries. 48. The new approach and selectivity criteria will result in several shifts in the IBRD program. Projects that finance purely infrastructure with little or no institutional strengthening will be 18 phased out, which will especially impact engagement in the transport, urban, and water sectors. New engagement in these areas will be reoriented toward the priorities above and investment volumes will likely decline over time. New or expanding areas for IBRD financial support include green finance, climate change, food safety, river basin environmental management/marine plastics, and public-private partnerships (PPPs). There are important institutional gaps in these areas, and many of them also deliver global public goods and opportunities for global learning. In some areas, IBRD will take a more sector-wide approach—using several coordinated projects to address different aspects of a complex institutional or reform area. IBRD operations will continue to shift towards policy and results-based programs, which offer effective platforms for strengthening government programs and addressing institutional and capacity gaps. Box 5: IBRD Lending to China Background on IBRD in China: • China is the fourth largest borrower of IBRD over the past decade, and it is one of the smallest IBRD borrowers on a per capita basis. China has borrowed US$17.9 billion in IBRD financing from FY2008-2018, ranking fourth after India (US$24.3 billion), Indonesia (US$21.7 billion), and Brazil (US$20.2 billion). • IBRD-financed projects in China have special characteristics. In most cases, the Bank works directly with China’s subnational governments; the projects are implemented by provinces and municipalities, which are responsible for loan repayment. Lending to China has Benefits… • …for China. The Chinese government values projects as platforms for knowledge, reform, and institution building, and for introducing and piloting new approaches that can be replicated in China using their own resources (see para. 42(ii)). Projects typically enable a deeper and more sustained engagement than technical assistance, with a 4-to-8-year partnership over the course of project preparation and implementation. Projects give the Bank an inside view of institutional challenges, allowing the Bank to provide better advice on how to overcome roadblocks and adjust project activities to realities on the ground to achieve the development objective. The government also appreciates that when the Bank’s own resources are at stake, the Bank is fully vested in ensuring project success. The hands-on-learning and capacity building over a sustained period is especially valued by towns and small cities. • …for the World Bank. Working on projects in China enriches the Bank’s knowledge base. Many developing countries want to learn from China’s development experiences. Bank learning from its direct involvement in designing and implementing projects in China is important for the Bank’s global knowledge and can be shared with other Bank members that face similar challenges. • …and for the world. IBRD-financed projects addressing the environment and climate change have important global benefits. Given its size, China is essential to global efforts to improve environmental management and address climate change. In addition, as noted in the 2018 capital package, IBRD (and IFC) engagement in upper middle-income countries such as China supports WBG financial sustainability and the ability to engage in less financially sustainable environments, such as fragile and conflict-affected states and low- income IDA countries. But engagement will shift going forward: • This is the first CPF for China since it passed the GDI in 2016 and since the Capital Package Proposal agreed in April 2018.1 Going forward, IBRD-financed projects will be platforms for reform, institution building, and knowledge transfer, and volume will gradually decline. IBRD will primarily focus on China’s remaining gaps in policies and institutions for sustainable IBRD graduation. WBG operations will also emphasize at least one of the following four criteria: addressing regional and global public goods, fostering the private sector, supporting critical services in lagging regions, and strategic piloting of approaches that address development priorities, especially in areas relevant to other developing countries. 1 The GDI is the threshold for initiating discussion of graduation. China is one of 30 IBRD-eligible countries whose GNI per capita exceeds the graduation discussion income (GDI) threshold of US$6,975 in 2018 (atlas methodology). In addition to the GDI, there are two non-income factors for continued access to IBRD: (i) ability to access external capital markets on reasonable terms; and (ii) progress in establishing key institutions for economic and social development. 19 49. The World Bank and Government of China have worked together to restructure the lending pipeline to align with the CPF selectivity criteria. The tentative IBRD lending program for FY20 and lending engagement areas for FY21-22, including selectivity criteria, are shown in annex 6. As noted in “lessons learned” (para. 42), China has a structured process of developing a three-year IBRD pipeline, which results in a stable and predictable lending program with strong ownership, especially at the sub-national level, but makes it challenging to change the program in a short period of time. During a process that stretched over several months, MOF, NDRC, and the World Bank used the CPF selectivity criteria to review the three-year lending pipeline and agreed to drop more than a dozen projects and reorient the portfolio. 50. IFC’s engagement will also evolve to reflect China’s changing development challenges and institutional constraints. China’s development has been accompanied by increasing flows of private capital. However, these flows have been volatile, and have not reached all sectors and provinces. In addition, capital has tended to flow to the state-owned sectors rather than to private companies. IFC will work to create competitive markets and attract private investment to areas where it is lacking. IFC’s engagement in China will continue to concentrate on strengthening capacity to meet international standards, and on developing a competitive private sector. IFC’s program will become more selective and the focus—both sectoral and geographic—will shift to align with China’s emerging development needs, in line with the CPF selectivity criteria. The IFC program is complementary to that of IBRD and will contribute to achieving the CPF objectives by focusing support to the private sector on (i) strengthening environmental sustainability and resilience; (ii) deepening inclusion and reducing inequality in lagging regions; and (iii) crowding in private investment to create a more competitive market environment. 51. In keeping with the capital package commitments, IFC will apply a rigorous additionality assessment to its investments. On the non-financial side, IFC additionality is focused on propagating international standards in the Chinese market, including bringing expertise and standards in climate and green financing and food and drug safety, and spreading best practices in risk management, sustainability, corporate governance, and transparency. On the financial side, such additionality includes the promotion of longer tenors, RMB-denominated products, or other unique terms on its debt products. In addition, IFC can help attract investors to areas that they otherwise would not consider by providing swaps, hedges, and other risk-mitigation tools and mobilizing other investors to join a financing package based on IFC’s presence. 52. IBRD and IFC will work together wherever possible, leveraging their resources to help China address institutional gaps and deliver global public goods. Collaboration is currently focused on four areas: climate change, financial inclusion, PPPs, and the business environment (see box 6.) Future areas of collaboration could include aged care, food safety, and marine plastics. Financial Resources 53. IBRD. IBRD lending will average about US$1.0-1.5 billion per year and gradually decline during the CPF period. Lending levels may fluctuate up and down from year to year due to normal pipeline management based on project readiness. The average represents a decrease from the previous period: IBRD lending averaged about US$1.8 billion per year from FY13 (the beginning of the previous CPS) to FY19. IBRD lending rose to US$2.42 billion in FY17 after the Performance and Learning Review (PLR), discussed by the Board in February 2016, increased the lending envelope to address China’s reform priorities. The Chinese government has requested to continue using IBRD- financed projects and programs during this CPF period as platforms for reform, institution building, and knowledge transfer. 20 Box 6: One World Bank Group in China IBRD and IFC are collaborating in China across several areas to create markets, deliver global public goods, and help China move toward a sustainable development path: • Climate change. IFC and IBRD provide complementary support for renewable energy and energy efficiency lending in the banking sector. IFC’s China Climate Finance Advisory Program has catalyzed over US$100 billion of lending from its member banks for energy efficiency and renewal energy projects. IFC is now pursuing a major new initiative—the Green Commercial Bank Framework. Based on the successful pilot with Ma Anshan Rural Commercial Bank, IFC is now rolling the framework out to other Chinese banks. The IBRD, building on its 20-year engagement in the energy efficiency and renewable energy sector, is financing a PforR operation to increase energy efficiency and clean energy in the Beijing-Tianjin-Hebei region. Building on these experiences, IBRD and IFC are jointly exploring the development of a China green investment fund. • Financial inclusion. IFC and IBRD have a long history of coordinating their technical assistance and supporting policies and institutions in China that expand access to financial services. Most recently, IBRD and IFC are collaborating in Gansu, China’s poorest province, to strengthen the credit market for microenterprises and SMEs. • Public Private Partnerships (PPPs). Since 2014, a joint IBRD-IFC team has provided support to China’s PPP program. IBRD has been working with China’s PPP Center to develop regulations for PPPs, build capacity, and identify potential projects. IFC is providing PPP transaction and advisory services, including capacity building for local PPP advisory firms. IFC and multiple WBG global practices are working together to identify a pipeline of bankable PPP projects and help develop institutional capacity to structure and implement PPPs. Together, the World Bank and IFC have identified two potential PPPs that could be best practice pilots in China. • Improving the business environment. IBRD and IFC are working jointly to support improvements to the business environment, which is a top government priority. At the request of government, both institutions have been providing advice on how to improve the Doing Business indicators. 54. IFC. The IFC investment program is expected to remain roughly stable but will follow a rigorous additionality assessment and will focus on the priorities discussed above. Total commitments are expected to be in the range of US$800-1,200 million per year (including mobilization) in 15-25 projects. IFC will continue to employ the full array of financial instruments, from equity and preferred equity to senior and subordinated debt instruments. It will also maintain its extensive knowledge and advisory program to support China’s efforts to develop competitive markets. 55. MIGA. MIGA will pursue projects that support investment in the lesser developed western parts of China or that help expand PPPs. However, China’s investment climate is expected to continue to limit demand for inbound political risk insurance. 56. Trust funds. Recipient-executed trust funds are moderate in number and volume (22 grants, US$536 million in commitments as of September 2019) but integral to the Bank’s operations in China, especially in the environmental sector, where the trust funds help bring technical solutions to complex problems. Most of China’s trust fund portfolio comprises the Global Environmental Facility (GEF) and Montreal Protocol (MP) (for ozone-depleting substances). GEF engagement in China covers all thematic areas of the GEF—climate change, biodiversity, chemicals and wastes, and international waters. Over 70 percent of GEF commitments in China address climate change, reflecting its importance for China and the world. China has the largest MP program in the world (76 percent of all World Bank commitments), reflecting the country’s status as the largest producer, consumer, and exporter of ozone-depleting substances and the government’s efforts to phase them out. Current MP funding (about US$141.5 million) is helping to phase out the next generation of hydrochlorofluorocarbons (HCFCs). This support will continue during the CPF with a new component to help China avoid hydrofluorocarbons (HFCs) (in accordance with the 2016 Kigali Amendment to 21 the Montreal Protocol), which will make a notable contribution to climate change mitigation. In addition, through the Partnership for Market Readiness, the Bank is supporting key e lements of China’s Emissions Trading Scheme (ETS), and this engagement will deepen to expand the ETS to other sectors of the economy. Knowledge Services 57. Reimbursable Advisory Services (RAS). China approved its first RAS in December 2018. One RAS is already completed, another two are under implementation, and several more are under discussion, all in the area of Doing Business-related reforms. The government and the Bank will continue to explore using RAS where appropriate. As the RAS program expands, the government and the Bank will establish a process to ensure a strategic approach and effective coordination, implementation, and impact. 58. Other Advisory Services and Analytics (ASA). In addition to RAS, ASA will include: (i) demand-driven knowledge services, which includes both analytical work and technical advice; (ii) the Bank’s standard due diligence—economic and social monitoring, updates of the country gender action plan, and analytical work that generates sector knowledge required for investment projects; and (iii) IFC advisory services to help create sustainable markets and promote better standards while focusing on access to finance, climate change, agribusiness and food safety, and corporate governance. Key ongoing and planned ASA by area of engagement are shown in table 3. Table 3: Key Advisory Services and Analytics by Area of Engagement CPF Areas of Engagement Name of ASA and Expected Completion Date Cross-Cutting • Inputs to the 14th FYP (FY20) • Poverty Reduction in China: Lessons for the World and Challenges Ahead (FY21) Advancing Market and Fiscal • Various RAS on Doing Business Reforms (FY20/FY21) Reforms • China Innovation Promotion Policy (FY20) • Institutional Reform for Fiscally Sustainable and Efficient Subnational Governments (FY22) • Strengthening Digital Finance Foundations: Development of a Data Regime; and Building up an Electronic Warehouse Receipts System (IFC) • FinTech/Digital Banking Advisory with Micro-Credit Companies (IFC) Promoting Greener Growth • China Green Industries (IFC/WB) (FY20) • Programmatic Urban ASA (sustainable cities, etc.) (FY20) • Programmatic: Energy Transformation / Power Sector Reform (FY21) • Developing a Green Finance Framework (FY21) • Transport Transformation & Innovation Knowledge Platform (TransFORM) Phase 3 (FY21) • China Water Sector Support Program (FY22) • Environment and Climate Change Programmatic ASA (FY22) • Greening Agriculture and Food Systems (FY23) • Supporting Marine Plastic Debris Solutions (FY23) • China Green Commercial Bank Framework from Pilot to Operational (IFC) • Agribusiness Efficiency and Food Safety Advisory (IFC) Sharing the Benefits of Growth • Programmatic: Poverty and Inequality in China (FY20) • China Health Reform PforR Implementation Support (FY21) • Programmatic: Promoting Inclusive and Quality Education in China (FY22) 22 B. Engagement Area One: Advancing Market and Fiscal Reforms 59. Advancing market and fiscal reforms will be key to completing the transition to a more sustainable growth trajectory and maintaining financial stability, which are important for the global economy. China’s high investment rates to support economic growth resulted in lower productivity growth, declining returns to investment, and rising debt. Sustaining growth will depend on accelerating productivity growth and containing risks. For that to happen, as recognized by China’s government, the market needs to play a decisive role in the allocation of resources, and institutional reforms are needed to achieve this. The joint WBG-DRC study Innovative China: New Drivers of Growth identifies policies and reforms to promote sustainable productivity-led growth, including reforming financial, labor, and land markets; creating a more open, business friendly, and globally integrated economy; and hard budget constraints (see box 7). 60. The WBG will engage in selected areas to help strengthen markets and competition, contain debt, and manage financial risks (see institutional constraints in table 4). As outlined in the two objectives below, the WBG will expand support, especially through RAS, to improve the environment for private sector development and will help China achieve more effective and sustainable fiscal management. In addition to these two objectives, the WBG is carrying out programmatic ASA in the financial sector focusing on financial sector reform, financial stability, financial inclusion/digital finance, and green finance. Table 4: Engagement Area 1--Institutional Constraints Objective 1.1: Improving the Environment for Competition and Private Sector Development • Fragmentation of regulatory frameworks and policies supporting business environment reforms. • Regional differences in the quality of the business environment, driven by weak monitoring mechanisms, coordination challenges, and uneven administrative capacity. • Relatively weak coordination of innovation policies resulting in fragmentation, duplication, and misallocation of resources. • Weaknesses in corporate governance and compliance. Objective 1.2 Achieving More Effective and Sustainable Subnational Fiscal Management and Infrastructure Financing • Need for better management of subnational debt, including reduced reliance on off-budget financing. • Lack of incentives and accountability in local public finance management (PFM) and need for stronger PFM capacity at the local level. • Lack of sustainability of (often excessive) local public investment programs. • Limited local government tax autonomy and revenue mobilization capacity leading to excessive reliance on land-based financing vehicles and resulting in increased off-budget debt and urban sprawl. • Need for market-driven green infrastructure financing mechanisms to move away from land-based financing for urban development. Objective 1.1: Improving the Environment for Competition and Private Sector Development 61. A high-quality business environment is critical for supporting productivity growth. Although the overall business environment in an economy depends on many factors, regulations that are transparent and efficiently implemented are key for growth and job creation. In 2017, China began stepping up its efforts in this area. With WBG support, Shanghai and Beijing (the two cities covered by Doing Business) undertook a number of reforms in seven out of ten Doing Business areas, from starting a business through construction permits and getting electricity to paying taxes and registering property. Owing to these reforms, in 2018 China became the second fastest Doing Business reformer in the world. WBG support will include the following: 23 • World Bank support will expand, including through RAS, to reduce the costs of doing business to create a more competitive and dynamic business environment at the national and local levels, in line with the Doing Business methodology and international good practice. • To assist in the shift to more innovation-led growth, the Bank will also provide advice, through programmatic ASA, on improving China’s innovation policies and maintaining compatibility with an open international trade and investment system and competitive markets. • The WBG (IFC and the Finance, Competitiveness, and Innovation Global Practice) will help strengthen the foundation for digital finance (fintech) by supporting the development of a regulatory regime for the expanding data and analytics industry, developing or adapting regulations in selected fintech areas, and building up the necessary institutional elements for an electronic warehouse receipts finance system. • Building on the Bank’s policy work, IFC will support private sector investors who introduce new technologies that help improve efficiency and productivity, address regional and social disparities, and promote greater resource efficiency and environmental sustainability. The focus will also be on boosting financial inclusion of underserved populations. • IFC will continue fostering entrepreneurship and MSME growth and development, especially among women, by providing credit lines, advisory services, and investing with partners focused on supporting women-owned businesses. Box 7: The 3 D’s—Reducing Distortions, Accelerating Diffusion, Fostering Discovery Recognizing that innovation and productivity will be central to China’s next phase of growth, China and the WBG agreed to a joint study, Innovative China: New Drivers of Growth. Undertaken by the Development Research Center (DRC) of the State Council, Ministry of Finance and the World Bank Group the study recommends structural, governance, and institutional reforms to promote new driver s of growth and it compares China’s key policies and reforms with international practices. The main conclusion of the stud y is that promoting productivity is the key to China’s future growth to a high - income country. It can achieve this through a comprehensive program of reforms in three areas—the three D’s: • Removing Distortions to strengthen market competition and enhance the efficient allocation of resources in the economy. Reducing distortions in the allocation of resources will allow China to achieve its current production potential. The first D requires reforms of the financial, labor, and land markets for greater market- oriented resource allocation. • Accelerating Diffusion of advanced technologies and management practices in China’s economy, taking advantage of the large remaining potential for catch-up growth. Accelerating diffusion extends China’s current production frontier to the global frontier. The second D requires science and technology (S&T) polices that emphasize the promotion of technology diffusion, reforms of the education and training system to update the workforce, and a more open and globally integrated economy to access global technologies. • Fostering Discovery and nurturing China’s competitive and innovative capacity as China approaches OECD incomes in the decades ahead and extends the global innovation and technology frontier. The third D requires a more open, bottom-up, and collaborative S&T system; more basic “blue sky” research; world class universities; and strengthened intellectual property rights. All three D’s are underpinned by policies and institutional reforms that promote market competition and a state that is more supportive of markets. China also needs to strike the right balance between the three D’s. While recent policies have focused on the third D, fostering discovery and new innovations, the first and second D’s are likely to produce significant payoffs for China’s immediate future and remain the main drivers of growth for some time. 24 Objective 1.2: Achieving More Effective and Sustainable Subnational Fiscal Management and Infrastructure Financing 62. Reforms to increase productivity need to be complemented by changes in the fiscal system at the national and subnational levels. The motivation of subnational governments in China to mobilize resources for rapid investment played an important role in China’s remarkable econom ic development of previous decades. However, recent years of slower growth have witnessed a rapid build-up in debt and a less efficient allocation of credit. China’s economic transition requires important changes in the orientation and capacity of subnational governments toward more efficient and sustainable fiscal management and infrastructure financing. For this purpose, China approved amendments to its budget law, which came into effect in January 2015, that delegate responsibility for fiscal sustainability to subnational governments, while also introducing fundamental institutions for debt management and more strategic and efficient medium-term budgeting and measures that aim to put local governments on a more fiscally prudent and sustainable infrastructure financing path. At the same time, the need for infrastructure, especially green infrastructure, remains significant and cannot be financed solely from public sources. In the past, local governments commonly used off-budget financing vehicles known as urban development infrastructure corporations (UDICs) to borrow from commercial banks. Under the revised budget law, local governments can no longer access UDICs and are encouraged to use PPPs (but with centrally determined limits on local government commitments) to develop urban infrastructure. The WBG can support government efforts by: • Assisting with implementation of the revised budget law and with achieving fiscal sustainability at the subnational level. Operations in Hunan Province and Dadukou District in Chongqing Municipality, which closed in December 2017, piloted new approaches for achieving debt sustainability, rationalizing public investment, and monitoring local governments, while also enhancing transparency and accountability. Possible follow-up operations focusing on the effectiveness of earmarked transfers and improved focus of local government spending on quality of services are under discussion. Also, through an ongoing TA project, the Bank will continue to help strengthen key elements of China’s public finance system at the national and subnational levels. • Helping to establish a policy environment and guidelines conducive to PPPs and supporting selected local governments in establishing PPP projects that follow international good practices. IBRD is supporting preparation of two demonstration PPP projects that can be replicated by other local governments. The first one supports an inter-municipal urban transport operation and the second one, structured with IFC transactional support, involves a PPP for a water utility, helping establish a robust contractual, tariff and regulatory framework in a sector characterized by historical difficulties in attracting private investment. The WBG will explore additional opportunities among the pipeline of potential PPPs to demonstrate the value of project finance and proper risk allocation mechanisms on project costs, quality, and local government debt management. In addition, IFC will invest in private infrastructure, connectivity, and logistics companies, particularly to increase competition and introduce more efficiency. • Through an operation approved in FY19, the Bank will help establish an urban infrastructure financing facility to raise funds in capital markets and on-lend for green infrastructure in small towns, the first such facility in China. The project builds on previous Bank-financed operations and analytical work and draws lessons from international experience in pooled financing facilities. 25 C. Engagement Area Two: Promoting Greener Development 63. China’s environmental and climate change challenges are unique in scale and complexity and of global importance. Due to its large size, the growth in energy demand, and the reliance on coal, China accounts for almost a quarter of global CO2 emissions19, with per capita CO2 emissions less than the United States and on par with the European Union. Global environmental problems cannot be solved without China’s engagement. China also needs to prepare for climate shocks and make its economy more climate resilient. 64. The government is committed to environmental sustainability and to building an “ecological civilization.” The 13th FYP includes dual binding targets (targets for quantity and intensity) for key environmental parameters, such as energy consumption, carbon emissions, main pollutant discharge, air quality, water resource consumption, construction land, and forest coverage, as well as measures to strengthen enforcement, build environmental administrative capacity, and boost incentives for polluters to comply with environmental regulations and switch to cleaner technologies. Under the NDCs of the Paris Agreement, the Chinese government committed to the peaking of CO2 emissions around 2030 and to making best efforts to peak early; reducing carbon intensity by 40-45 percent from 2005 to 2020 and 60-65 percent from 2005 to 2030; and increasing the share of non-fossil fuels in the primary energy mix to 15 percent by 2020 and 20 percent by 2030. After piloting low- carbon cities and carbon trading programs in seven provinces, the government launched a nationwide carbon cap and trade scheme in December 2017. The NDCs also commit to the development of low- carbon agriculture, including zero growth of chemical fertilizers and pesticides after 2020 and control of methane emissions from rice fields and nitrous oxide emissions from farmland. 65. Climate change and environmental sustainability are cross-cutting issues mainstreamed across the WBG work program and will continue to deepen and expand. Over 70 percent of the IBRD/GEF portfolio in China has environmental objectives; and IFC continues to help clients identify and address environmental considerations in their operations and primary supply chains. Over 30 percent of IFC’s investment commitments in China are climate positive, while all I FC investment operations require clients to adhere to environmental standards, including resource efficiency and pollution abatement. Using the joint multilateral development bank climate finance tracking methodology, IBRD lending during FY15-17 averaged 31 percent climate co-benefits, giving the EAP region the highest percentage of climate co-benefits Bank-wide. The China IBRD pipeline (FY20-22) is expected to be an important contributor to meeting EAP and corporate targets. Going forward, engagement in China could include cross-cutting ASA, climate-oriented DPF to drive policy actions to achieve NDC goals, and climate mainstreaming—supporting China in integrating climate considerations into its development and territorial spatial planning, policy development, and investment design, including China’s overseas investments. 66. To promote green development, the WBG will focus on the five objectives below, addressing the institutional constraints shown in table 5. 19 https://data.worldbank.org/indicator/EN.ATM.CO2E.KT?view=map 26 Table 5: Engagement Area 2--Institutional Constraints Objective 2.1: Facilitating the Transition to a Lower Carbon Energy Path • At the provincial level, lack of institutional framework for policy coordination and implementation to transition away from coal, in particular with respect to coal mine closure, reclamation, repurposing and associated social and reconversion support to laid-off coal mine workers. • At national and regional levels, inadequate regulation and policy frameworks to ensure local utilization and effective integration of renewable energy and create incentives for private sector-led, market-based expansion of RE capacity. Objective 2.2: Reducing Air, Soil, Water, and Marine Plastic Pollution • At the local level, variable capacity to monitor and enforce environmental regulations; advisory, regulatory, executive and judicial roles poorly defined, leading to discretionary decision making. • Limited capacity to gather, share, and report adequate environmental information; limited data transparency • Lack of institutions for coordinated pollution management and land-use planning across jurisdictions. • Limited valuation of natural capital undermines the potential for realization of market-based mechanisms and instruments for addressing pollution measures. Objective 2.3: Demonstrating Sustainable Agriculture Practices and Improving Food System Quality and Safety • Need for stronger coordination between the Ministry of Agriculture and Rural Affairs (MARA) and subnational governmental agencies to develop harmonized policies and regulations and ensure green growth in agriculture. • Weak capacity at local levels to monitor and enforce green policies and regulations in agriculture and create incentives for private green agriculture investment. • Need for enhanced coordination and implementation capacity of the MARA and new State Administration for Market Regulation for food safety policies, absence of risk-based and value-chain-based collaborative approaches across the food safety system. Objective 2.4: Strengthening Sustainable Natural Resource Management • Need to build capacity of new Ministry of Natural Resources—responsible for managing China’s natural resource assets, overseeing the use of China’s territorial space, protecting and restoring the ecological environment, and establishing an integrated spatial planning system. • At the local level, need to strengthen ecological function zones by establishing ecosystem service assessment standards. • Poor incentives and limited institutions for coordination across jurisdictions leading to increasing competition over resources rather than effective management of common resource pools. • Limited use of market-based mechanisms for resource management (tiered pricing, water rights trading etc.) and associated financing mechanisms. Objective 2.5: Promoting Low-Carbon Transport and Cities • Insufficient attention of local governments to asset management and maintenance and excessive focus on construction. • Urban traffic congestion and inefficient distribution systems lead to increased logistics costs and CO 2 emissions; absence of multimodal transport planning and poor integration of transport solutions across the supply chain. • Need for urban planning systems that do not lock cities in carbon-intensive and high-energy consumption growth patterns. • Need for new metropolitan (multi-jurisdiction) institutions and city cluster arrangements to foster collaboration to increase resilience and sustainability of socioeconomic development. Objective 2.1: Facilitating the Transition to a Lower-Carbon Energy Path 67. China is in the process of transforming its energy sector, which is the country’s single largest contributor to air pollution and climate change. Over the past 35 years, China has reduced energy intensity (the amount of energy consumed per unit of GDP) by over 70 percent. China has the world’s largest renewable energy capacity, including installed wind and solar PV capacity. Nonetheless, coal still accounts for about 60 percent of primary energy consumption. China’s energy transformation requires the reduction of coal consumption and the scale-up of natural gas, renewable energy, and energy efficiency. To do so, China needs to overcome policy, institutional, and other barriers. For example, institutional barriers underlie the serious curtailment of renewable energy in 27 recent years, such as insufficient incentives to promote inter-provincial power exchange. WBG support will transition from specific project investments to a programmatic approach that helps China address the policy, institutional, and pricing barriers that limit the development and use of renewable energy. The WBG will support China’s energy transformation by: • The WBG will continue to help scale up energy efficiency and renewable energy by supporting power sector reform, creating an enabling environment and a market for local utilization of renewable energy and energy storage applications, and building the capacity of local financial institutions for green finance. IFC support for renewable energy companies and independent gas distribution companies expanding into rural areas will allow consumers to switch from coal heating to gas heating. • The Bank, through the GEF and Partnership for Market Readiness, will continue to help introduce and increase use of market-oriented mechanisms to address carbon emissions, including supporting China’s national emissions trading scheme launched in December 2017 and helping China share its experience with other countries. • The Bank has been requested to provide policy-based financing and technical assistance to support the province of Shanxi in its transition to a green development path. IBRD will help design policies to accelerate the transition of the energy mix from coal to clean energy, and mitigate the impacts of the energy transition away from coal production on jobs, communities, and the environment. • Beyond the energy sector, the WBG will support the streamlining of national guidelines and standards for green finance and explore the establishment of a green investment fund that would leverage WBG finance with domestic and international private finance. This will include work to harmonize Chinese regulations, policies, and guidelines among various agencies and institutions; come to a common definition of what counts as “green;” and promote the adoption of international best practices. IBRD will support the creation of a demonstration green industrial zone in Jiangxi province using guidelines jointly developed with GIZ and UNIDO, aiming to set a standard for other zones to emulate and attract green financing. • In addition to joint WBG work to establish a green investment fund to pool demand for green assets, IFC also plans to invest in multiple green bonds based on international standards issued (with IFC’s assistance) by existing or prospective mid-sized clients from various sectors to make the green bond market more accessible to smaller private companies. WBG analytical work could also support the development of strategies for a green transformation of China’s industrial sector. • IFC will promote greater adoption of scalable low-carbon and resource-efficient solutions among selected industrial sectors in China via technical advisory services and investments (for example, in new industry sectors or technical intervention areas such as distributed renewable energy generation) and create a pipeline of bankable projects for financing. • IFC will help Chinese banks to incorporate sustainability in their domestic and overseas lending via globally-accepted standards such as the Equator Principles and Green Credit Guidelines and platforms such as the Sustainable Banking Network. Following its successful pilot with Ma Anshan Rural Commercial Bank, IFC will also leverage the newly established Green Commercial Bank Framework to encourage Chinese commercial banks to mainstream green finance and green practices more broadly. IFC will also support existing and future mid- size clients in issuing green finance instruments—green bonds, green loans, and green mobilizations—based on international standards and best practices to broaden and deepen Chinese green capital markets. 28 Objective 2.2: Reducing Air, Soil, Water, and Marine Plastic Pollution 68. Pollution harms China’s economy and people’s health and has global spillovers. Due to concerted government efforts, air quality has improved over the past few years. However, levels of pollution remain high and economic costs from health impacts are rising, partly due to higher exposure levels in areas with growing populations. Water pollution is a serious problem compounded by acute water scarcity. Soil contamination—affecting the food chain and ground and surface waters—is another serious threat to health and the environment; and even with steps to prevent new soil pollution, China must still contend with a large legacy of pollutants that have accumulated over decades. The WBG can help China strengthen its environmental policies and institutions in several areas: • The Bank is supporting government efforts to reduce urban air pollution, including through an ongoing PforR operation in Hebei, which is responsible for about 70 percent of the emissions in the Beijing-Tianjin-Hebei region. Going forward, the Bank will continue working with key regions requiring air pollution control, helping to introduce regional approaches and integrated plans to reduce both air pollution and GHG emissions. • Several ongoing Bank-financed projects demonstrate risk-based approaches to remediate contaminated industrial and agricultural land and introduce and pilot new remediation technologies, creating more flexible and cost-effective models for local governments to redevelop contaminated sites or restore contaminated farmland and reduce public exposure to heavy metals and persistent organic pollutants (POPs). • As a new area of engagement, the Bank will support efforts to tackle marine plastic pollution by developing roadmaps for plastic pollution control to inform policies with support from the PROBLUE multi-donor trust fund, which supports healthy and productive oceans. This engagement could evolve into financial support to selected Chinese provinces to help them reduce plastics and microplastics leakage into rivers and oceans and strengthen the circular economy. China’s Waste Free Cities initiative could also provide important lessons on the reduction and recycling of solid wastes around the world. • Through an ongoing operation, the Bank is also helping to reduce pollutant discharge into Poyang Lake, which is the largest freshwater lake in China and of global biodiversity significance, while introducing international best practice and piloting a modern environmental monitoring system. • Ongoing GEF-financed operations will support the development of a national strategy on mercury and related action plans to manage the production, use, and disposal of mercury and mercury-related products to reduce releases and emissions of mercury to the environment and reduce public exposure to mercury-related pollution, as per the Minamata Convention. China is one of the highest contributors to atmospheric mercury emissions. • The Bank will continue to accelerate the phase-out of ozone-depleting substances (ODS), including hydrochlorofluorocarbons (HCFC), which are powerful greenhouse gases, as per the Montreal Protocol and the 2016 Kigali Amendment. China is the world’s largest producer, consumer, and exporter of chemicals associated with ODS. • IFC will continue working with private sector clients on pollution abatement by assessing the risk and potential impacts of their operations, recommending actions to mitigate them, and tracking performance through regular Performance Standards monitoring. IFC will also continue to support and invest in clean technologies and companies engaged in pollution abatement, safe and responsible recycling of potentially hazardous or precious materials, water conservation, wastewater treatment, and solid waste management. 29 Objective 2.3: Demonstrating Sustainable Agriculture Practices and Improving Food System Quality and Safety 69. The agriculture and food sector in China is transitioning from an emphasis on quantity to greater quality, safety, and environmental sustainability. China’s agriculture, while providing food security to the country, has also brought major environmental challenges, especially due to excessive use of chemical fertilizers and pesticides. Ammonia emissions from inefficient use of nitrogen fertilizers contribute around 10 percent of the air pollution (PM2.5) over the North China Plain and Pearl and Yangtze River deltas; and agriculture accounts for 7.9 percent of China’s total GHG emissions, making China the largest producer of GHG emissions from agriculture in the world. Also, chemical overuse in agriculture, and other agricultural and industrial pollution cause soil and water contamination and affect food safety. Addressing these challenges requires a shift from a resource-intensive production system to a sustainable, climate-smart, and more knowledge-intensive production system. It also requires changes in farm scale, transformation of rural factor markets, and upgrading of food supply chains. To address these challenges, the government is placing a priority on modernizing agricultural production systems while reducing their environmental footprint. Bank support for policy reforms will help open the way for IFC investments in agribusiness and rural supply chains. The WBG can help strengthen policies and institutions: • The Bank will continue to demonstrate climate-smart agriculture technologies and practices that increase efficiency while reducing air and non-point source agriculture pollution. These include improved fertilizer (nitrogen) use efficiency, improved soil management, and improved livestock waste management practices. Bank operations are also strengthening institutions needed to transform the agriculture and food production systems, such as the development of farmer cooperatives and partnerships with agribusinesses and other stakeholders along food value chains and the channeling of green financing towards smart agricultural applications. A proposed new IBRD financial intermediation loan to Henan province will seek to mobilize commercial funding for green technology applications in agriculture, which has so far not benefited substantially from China’s large green finance market, by helping set standards and providing technical assistance and risk reduction instruments. • The WBG expects to expand support for strengthening agriculture product quality and food safety systems in China through supporting development of food distribution and logistics systems and working with regulatory agencies at the national and provincial levels to address capacity constraints and move towards risk-based monitoring, thereby helping to implement the Agriculture Product Quality and Food Safety Law. • Building on IBRD-supported institutional reforms in the agricultural sector, IFC will continue investing in smart agribusiness companies and supply chains to enhance their productivity, encourage food safety, improve water conservation in agriculture, and/or create new market access routes and sales outlets for farmers and smallholders, particularly in frontier regions. IFC’s approach to agribusiness globally focuses on enhancing food safety and security, ensuring inclusive growth and shared prosperity, and making sustainability and energy/water efficiency a business driver. Of these priorities, food safety is a particular concern that IFC is working to address. This engagement will also prioritize increasing female participation in agribusiness and the value chain from farms to markets. Objective 2.4: Strengthening Sustainable Natural Resource Management 70. China’s rapid economic growth has been coupled with a degradation of its scarce natural resources. China is one of the most water-scarce nations in the world—per capita water resources are less than one-third the global average. Water scarcity has become a constraint to economic 30 development in parts of China, and scarcity is worsening due to increasing demand, water pollution, and the effects of climate change. China adopted policies in the mid-1980s that have successfully doubled forest coverage, although total forest coverage remains relatively small and the quality of forests varies. Forests sequestrate enormous quantities of CO2 and figure prominently in China’s NDCs; and they are also important for income and employment in poorer rural areas. Desertification affects over one quarter of China’s land area and about 400 million people and impedes development in northwest China. Chinese policy makers and society are giving sustainable natural resource management high priority; and income and living standards have reached a level where China can afford and is also willing to shift its policies. The WBG can help China strengthen its policies and institutions in this area: • The Bank will continue to provide policy advice on water governance issues, building on the 2018 report, Watershed: A new Era for Water Governance in China , jointly prepared by the WBG and the DRC of China’s State Council. Several ongoing projects are demonstrating integrated water resource management. The Bank will also help implement market approaches to water scarcity and pollution challenges, including use of economic instruments to promote efficiency and productivity in water use and its quality. Going forward the Bank will seek ways to incentivize coordinated water governance across jurisdictions through new financial modalities, leveraging and improving the efficiency of public spending in water resource management and pollution control, with a focus on the Yangtse and Yellow River basins. A new analytical study is also planned on water valuation and its integration into economic planning and decision making. • Ongoing IBRD-financed operations are demonstrating ways to better manage and restore ecosystems and conserve biodiversity, including wildlife conservation in northeast China and controlling desertification in Ningxia Hui Autonomous Region, a national demonstration area for desertification control. • A proposed forestry operation will help China enhance forest ecosystem resilience to natural disasters and climate variability, complementing a parallel operation by the European Investment Bank. A planned GEF operation will pilot climate-smart grassland management practices. • IFC will support private-sector investments in water and sanitation projects. IFC is focusing on improving municipal and industrial water efficiency and water quality, working with private sector firms in water-intensive sectors, especially in water-scarce areas of the country. • Through a combination of advisory services and investments, IFC will crowd in more private investment in sectors so far dominated by the public sector but with potential for risk-sharing and private service provision, including in water, waste water management, and waste to energy. Objective 2.5: Promoting Low-Carbon Transport and Cities 71. GHG emissions from the transport sector continue to grow, adding urgency to the development of low-carbon transport. Although the transport sector contributes less to China’s overall GHG emissions than energy and industry, it is one of the fastest growing contributors due to the rising numbers of private vehicles, inadequate traffic management systems, and inefficiencies in freight transport. Given that car ownership will likely continue to grow, China needs to scale up its efforts to develop low-carbon and efficient transport systems. While China has developed basic public transport infrastructure, it needs to promote market-based policies to manage transport demand, develop integrated urban transport systems in large metropolitan regions to reduce traffic congestion and carbon emissions, and shift from an emphasis on construction to greater focus on asset management and maintenance, including by involving the private sector. There is also a need to improve the quality and efficiency of freight transport, which is dominated by highly polluting trucks 31 and accounts for a large share of vehicular CO2 emissions in China. A decentralized and fragmented logistics industry and underdeveloped multi-modal transportation result in a reliance on trucks for freight and an underutilization of greener modes of transport, such as railways and inland water transport. It is important to reduce GHG emissions from China’s maritime fleet, the world's third- largest, which mainly uses heavy fuel oil and is a main contributor to air pollution in many Chinese port cities. 72. China is shifting to a new sustainable model of urbanization that will require new urban planning approaches and institutional capacity building, particularly in secondary cities. An additional 300 million people will be moving to China’s cities by 2030, taking the country’s urbanization rate from about 50 percent currently to about 70 percent—about one billion people in cities. This continued urbanization will drive growth and raise living standards, but it will be important to establish urban planning systems that do not lock cities into carbon intensive and high energy growth patterns. In 2015, the government launched a “National Plan on New Urbanization” that emphasizes more people-friendly and sustainable cities, transit-oriented development, and the provision of basic urban services to all residents, including migrants. China’s city governments are interested in learning from other countries and adopting innovative urban planning approaches that mitigate pollution, conserve energy and natural resources, and build resilience to natural disasters exacerbated by climate change. 73. WBG support in the transport and urban sectors will transition from infrastructure- intensive investments to a more focused approach on the institutions and systems needed to minimize carbon emissions and environmental impact. Ongoing and future WBG support includes: • Through GEF grants, the Bank is supporting the Ministry of Transport in developing national policies and guidelines for green and efficient freight transport and to select representative regions to demonstrate reduction of energy consumption and carbon emissions from the freight transport sector. • Through ongoing city-specific transport investment operations, the Bank is increasing the use of public transport and improving transport efficiency, especially supporting pilot cities for both the Transit Metropolis and the Smart City Program. Investments are complemented by TA to pilot and demonstrate institutional and technological innovations, such as intelligent transport systems, public transport integration, and transit-oriented development. Ongoing projects are also helping to develop models for integrated multimodal (waterway, rail, and road) transport and logistics hubs and helping to build the systems needed for better asset management of the road network, important for reducing fuel consumption and avoiding costly and environmentally harmful road rehabilitation. Going forward, the Bank will seek opportunities to expand engagement on asset management to create space for private investment, thereby reducing the high burden of transport-related debt on local government balance sheets. • The Bank will build on its previous support (through trust funds and ASA) and continue to help reduce air pollution and GHG emissions from maritime transport. • IFC could potentially invest in warehousing and logistics companies that are focused on reducing supply chain costs, introducing best international practices and green building standards, and making transportation companies more efficient to reduce carbon emissions. • The Bank will help scale up the Transport Transformation & Innovation Knowledge Platform (TransFORM)—a knowledge platform to share Chinese and international urban transport experiences and facilitate city-to-city peer learning. TransFORM will expand from sharing knowledge within China to sharing China’s experiences with other countries. • Through both ongoing and potential future operations, the Bank will help cities build resilience to natural disasters, especially floods; and support the shift in focus from natural disaster recovery and construction to introducing risk reduction in socio-economic planning, 32 including by financing an innovative pilot multi-hazard risk information platform that will enable knowledge sharing across districts, counties, and municipalities in Sichuan Province. • IFC will invest in green buildings, including adoption of EDGE standards, encouraging the use of green materials and design of green buildings in new construction, and capital expenditure projects of IFC investees and mobilizing the local capital market to invest in green city projects across China. IFC and the World Bank are collaborating to encourage the use of international green building standards. D. Engagement Area Three: Sharing the Benefits of Growth 74. Addressing the inequalities that have emerged during China’s rapid development is a key social challenge and priority for the government. The disparities are both spatial (between urban and rural areas and between coastal and inland provinces) and between different social groups (most notably migrants and local urban residents). Spatial disparity arose as a natural consequence of economic development—export-oriented manufacturing grew mainly in coastal and urban areas. However, institutional factors have also contributed, such as barriers to rural-urban migration caused by the hukou system and disparities in local government spending caused by the decentralized fiscal system. The government is putting a stronger emphasis on integration between urban and rural areas, including facilitating mobility of people and economic activity and through policies that gradually harmonize social entitlements. The government is also beginning to respond to the new challenges of a rapidly aging population, such as developing a policy framework for aged care. In addition to reducing inequality, reforms to enhance equality of opportunity will also help facilitate China’s shifting growth model—investments in human capital and a healthier and more secure population will enhance consumption and contribute to rebalancing. They will also ensure that China has the quality of workers to navigate the ongoing decline in the labor force due to rapid aging and move up the value chain in production. 75. The WBG will help promote shared development by geographically focusing on less developed regions and small towns and by supporting policies, institutional reforms, and demonstration projects that address inequalities (see table 6 for key institutional constraints). In the human development sectors—health and aged care, social protection, early childhood education, basic education, and skills development—the Bank will help introduce and pilot new approaches at the subnational level while supporting policy reforms through dialogue and ASA at the national level. The Bank could also provide analytical support to help strengthen measurements of poverty and to inform China's poverty reduction policies. Building on Bank-supported policy reforms, IFC will support efforts to increase private sector investment and the deployment of new technologies to provide more inclusive and effective health and aged care and reduce spatial disparities. IFC will especially target companies that provide digital and connected healthcare, thereby enhancing patients’ access to quality and affordable health services. Many of the social sector innovations being supported in China are ones with strong relevance for other developing countries and can provide lessons and models globally. WBG-supported activities can be mapped to the two objectives below. 33 Table 6: Engagement Area 3--Institutional Constraints Objective 3.1: Increasing Access to Quality Health and Aged Care Services • Fragmented and hospital-centric health services delivery system; lack of integration across levels of care. • Need for strengthened capacity of the recently established National Health Security Administration for strategic purchasing from health service providers; need for broader use of performance incentives. • Need for a comprehensive policy and institutional framework for elderly care, including to build the stewardship function of the state, engage the private sector; and develop a sustainable financing model. Objective 3.2 Strengthening the Quality of Early Learning and Skills Development Programs • In rural areas and poorer provinces, limited institutional capacity for early childhood education and basic education and underdeveloped policies for accommodating “left behind” and special -needs children. • Nascent institutional mechanisms for promoting a high-quality teaching force. • Limited capacity, especially in lesser developed areas, to develop technical and skills development programs relevant for the job market. • Availability of reliable and comparable data on learning outcomes to drive policy. Objective 3.1: Increasing Access to Quality Health and Aged Care Services 76. Deepening health sector reform is important for China’s future social and economic success. Despite major gains in health, including a round of reforms launched in 2009, China faces new challenges, especially a rapidly aging population and an increase in non-communicable diseases. China’s fragmented, hospital-centric, and volume-driven health delivery system contributes to escalating health expenditures, raising concerns about future affordability. To expand current reforms, the government, WBG, and World Health Organization worked together during 2014-2016 on a major study, Healthy China—Deepening Health Reform in China, Building High-Quality and Value-Based Service Delivery, that proposed a comprehensive package of measures to deepen health reform and establish a system for better health at affordable costs. The study informed the government’s health sector development plan, which lays out an agenda to provide affordable, equitable, and effective health care for all by 2020. 77. To cope with rapid aging, China needs a sustainable, efficient, and high-quality aged care system. Due to declining fertility and longer life expectancy, a quarter of the population will be 65 and older by 2040. At the same time, the traditional family care system for the aged has eroded because there are fewer adult children to provide informal care and internal migration has reduced inter- generational co-residence. The formal aged care industry and market are underdeveloped except for high-end services catering to the wealthy urban elderly and public aged care services for some indigent elderly. In response, the government is developing a framework to build a market for elderly care services tailored to individual needs and resource constraints. The envisaged system will have three tiers: home-based care supported by community-based care and supplemented by institutional care. It will be important to define the roles of providers and the role of the state as regulator, part financier, and overall sectoral steward. Population aging also poses challenges for China’s social protection system, particularly the pension system and the social assistance system, which focuses on the frail and elderly poor. WBG support for government reforms in healthcare, aged care, and social protection will include: • The Bank will continue supporting reforms needed for the transformation of China’s health service delivery model, including through an ongoing PforR operation that helps implement healthcare reforms in Anhui and Fujian provinces and a planned new operation in Hainan province deepening reforms in integrated care and pooled health insurance to increase quality of care and efficiency of service delivery. Knowledge generation and learning components will ensure that lessons at the provincial level are mainstreamed nationally and shared with other countries. The Bank will also work with the new National Healthcare Security Administration to help strengthen policy and regulatory capacity. 34 • IFC will support private sector provision of affordable health care in areas where it can be more efficient and effective than public provision, and where it can help alleviate some of the stress in the public healthcare system. For example, IFC will look for investments and advisory assignments in private clinics and hospitals in frontier areas, where a market gap may exist in public provision of such health services. More broadly, IFC will look for opportunities to engage with companies focused on the diagnosis, treatment, and prevention of disease, illness, and injury, including companies producing and distributing medical devices, pharmaceuticals/biopharmaceuticals, and those engaged in new markets such as biotechnology and digital/mobile healthcare. • The Bank will support China’s development of an aged care system. There are two ongoing operations—one in Anhui to develop an aged care masterplan and one in Guizhou to promote aged care sector reform. They build on recent ASA on China’s aged care sector and the financing of aged care. The Bank may consider an additional modest financial engagement in this area to deepen reform efforts and promote knowledge sharing about policy reforms among provinces. In close coordination with the Bank, IFC will promote private sector participation in aged care by tapping into its domestic and international network of providers to bring best practices to the Chinese market. • The Bank will continue to support institutional strengthening of social protection programs, building on the Bank’s long-term engagement on pension and social protection reform in China. Objective 3.2: Strengthening the Quality of Early Learning and Skills Development Programs 78. China has made remarkable progress in improving access to education, but there remain large educational disparities between rural and urban areas, especially in learning outcomes. China has practically achieved universal access to compulsory education (grades 1-9) and is on its way to achieving the same for senior secondary education (grades 10-12). Yet, the Human Capital Index for China shows that a child born today will be only 67 percent as productive when she grows up as she could be if she enjoyed complete education and full health. Children in China can expect to complete 13.2 years of preprimary, primary, and secondary school by age 18; but when years of schooling are adjusted for quality of learning, this is only equivalent to 9.7 years. This learning gap of 3.5 years is a result of multiple factors. Access to early childhood education (preschool) in rural areas is low, putting rural and migrant children at a disadvantage. In addition, due to inequalities of basic education and costs associated with continuing education, rural children are learning less in compulsory school and less likely to progress to higher levels of education. Despite reforms that require local governments to admit migrant children in local schools, migrant children still face difficulties enrolling in urban public schools due to capacity constraints and other factors. As a result, learning outcomes in select urban counties and rich provinces are among the best in the world, while rural areas and poorer provinces lag far behind. The government is addressing educational disparities, including through a fund guarantee system to improve compulsory education in poor areas. The government is also promoting technical and vocational education and training (TVET) to help develop a workforce with the competencies needed for more complex local industries, especially in less developed areas. The WBG will assist through pilot interventions in a few key areas: • Through an ongoing operation, the Bank is piloting improvements to improve the quality of and access to early childhood education (ECE) in Yunnan, one of China’s least developed provinces. This first-time IBRD investment in ECE in China is informed by two World Bank 35 studies. 20 Future Bank involvement could help address other ECE challenges and the inequalities in access to quality education, especially in the least developed provinces. • An ongoing Bank operation is piloting ways to decrease educational disparities in Guangdong, including addressing the needs of the “left-behind” children of migrant families and mainstreaming children with disabilities in primary and junior secondary school classrooms. Evidence from the pilot will be useful for informing other developing countries on how education systems can help reduce inequality. A programmatic ASA to assess effective teaching practices and understand local policies and perceptions about mainstreaming children with disabilities will help inform the pilot. Also, the Bank is supporting national teacher education and support policies through the ongoing China Economic Transformation and Institutional Capacity Building Project. • The Bank has several ongoing operations that support reforms and investments that improve the quality and relevance of TVET. The experience of Bank-supported TVET projects provides a solid evidence base for China to reform the TVET system through its domestic resources. The Bank will therefore move away from traditional TVET projects but remain engaged with the skills development reform agenda. • IFC will support employment-driven and skill-based affordable private tertiary and vocational education with an emphasis on education for women to help expand access to quality and affordable education and meet the skill gap as China’s economy shifts towar ds a service- and skill-based economy. Apart from direct investment and advisory support to educational and training institutions, IFC will promote affordable private tertiary and vocational education through its partner financial institutions that also offer financing for education. IFC will also focus on projects that provide exceptional job and job-training opportunities in frontier areas, for example in high value-added manufacturing, raising the skill and income levels of these underserved populations. The IFC and the World Bank will collaborate in analyzing policy and institutional reforms in the tertiary and vocational education sectors. E. Cross-Cutting Theme: Cooperating on Global Knowledge and Development 79. Cooperating with China on global development issues has been an increasingly important aspect of the WBG engagement and strategy. It has been a theme in the WBG-China partnership since 2006. Working in upper-middle-income countries such as China allows the WBG to build its own knowledge and capabilities and to transfer development lessons to other countries. The WBG is well positioned to leverage China’s development experience, given its knowledge and rel ationships built through nearly four decades of lending and analytical work. 80. As part of its growing global role, China is strengthening its engagement with international development organizations, including IDA. China played a key role in the IDA18 replenishment, especially in the creation of the special theme of “Jobs and Economic Transformation.” It will continue to be an important player in the IDA19 replenishment (see box 8). In 2015, China established its first WBG trust fund, the China-WBG Partnership Facility Trust Fund, to contribute to the WBG’s twin goals of eliminating extreme poverty and creating shared prosperity (see box 9). The WBG and China are working together to promote development in Africa, including through the Investing in Africa Forum and the Investing in Africa Think Tank Alliance. 81. Regional integration, South-South cooperation, and knowledge exchanges are key themes of China’s growing global development role. China sees ample development opportunities in 20 World Bank. 2012. Early Child Development in China: Breaking the Cycle of Poverty and Improving Future Competitiveness. and World Bank. 2013. Early Childhood Education in Yunnan. 36 growing connectivity and regional integration. A recent (2019) World Bank study, Belt and Road Economics, highlights the importance of connectivity for development. It also emphasizes that the potential gains depend on ensuring best practices in debt management and transparency, sound procurement and anti-corruption provisions, and environmental and social risk management. As with many middle-income countries, China’s recent development successes offer many lessons of potential relevance to other developing countries, even if these need to be adapted from one context to another. These are themes that will continue to feature prominently in the WBG-China cooperation on international development. Box 8: China as an IDA Contributing Partner Since 2007, China has been an important contributing partner to IDA—its financial contributions have grown over the past four replenishments to US$600 million in IDA18 (see figure below). In addition to grant contributions, China contributed through contractual acceleration of its credit repayments and through voluntary credit prepayments in IDA16 (which contributed US$1.3 billion and US$1 billion of additional resources respectively), and through a Concessional Partner Loan (CPL) of US$1 billion in IDA17. In IDA18, for the first time, China’s contribution was made in renminbi, which joined the Special Drawing Rights (SDR) basket in 2016. China is the 11th largest contributor to IDA18. Alongside its financial contributions, China has participated in shaping IDA’s policy framework during replenishment discussions. During the IDA18 replenishment, China played a key role in formulating the Jobs and Economic Transformation special theme. It continues to engage closely in the ongoing IDA19 replenishment process. China’s Grant/Grant Equivalent Contributions to IDA* * The IDA17 contribution of US$300 million includes the grant elements from the US$1 billion CPL. 82. This CPF will take a more strategic and coordinated approach to cooperation on global development, focusing on two areas: • Harnessing China’s development experience and knowledge to benefit other developing countries. WBG-financed operations in China and analytical work will be more systematically designed to distill and transfer lessons to other developing countries. More broadly, the WBG will work with China’s government and knowledge institutions to analyze and document key practices, policies, programs, and institutions of interest to other countries; distill lessons; and develop an approach to learning and exchanges related to China’s development experience. The 40th anniversary of the WBG-China partnership in 2020 offers an opportunity to draw lessons more systematically and inform knowledge sharing activities going forward, including through the proposed study on lessons from China’s poverty reduction. The interest in China’s 37 experience is considerable. The value added of the WBG will be to help put development experience into context and forge sustainable knowledge partnerships. • Strengthening China’s development assistance institutions and standards for development assistance and finance. The WBG will strengthen cooperation with China’s development assistance institutions, including its newly established development cooperation agency, and exchange experiences in development assistance and aid effectiveness. The WBG will work with China’s agencies and financial institutions and with international partners to support standards for sustainable development assistance, including environmental and social standards, procurement standards, governance and anti-corruption good practices, and debt sustainability analysis. Part of this work may be funded by a multi-donor trust fund, which will operationalize the Multilateral Cooperation Center for Development Finance (MCDF), a platform for promoting high-quality infrastructure and connectivity in developing countries. MOF and eight international agencies, including the WBG, signed a MOU in March 2019 to collaborate through the MCDF. IFC will support Chinese agencies and banks in further building their capacity to implement the Equator Principles and Green Credit Guidelines. IFC will also work with other bilateral and multilateral financial and development institutions that focus on private sector development in China to harmonize approaches and encourage using global best practices with regard to transparency and sustainability. Box 9: The China-WBG Partnership Facility Trust Fund The China-World Bank Group Partnership Facility (CWPF) was established in July 2015 to enhance China-WBG cooperation and contribute to the WBG’s twin goals of eliminating extreme poverty and creating shared prosperity. The CWPF consists of four funding windows: (1) investment projects and operations; (2) knowledge development and South-South learning; (3) human resource cooperation; and (4) financing for global and regional programs. China has contributed US$50 million to the CWPF. Two calls for proposals have been issued for funding through windows 1 and 2, resulting in 28 projects approved for US$16.4 million in funding. In addition, China has contributed US$20 million to the Global Infrastructure Fund through CWPF window 4. Projects approved to date include: • Green investment in Asia. Building on the lessons of the IFC’s China Utility-Based Energy Efficiency Finance Program (CHUEE) to encourage green investment, the CWPF supported the conclusion of four IFC climate investments in India, Sri Lanka, and Vietnam for a total of US$175 million and a private sector investment in green projects of US$1.9 billion by the Agricultural Bank of China (ABC), which the IFC supported with technical support and advice. • Transit-oriented development in Mumbai. In support of a larger World Bank-financed project on urban rail in Mumbai, the CWPF financed activities to help Indian officials learn from China’s experience with urban transit development, especially transit-oriented development, metro, and station development. • Use of evapotranspiration measurement systems in the MENA region. A regional workshop was held with North African and Middle Eastern beneficiary countries and the Arab Water Council in Cairo in May 2017 to study how the evapotranspiration measurement system in China can be replicated in other countries. • Public health capacity in West Africa. In response to the Ebola crisis, the CWPF funded a project to increase public health capacity in African countries to improve disease surveillance, including through a visit by the Chinese Center for Disease Control and Prevention to Sierra Leone. • Climate-Smart Agriculture in Mozambique. The CWFP is financing a project to demonstrate how climate- smart solutions developed in China could benefit agriculture in Mozambique. • Agriculture value chain in Senegal. The CWPF supported research on agricultural value chains in peanuts and rice production to promote private-sector partnerships. • Capacity building in Ethiopia. The CWPF supported trainings in China for Ethiopian government officials and project managers on irrigation technologies for small-scale farmlands. 38 83. A new “China-WBG Program for International Development” will allow more effective coordination. Although cooperating on global development issues has been a theme in WBG country partnership strategies for China since 2006, activities have been predominantly driven by opportunities and initiatives involving multiple parts of the WBG, loosely coordinated, and not systematically tracked or evaluated. The China-WBG Program for International Development, supported by a small secretariat located in the World Bank office in Beijing, will provide an umbrella that ensures that activities take place within a strategic framework and are appropriately coordinated, prioritized, supported, tracked, and evaluated. Cooperation with China on global development issues is expected to become the mainstay of the relationship over time. The Program will provide for continuity in knowledge generation and sharing as WBG lending to China declines. IV. DELIVERING THE WORLD BANK GROUP PROGRAM 84. The WBG office in Beijing will play a central role in program delivery and monitoring. The World Bank office currently comprises about 125 staff. Since 1992, IFC has maintained an office in Beijing co-located with the World Bank office, with currently about 50 staff. In September 2000, a joint IFC/World Bank regional office for private sector development was established in Hong Kong SAR, China. MIGA has Asia offices in Singapore and the Republic of Korea as well as a presence in Beijing, co-located with IFC. 85. The WBG will continue to work closely with national partners and international partners to leverage knowledge and financing. When possible, the WBG will coordinate with local agencies, research institutes, and universities. The WBG will leverage its financial resources through partnerships with other development partners. The World Bank and the Asian Development Bank (ADB) exchange information and collaborate at the program level. The ADB’s country partnership strategy for 2016-2020 focuses on: managing climate change and the environment; promoting regional cooperation and integration; supporting inclusive economic growth; fostering knowledge cooperation; and supporting institutional and governance reform. 86. A CPF Results Framework presents the results chain for the WBG’s program of support (Annex 1). CPF indicators will be monitored over the CPF period. Most supplemental indicators are expected to be completed by the PLR around FY22. Results during this CPF period will come from existing operations and quicker-disbursing operations included in this CPF; many of the new operations to be undertaken during this CPF will not be completed by the end of the CPF (FY25). 87. Continued strong support will be provided to ensure compliance with World Bank fiduciary and environmental and social (E&S) safeguard policies (see also paras. 94 and 95). Challenges include: the geographic span of the portfolio and new projects with implementing agencies unfamiliar with World Bank procedures, especially the Procurement Framework and the new Environment and Social Framework (ESF), which was launched October 1, 2018. Also, given that firms from China are competitive and active in procurement in Bank-financed projects worldwide, the Bank will continue to engage regularly with business associations in China on key E&S safeguard issues. 88. The Bank will also continue to support the strengthening of country systems. A key feature of the new ESF is its focus on using and strengthening country E&S management systems. The World Bank and ADB are helping China incorporate features of the 2016 Procurement Framework into the Chinese Model Procurement Documents for National Open Competitive Procurement of Works and Goods. The Bank is providing TA to NDRC and MOF to further strengthen China’s legislative instruments and systems for public procurement and for accelerating the process of China’s accession to the World Trade Organization Agreement on Government Procurement. The Bank’s procurement team will continue to provide periodic training to government auditors and is increasingly relying on 39 the China National Audit Office and subnational audit offices to carry out procurement post reviews of Bank-financed operations using a risk-based approach. The Bank will also continue to facilitate South-South cooperation in accounting, auditing, financial reporting, and safeguards management to benefit other countries in the region 89. The WBG will continue to ensure that gender gaps, when present, will inform the preparation and design of projects and results frameworks.21 As per corporate commitments, the CPF sets a target of at least 55 percent of new operations addressing relevant gender gaps. 22 For example, IBRD will aim to reduce existing inequalities between males and females in regard to access to credit services (Gansu Revitalization and Innovation Project); access to participation in the New Professional Farmer Development Program (Guangxi Poverty Reduction Program); and reduce the elder care burden for women and promote formal job opportunities for care workers (Anhui Aged Care System Demonstration Project; Guizhou Aged Care System Development Program). IFC will continue to deepen its work on gender in both its investment and advisory work, with a focus on supporting women-owned businesses and facilitating better targeting of women clients in the banking and educations sectors, among others. 90. The WBG will prepare a PLR at CPF midpoint. The PLR will evaluate progress toward CPF objectives and adjust the strategy and program as needed in accordance with the 14th FYP (2021- 2025) and based on lessons learned during the first half of CPF implementation. The PLR will also provide an update of the key elements of the graduation policy, notably the strengthening of key institutions for economic and social development. V. MANAGING RISKS 91. Risks to the WBG’s development effectiveness in China are moderate overall. The risks reflect the shift in China’s economic model, including those arising from potential resistance to the required reforms and uncertainties in the global environment. Also, the shift in WBG engagement to address key policy and institutional challenges is expected to result in greater risk taking. On the other hand, China has good design and implementation capacity, has displayed strong ownership of the WBG program in the past, and has a track record of high performance. The summary risk table (see table 7) uses the Systematic Operations Risk-rating Tool (SORT).23 92. Given the CPF’s shift to primarily focus on key policy and institutional constraints, WBG development effectiveness will depend to a greater extent on strong sector strategies and policies in difficult reform areas. Therefore, the risk category “sector strategies and policies” is rated substantial. Some provincial governments may view this shift as less demand driven than when the IBRD program was determined mainly through a bottom-up process, which could also increase risk. When working at the provincial level, it will be important to ensure that support for key policy and institutional reforms is matched at the local level by commitment and need for implementation support. 93. China’s complex development issues require sophisticated solutions, making project design and implementation challenging. For example, projects that address air pollution and land contamination require technically and institutionally complex designs and flexibility during 21 A China Gender Assessment (FY17) was undertaken to inform the SCD and the CPF, including data from Gender Equality in China’s Economic Transformation, UN Women, 2014; and Gender Equality and the Labor Market, Asian Development Bank, 2017. 22 In FY18, WBG corporate monitoring shifted to reporting the percentage of projects approved each year that meet the new gender tag. The FY17 baseline for China was 23 percent and in FY18 this increased to 30 percent. 23 A definition of risks and a rating guide are provided in the SORT Guidance Note, available at: http://pubdocs.worldbank.org/en/972311473706061935/SORTGuidanceNote2014.pdf 40 implementation. “Technical design of project or program” is therefore also rated “substantial.” The WBG must ensure that staff with high levels of expertise remain engaged with China. 94. During the CPF period, the World Bank will give due attention to the management of social and environmental risks. These include risks related to issues such as resettlement, labor conditions, community health and safety, biodiversity, resource efficiency and pollution as well as vulnerable groups such as the elderly, disabled, women and ethnic minorities. The Bank has various ongoing projects with high safeguard risk ratings given their complexity and scale and also operates in some areas with a significant share of vulnerable groups. Risk management for new Investment Project Financing (IPF) projects with Concept Note meetings on or after October 1, 2018 follows the new Environmental and Social Framework (ESF), which enables the World Bank and borrowers to better manage environmental and social risks of projects and to improve development outcomes, particularly for vulnerable groups. The ESF makes important advances in areas such as transparency, non- discrimination, public participation and accountability. However, its implementation will require additional training for clients and project management units. 95. Although risks are moderate for “institutional capacity for implementation” and “fiduciary,” continued capacity building will be needed. Many operations focus on central and western provinces and smaller cities, where counterparts are less experienced and may require more support during preparation and implementation. World Bank fiduciary staff will continue to provide training to project management office staff, implementing agencies, and other relevant groups, such as procurement agents, auditors, and finance bureaus. Also, the Bank’s fiduciary teams are working closely with clients to carry out assessments of client systems under PforR operations, and to provide recommendations to improve their systems and mitigate risks. Table 7: Summary Risk Table Summary Risks (H: High; S: Substantial; M: Moderate; L: Low) Risk Categories Rating 1. Political and governance L 2. Macroeconomic M 3. Sector strategies and policies S 4. Technical design of project or program S 5. Institutional capacity for implementation and sustainability M 6. Fiduciary M 7. Environment and social S 8. Stakeholders M Overall M 41 ANNEXES Annex 1: China Country Partnership Framework Results Matrix Engagement Area 1: Advancing Market and Fiscal Reforms Objective 1.1: Strengthening the Environment for Competition and Private Sector Development Intervention Logic China’s slowdown in growth places a premium on policies to increase productivity -led growth by promoting market competition and the private sector (SCD, 2018). This entails, among others, structural reforms to strengthen the foundation of a market-based economy, including fewer barriers to entry and exit and increased competition in all sectors (China 2030). A strong regulatory framework and consistent and predictable application of regulations are needed to reduce the regulatory uncertainty identified by both foreign and domestic investors in China. The government has emphasized its commitment to strengthen the business environment and gave this topic priority during State Council meetings in January and February 2018. Reform momentum has also picked up at the subnational level, including Beijing and Shanghai. The government has implemented a range of reforms to improve the regulatory environment for private sector and reduce transaction costs; however, the regulatory environment still varies substantially among different regulatory areas and regions/cities. The WBG has supported the government through policy advice since 2017. During the CPF period, the WBG will provide TA to the federal and subnational government to support a program of reforms to improve the business environment. In 2018, the government signed the first RAS agreement for advice on improvements in China’s secured transaction and insolvency frameworks, followed by RAS agreements with Shanghai and Beijing. Several more potential RAS are under discussion. Indicators Supplementary Progress Indicators WBG Program 1.1.1 Doing Business composite measure Business Environment Ongoing: (for Beijing and Shanghai) of the cost of • Reduction in composite time to comply with regulations in IBRD: Gansu Revitalization and Innovation Project doing business and quality of the Beijing and Shanghai (time to start a business, deal with (P158215, 6/19-6/25) regulatory environment construction permitting, get electricity, register property) Ease of Doing Business Score from 207 to 150 by 2022. RAS: Shanghai: DB Construction Permitting and Trading (Highest/frontier = 100): • Improvements in quality of regulations and institutions to Across Borders Reforms (P170611, FY20); Beijing: DB - Baseline: 77.9 (2020) secure property and investor/creditor rights (property Construction Permitting and Property Registration Reforms - Target: 80 (2025) registration, secured transactions, resolving insolvency) by (P170908, FY20). 2023. 1.1.2 Number of MSMEs provided with ASA: Innovation Promotion and 13th & 14th FYP Support financing by IFC’s fintech and financial Competition/Innovation (P168758, FY19-20); Financial Inclusion Global Initiative intermediary partners • Competitive neutrality principles (as noted in the (FIGI) Country Support Program (P167514, FY18-21); - Baseline: 0 (2018) Government Work Report, March 2019) implemented by Financing Instruments for Green Development (P171164, - Target: 10 million MSMEs 2022. FY19-21); Financial Stability and Development (IFC: CFPA Microfinance Management • New policy measures to strengthen technology diffusion (as Programmatic Approach (P170820, FY19-22); Co., Ltd. (32523, 33268, 38028); discussed in the Innovative China report) implemented by Strengthening China’s Investment Environment through FDI Chongqing Baidu Microloan Co Ltd 2022. and Competition Reform (P171096, FY19-22) (38237, 40399); Jiangsu Financial Leasing 42 Co., Ltd. (30850, 35255; 41668); IFC Investment: Chongqing Xiaomi Microfinance Co., Ltd. Financing for MSMEs CFPA Microfinance Management Co., Ltd. (32523, 33268, (40334); Lionbridge Financing Leasing • 2 “participating financial institutions” in Gansu have 38028); Chongqing Baidu Microloan Co Ltd (38237, (China) Co Ltd (41378); Simple Credit completed and executed their institutional development 40399); Jiangsu Financial Leasing Co., Ltd. (30850, 35255; (42086)) plans with project support by 2023. (Gansu Revitalization 41668); Microcred China Limited (25940, 28915,28916, and Innovation Project) 36287); Postal Savings Bank of China (35461); Urumqi • Non-performing loan ratio (in Gansu) is less than 5% in Tianrong Micro Credit Co Ltd (30345); Tianjin Binhai Rural 2022 and 2023 in new MSME portfolio financed under the Commercial Bank (25511; 29038); Chongqing Liangjiang project as a result of increased capacity of participating New Area Shengji Micro-Loan Co., Ltd. (40226); financial institutions. (Gansu Revitalization and Innovation Chongqing Xiaomi Microfinance Co., Ltd. (40334) Project) IFC Advisory: Postal Savings Bank of China AS (601814); Simple Credit Digital Agrifinance Project (603905); China Rural Collateral Reform (598367) Pipeline: IBRD: Infrastructure PPP Demonstration (FY21/22) RAS: Potential engagements with Guangzhou Free Trade Zone, China Southern Power Grid, Shenzhen, and Xiamen. IFC Investment: Active pipeline includes projects and early leads with a number of microcredit and microfinance (including digital finance) companies, leasing and insurance companies e.g. CFPA Gansu Loan (41879); Lionbridge Financing Leasing (China) Co Ltd (41378); Simple Credit (42086). IFC Advisory: Data Market Development Project (602791); Digital Financial Inclusion (603628) Objective 1.2: Achieving More Effective and Sustainable Subnational Fiscal Management and Infrastructure Financing Intervention Logic China’s economic transition requires important changes in the orientation and capacity of subnational government s toward more efficient and sustainable fiscal management and infrastructure financing. For this purpose, China approved amendments to its budget law, which came into effect in January 2016, to delegate responsibility for fiscal sustainability to subnational governments while also introducing fundamental institutions for debt management and more strategic and efficient medium-term budgeting and measures that seek to put local governments on a more fiscally prudent and sustainable infrastructure financing path. The World Bank will assist with the implementation of the 2016 budget law by: supporting China’s fiscal reforms through ASA; two ongoing IBRD-financed TA projects to strengthen key elements of China’s public finance system at both national and subnational levels; and potentially through a new IBRD operation, building on the work of two subnational DPLs that closed at the end of 2017, to help local governments establish a forward-looking, comprehensive, and transparent public finance regime that integrates budget, public investment, and debt management. The 43 WBG will also support the establishment of demonstration PPPs and China’s first pooled financing facility for green infrastructure, thereby helping China establish new financing strategies at the local government level. Indicators Supplementary Progress Indicators WBG Program 1.2.1 Annual rate of growth in total Fiscal Reform Ongoing liabilities of local government financing • Dissemination of 20 fiscal policy reform proposals to IBRD: Economic Transformation and Capacity Building vehicles. decision makers by 2021 to inform the design and (P144270, 5/14-10/21); Building a Modern Fiscal System - Baseline: implementation of the central government's fiscal reform (P154694; 4/16-7/21); Guangxi Poverty Reduction PforR 2015: 25.2% program. (Building a Modern Fiscal System.) (P163138; 6/18-12/21); Green Urban Financing and 2016: 23.3% • Capacity and skills in core budget management systems in Innovation Project (P158124, 5/19-6/25). 2017: 16.1% the Ministry of Finance enhanced (as measured by percent 2018: 11.1% of staff who, according to a follow up survey, use concepts ASA: China Institutional Reform for Fiscally Sustainable Target: Slower than the rate of nominal and skills from training activities). Baseline: 0 (2018); and Efficient Subnational Governments (P168929, FY19- GDP growth (annually, 2020-2025). Target: 75% of staff (2021). (Building a Modern Fiscal 22); China Fiscal Interbudgetary Reform and Debt (Measured by WIND database that includes System.) Sustainability (P168842, FY19-22). all corporations that issue bonds) • 28 Targeted Poverty Counties in Guangxi have adopted annual program-based Budgeting Plans and annual IFC Investment: Beijing GeoEnviron Engineering and 1.2.2 Successful establishment and program-based Expenditure Reports for consolidated Technology, Inc. Green Bond (41819); Canvest operationalization of innovative and poverty reduction program management in Guangxi by Environmental Protection Group Company Ltd. transparent green financial intermediary 2020. (Guangxi Poverty Reduction PforR) (39889;40570); China Everbright Water Ltd. institution (demonstrated by total private • Guangxi has institutionalized participatory approach to (35266);Penyao Environmental Protection Co. Ltd. (39279) direct mobilization of World Bank loan poverty reduction program by 2020. (Guangxi Poverty for selected green urban investments of Reduction PforR) IFC Advisory: Deyang City Jingyang District Water participating local governments in the Environment Treatment PPP project (603119) Yangtze River Delta). Infrastructure Financing and PPPs - Baseline: 0 (2018) • Shanghai Green Urban Financing and Services Co., Ltd on Pipeline - Target: $800 million (2025) track to obtain green bond principles certification by 2025. IBRD: Sichuan Water Supply and Sanitation PPP Project (Green Urban Financing and Innovation) (Green Urban Financing and Innovation) (P168025, FY20); Chuzhou-Nanjing Intercity Railway PPP • Shanghai Green Urban Financing and Services Co., Ltd on Project (P168181, FY20); Hunan Institutional Enhancement 1.2.3 Number of innovative infrastructure track to obtain credit rating by 2025. (Green Urban for Rural Revitalization PforR (P172325, FY21); Provincial financings or demonstration PPP projects Financing and Innovation) Fiscal Governance and Reform (FY21/22). successfully established - Baseline: 0 IFC Investment: Active pipeline includes a number of - Target: 2 PPPs (IBRD/IFC) and 5 potential investments and early leads in Transportation & private infrastructure companies Logistics, Gas Distribution, Waste Management, (IFC: Beijing GeoEnviron Engineering and Water/Wastewater Utilities, Waste-to-Energy, Renewables, Technology, Inc. Green Bond (41819); e.g. Best Logistics (41906); Bestsun (41796) Canvest Environmental Protection Group Company Ltd. (39889;40570); China IFC Advisory: Yichang Municipality PPP MOU (601776) Everbright Water Ltd. (35266);Penyao 44 Environmental Protection Co. Ltd. (39279); Deyang City Jingyang District Water Environment Treatment PPP project (603119); Bestsun (41796)) Engagement 2: Promoting Greener Growth Objective 2.1: Facilitating the Transition to a Lower-Carbon Energy Path Intervention Logic Over the past ten years, China has reduced both energy and carbon intensity measured per unit of GDP. With the support of the WBG, China developed its energy efficiency and the renewable energy industries, which are now world leaders. Currently, however, the structure of China’s energy market is preventing an efficient use of renewable energy, resulting in curtailment rates that are high by international standards, and limiting the effectiveness of further energy efficiency improvements. Moreover, China’s central and provincial authorities have committed to ambitious targets to improve air quality and mitigate the cause of climate change, which requires an energy transition to far higher shares of clean energy and a substantial reduction of the reliance on coal. The World Bank will help the substitution of coal with clean energy by supporting the improvement of the efficiency of energy markets and facilitating the removal of regulatory and institutional barriers that lock-in the high dependency on coal. This will include technical assistance and loans to improve the institutional and regulatory frameworks of the different energy markets at both the central and provincial levels; the development of innovative green finance instruments to scale-up the adoption of disruptive innovations like battery storage, decentralized renewable energy (DRE) and complex EE segments; and the design of policies and standards to facilitate a sustainable transition of coal-dependent provincial economies. Indicators Supplementary Progress Indicators WBG Program 2.1.1 Reduction in GHG emissions from Energy Efficiency (EE) Ongoing renewable energy and energy savings • Development by 2022 of a market-based EE trading IBRD: Beijing Rooftop Solar PV Scale-up (P125022, 3/13- (tons of CO2, cumulative) mechanism. (Developing Market-Based Energy Efficiency). 12/19); Shanxi Gas Utilization (P133531, 3/14-6/20); Hebei - Baseline: 2.9 million (2019) Clean Heating Project (P148599, 1/16-6/21); Innovative - Target: 15.5 million (2025) Renewable Energy (RE) Financing for Air Pollution Control in Jing-Jin-Ji (P154669, (IBRD: Hebei Clean Heating Project; • Demonstrate and scale-up the Renewable Energy Service 3/16-6/22); Hebei Rural Renewable Energy Development Innovative Financing for Air Pollution Company (RESCO) model for market-based roof-top solar Project (P132873, 3/15-12/20); China Renewable Energy and Control in Jing-Jin-Ji; Hebei Rural photovoltaic systems. Target: 400 RESCO contracts signed Battery Storage Project (P163679, 5/19-6/25). Renewable Energy Development Project; by 2021. (Beijing Rooftop Solar Photovoltaic Scale-Up Developing Market-Based Energy Project) TF: China Partnership for Market Readiness (P145586, 6/14- Efficiency; Improving Efficiency and • Development of 7 new or revised policies, regulations, and 2/20). Promoting Reform for Renewable Energy in standards related to grid integration of distributed renewable China; GEF: China Distributed Renewable energy by 2023. (Distributed Renewable Energy Scale-up GEF: China Renewable Energy Scale-up Program Phase II Scale Up Program) Project) (CRESP II) (P127033, 10/13-12/20); Urban Scale Building • Increase in RE absorption by the grids (Gigawatt hour). Energy Efficiency and Renewable Energy (P130786, 4/13- 2.1.2 Reduction in GHG emissions from Target: 120 (2022). (China Renewable Energy and Battery 12/19); Developing Market-Based Energy Efficiency renewable energy and energy efficiency Storage Project.) (P132748, 3/17-04/22); Distributed Renewable Energy Scale- up Project (P162299, 5/19-6/23). 45 advisory assignments and investments • Sustainable biogas production and utilization demonstrated IFC Investment: Investment in renewable energy generation (tons/year during the CPF period) in Hebei by 2021 (demonstrated by over 90,000 rural assets: Chint Solar (HK) Co. Ltd (38815); Concord New - Baseline: 0 (2018) households gaining access to sustainable biogas supply). Energy Group Ltd. (30015; 38636); Sanchuan Energy Group - Target: 10 million (2025) (Hebei Rural Renewable Energy Development Project) Co. Ltd (26586); Investments in cleaner energy: China Tian (IFC: Chint Solar (HK) Co. Ltd (38815); Lun Gas Holdings Ltd. (35400); Henan Tian Lun Gas Group Concord New Energy Group Ltd. (30015; Green Financing Ltd. (36418); Investments in banks for EE and RE projects: 38636); Sanchuan Energy Group Co. Ltd • Develop a case study of the Innovative Financing for Air Jiangsu Financial Leasing Co. (32288, 41668); Investments (26586); China Tian Lun Gas Holdings Ltd. Pollution Control in Jing-Jin-Ji and disseminate knowledge in energy efficient machinery and engineering companies: (35400); Henan Tian Lun Gas Group Ltd. and lessons learned from the program by 2022 for Envision Energy Ltd (36094); Microvast Inc. (30599, (36418); Envision Energy Ltd (36094); replication in other provinces. (Developing Market-Based 37168); Wasion Group Holdings Ltd (36735); Investments in Microvast Inc. (30599, 37168); Wasion Energy Efficiency) Green Buildings: China Houze (37869, 40174); Carlyle Group Holdings Ltd (36735); Bestsun • Development of three innovative products for green China Rome Logistics L.P. (39046); Green financing: Energy Co Ltd (41796)) financing by 2021. Baseline: 2 (2019); Target: 5 (2021). Lionbridge Green (41378); Beijing GeoEnviron Engineering (Developing Market-Based Energy Efficiency and and Technology, Inc. Green Bond (41819); Canvest 2.1.3 Through banks in the China Innovative Financing for Air Pollution Control in Jing-Jin- Environmental Protection Group Company Ltd. Climate Finance Advisory Program Ji) (39889;40570); China Everbright Water Ltd. (35266); and/or the Green Commercial Bank • Total investments in eligible EE, RE, and pollution Penyao Environmental Protection Co. Ltd. (39279) Framework, GHG emissions expected to abatement subprojects of $2 billion by 2021. (Innovative be reduced at the banks and their Financing for Air Pollution Control in Jing-Jin-Ji) IFC Advisory: China Climate Finance Advisory (585507); borrowers (tons/year during the CPF Environment and Social Risk Management for FIs in China period) Coal Mine Closure (591367). - Baseline: 0 (2020) • Development and enforcement by 2022 of Consistent Social - Target: 100 million (2025) and Environmental Planning and Standards for Coal Mines ASA: CWPF: Sharing China's Clean Energy Experiences (IFC: China Climate Finance Advisory Closure in one coal-dependent province engaged in energy (P166673, FY19-20); China Green Finance Development (585507); Environment and Social Risk transition. (Pipeline ESMAP-financed ASA: Energy Program (P168899, FY19-21); China Energy Revolution Management for FIs in China (591367)) Transition to a Lower-Coal Economy in Shanxi Province, Programmatic ASA (P172281; FY20-23) China.) 2.1.4 Deepening of the green bond and Pipeline green syndication market for private IBRD: Shanxi Energy Transition and Green Growth DPO sector issuers/borrowers (metric: # of (P170663, FY20) bonds/syndications during the CPF period) GEF: China Distributed Renewable Scale Up Program - Baseline: 0 (2020) (Phase III). - Target: 5 bonds/syndications (2025) (IFC: Jiangsu Financial Leasing Co. (32288, IFC Investment: Potential investments in green financing 41668); Lionbridge Green (41378); Beijing through banks and leasing companies: Lionbridge Financing GeoEnviron Engineering and Technology, Leasing Co Ltd. (41378); potential investment in gas Inc. Green Bond (41819); Canvest distribution: Bestsun Energy Co Ltd (41796); renewable Environmental Protection Group Company energy generation companies; energy efficiency projects Ltd. (39889;40570); China Everbright 46 Water Ltd. (35266);Penyao Environmental IFC Advisory: China Green Building Phase II (602733); Protection Co. Ltd. (39279)) early stage AS on Green Growth for Industry (602940) Objective 2.2: Reducing Air, Soil, Water, and Marine Plastic Pollution Intervention Logic Due to concerted government efforts, air quality has improved over the past few years. However, levels of pollution remain high and economic costs from health impacts are rising, partly due to higher exposure levels in areas with growing populations. Water pollution is a serious problem compounded by acute water scarcity in certain areas. Soil contamination—affecting the food chain and ground and surface waters —is another serious threat to health and the environment; and even with steps to prevent new soil pollution, China must still contend with a large legacy of pollutants that have accumulated over decades. The WBG will help China to strengthen its environmental policies and institutions. The Bank will continue working with key regions requiring air pollution control, helping to introduce regional approaches and integrated plans to reduce both air pollution and GHG emissions. It will further continue its support to phase out ozone depleting substances (ODS) and help to remediate contaminated industrial and agricultural land. The Bank is also helping to reduce pollutant discharge into Poyang Lake and as a new area of engagement, the Bank will support efforts to tackle marine plastic pollution by developing roadmaps for plastic pollution control and through potential projects to help reduce plastics leakage into rivers and oceans and strengthen the circular economy. The Bank’s efforts will be complemented by IFC, which will continue to invest in clean technologies and companies engaged in pollution abatement, safe and responsible recycling of potentially hazardous or precious materials, water conservation, wastewater treatment, and solid waste management. Indicators Supplementary Progress Indicators WBG Program 2.2.1 Reduction of NOx and SO2 Air Pollution Ongoing emissions in Jing-Jin-Ji attributable to • Approval of a Cost-effective Comprehensive Plan on Air IBRD: Hebei Pollution Prevention and Control Program projects (tons) Quality Control for the next 5 years by 2020 (Hebei (P154672, 6/16-12/19); Innovative Financing for Air - Baseline: 1,400 tons NOx; 865 tons SO2 Pollution Prevention and Control Program) Pollution Control in Jing-Jin-Ji Project (P154669, 3/16- (2018) • Case study for the Hebei PforR developed and lessons 3/22); Zhuzhou Brownfield Remediation Project (P147381, - Target: 190,000 NOx (2022); 225,000 learned summarized by 2021 (GEF Developing Market- 3/16-12/21); Huainan Mining Area Rehabilitation Project SO2 (2022) Based Energy Efficiency) (P133000, 5/15-6/21); Poyang Lake Water Environment (Innovative Financing; Shanxi Energy • Training is provided to no less than 480 monitoring and Management Project (P153604, 3/17-12/22); Hunan Transition and Green Growth DPO) enforcement staff at the Environmental Protection Bureaus Integrated Management of Agricultural Land Pollution at all levels by 2020. (Hebei Pollution Prevention and Project (P153115, 8/17-12/23); Guangdong Agricultural 2.2.2 Contaminated land managed Control Program) Pollution Control (P127775, 12/13-6/21); Zhejiang Qiandao through innovative remediation • National strategy for mercury developed and submitted for Lake an Xin’an River Basin Water Resources and Ecological approaches (ha) approval and mercury flow tracked by a fully functional Environmental Protection Project (P159870; 6/18-6/24); - Baseline: 52 (2019) MIS by 2021. (China Minimata Convention on Mercury Shaanxi Sustainable Towns Development Project (P162623, - Target: 8,284 (2023) Project) 5/19-12/25). (Huainan Mining Area Project; Zhuzhou Brownfield Project; China Contaminated Soil Pollution and Contaminated Sites MP: China HCFC Phaseout Project Stage II (P156397, Site Management Project; Hunan Integrated • Updated spatial zoning plan for Qinghuitang Core Area 12/18-12/27). Management of Agriculture Land Project) tailored to remediation concepts and brownfield redevelopment requirements by 2022. (Zhuzhou Brownfield GEF: Municipal Solid Waste Management Project Remediation Project) (P126832, 11/14-12/19) ; Contaminated Site Management 47 2.2.3 Volume of Chemical Oxygen • Technical guidelines and policy recommendations for (P145533, 4/15-12/21); Capacity Strengthening for Demand (COD) pollution load reduction prevention and control of site contamination at the national Implementation of Minamata Convention on Mercury (tons/year) level and in Chongqing and Liaoning developed by 2020. Project (P151281, 9/16-4/21); Developing Market-Based - Baseline: 18,400 (2018) (China Contaminated Site Management) Energy Efficiency (P132748, 09/17-04/22); Reduction and - Target: 55,700 (2024) • National database of POPs contaminated sites developed by Phaseout of PFOS in Priority Sectors (P152959, 4/17-3/23); (Poyang Lake Basin Town Water 2021. (China Contaminated Site Management) Guangdong Agricultural Pollution Control (P127815, 12/13- Environment Management; China • Risk-based approach successfully established: safety risks 6/21). Guandong Agricultural Pollution Control; of agriculture production areas in participating counties CN-Jiangxi Poyang Lake Basin and classified in 2023 (Hunan Integrated Management of IFC investment: Camel Group (41128); BGE Green Bond Ecological Economic Zone Small Town Agricultural Land Pollution Project) (41819); Alpha Feed (41835); GEM Co Ltd. (43250) Development; Mainstreaming Integrated Water and Environment Management Water Pollution ASA: Pollution Management and Environmental Health in Project) • 16 newly established water quality monitoring stations/sites China (P159873, FY21); Watershed: A New Era of Water at Poyang Lake by 2021. (Poyang Lake Water Environment Governance - Advancing Water Quality Markets in China; 2.2.4 Persistent Organic Pollutants Management Project) Evaluating and Realizing the Value of Water in the (POPs) and POPs waste destroyed, • Lake Management Platform (LMP) for Poyang Lake Construction of an Ecological Civilization for China disposed, and contained in established and operational by 2023. (Poyang Lake Water (P171215, FY21); Developing Green Investment Standards environmentally sound manner (metric Environment Management Project) (P170977, FY21); Environment and Climate Change PASA ton) • Shanxi Province Han River Corridor regional water (P168619, FY22) China: Supporting Marine Plastic Debris - Baseline: 0 (2018) pollution monitoring system on track for operation by 2024. Solutions (P170079, FY23) - Target: 79,000 (2021) (Shaanxi Sustainable Towns Development Project) (China Contaminated Site Management Project) Pipeline IBRD: Shanxi Energy Transition and Green Growth DPO 2.2.5 Reduction of Production of Ozone (P170663, FY20); Yangtze River Revitalization Program Depleting Substances Emissions (in ton) (P171644, FY21), Yellow River Restoration (FY 21 or 22) - Baseline: 0 (2019) - Target: 16,745 (2027) GEF: Reducing Mercury Emission in Non-Ferrous Metal (China HCFC Phaseout Project Stage II) Sector (aiming for 2021 delivery) GEF: Dioxins Reduction and Environmentally Sustainable 2.2.6 Lake and river basin Development of the Iron and Steel Industry (2021 delivery) treatment/restoration (number of projects) IFC Investment: Potential investment in waste - Baseline: 0 collection/management company and in ecology restoration - Target: 3 companies (IFC) 2.2.7 Volume of recycled lead by lead- acid battery recycling facilities (metric: tons/year) 48 - Baseline: 250,000 (2018) - Target: 710,000 (2025) (IFC: Camel Group (41128); GEM Co Ltd. (43250) Objective 2.3: Demonstrating Sustainable Agricultural Practices and Safer and Higher Quality Food Systems Intervention Logic China’s approach to agricultural development and rural revitalization is driven by concerns over food security, environmental sustainability and food safety. The strategic direction is laid out in a series of “No. 1 Central Documents”; the National Sustainable Agricultural Development Plan adopted by the Ministry of Agriculture; and Rural Revitalization and Ecological Civilization strategies issued by the State Council. In addition, China has committed to promote low-carbon development in agriculture under the Paris Climate Agreement. However, implementation of these strategies and international commitments has been hampered by fragmented inter-agency coordination mechanisms; weak institutional capacity to ensure that the objectives are being supported by harmonized policies and regulations at different administrative levels; and inadequate monitoring and evaluation of implementation. Current and planned WBG support to China addresses the challenges facing China’s agri -food system by promoting integrated approaches for the development of agricultural and food systems, which recognize the need to address food safety and agriproduct quality, environmental sustainability, and climate change in an integrated and complementary way. Indicators Supplementary Progress Indicators WBG Program 2.3.1 Farmers adopting innovative Climate Smart Agriculture Ongoing sustainable practices (number) • 100 new varieties and technologies demonstrated by 2020 IBRD: Sichuan Wudu Irrigated Agriculture Development - Baseline: 5,700 (2018) in project working in five provinces and one municipality. Project (P121414, 02/12-10/19); Integrated Modern - Target: 100,000 (2023) (Integrated Modern Agriculture Project) Agriculture Development Project (P125496, 12/13-12/19); (Integrated Modern Agriculture Project; • Operation of 30 farmer field schools by 2020. (Climate Guangdong Agricultural Pollution Control Project (P127775, Climate Smart Staple Crop Production Smart Staple Crop Production) 12/13-06/21); Jiangxi Farm Produce Distribution System Project; Hunan Integrated Management of • Reduction in consumption of pesticides in project areas Development (P147009, 12/17-12/23); Hunan Integrated Agricultural Land Pollution Project) (tons) (Climate Smart Staple Crop Production) Baseline: Management of Agricultural Land Pollution Project 48 (2018) Target: 100 (2020) (P153115, 10/17–12/23) 2.3.2 Area where sustainable agricultural • Mass of COD pollution load reduction achieved under the practices have been demonstrated (ha) project (Tones/year) (Guangdong Agricultural Pollution GEF: Guangdong Agricultural Pollution Control (P127815, - Baseline: 54,611 (2018) Control Project) Baseline: 17,647 (2018) Target: 45,000 12/13-06/21); Climate Smart Staple Crop Production - Target: 110,000 (2023) (2021) (P144531, 8/14-9/20) (Integrated Modern Agriculture Project; • Number of livestock waste management facilities Climate Smart Staple Crop Production constructed. Baseline: 32 (2018) Target: 120 (2021). IFC Investment Portfolio: Anyou Biotechnology Group Project; Hunan Integrated Management of (China Guangdong Agricultural Pollution Control Project) Co.,Ltd. (31568; 36905; Guangxi Yangxiang Co Ltd Agricultural Land Pollution Project) (38720); Changyu Group (23745); Hwagain Group Co., Ltd. Food Systems (30021); Kilcoy Global Foods, Ltd (Atopco) (35839; 40179; 2.3.3 Private farmers reached from IFC investments, or benefitting through • 500 farmer cooperatives with service access provided by 41952); Muyuan Food Co., Ltd. (29089, 39372, 39373); the project by 2022. (Jiangxi Farm Produce Distribution New Hope Singapore Pte. Ltd. (34007); Shandong adoption of efficient practices and/or System Development Project) Hekangyuan Poultry Breeding Inc Ltd (33944); improved incomes (metric: number) 49 - Baseline: 500,000 (2018) • Number of villages with farmer information hubs. Forestry: Guangxi Fenglin (35042, 39801); Stora Enso - Target: 1 million farmers by 2022 Baseline: 87 (2018) Target: 600 (2023) (Jiangxi Farm (Guangxi) Forestry Co., Ltd. (34978, 34977, 27286) (IFC: Anyou Biotechnology Group Co.,Ltd. Produce Distribution System Development) Food Safety: Henan Xiang Nian Foods Co Ltd (38881); (31568; 36905; Guangxi Yangxiang Co Ltd Shanghai Zhengming Morden Logistics Co., Ltd. (34169); (38720); Changyu Group (23745); Kilcoy Suzhou Jiahe Foods Industry Co., Ltd. (40045); Haid Global Foods, Ltd (Atopco) (35839; 40179; International (39543) 41952); Muyuan Food Co., Ltd. (29089, Food Security: Kingenta Ecological Engineering Group Co 39372, 39373); Shandong Hekangyuan Ltd. (39459) Poultry Breeding Inc Ltd (33944); Guangxi Fenglin (35042, 39801); Stora ASA: Transforming Rural China (P171518, FY21) Enso (Guangxi) Forestry Co., Ltd. (34978, 34977, 27286); Chenguang Biotech; Alpha Pipeline Feed Group Limited (41835); Shandong IBRD: Henan Green Agriculture Finance Fund (P169758, Hekangyuan Poultry Breeding Inc Ltd FY20); Hubei Smart, Safe and Sustainable Agriculture (40900); Simple Credit Digital Agrifinance Project (P168061, FY20); China Food Safety Improvement Project (603905)) Project P162178 (FY21) GEF: Hubei Safe, Sustainable, Smart Agriculture Project (P172224, FY21 – complements IBRD project). IFC Investment: Potential 2-4 investment projects in agribusiness per year. Active pipeline includes projects in agribusiness and food manufacturing companies Alpha Feed Group Limited (41835); Shandong Hekangyuan Poultry Breeding Inc Ltd (40900); Xiang Nian II (42401); and a potential project in smart irrigation (e.g. Netafim China). IFC Advisory: Simple Credit Digital Agrifinance Project (603905) Objective 2.4: Demonstrating Sustainable Natural Resources Management Intervention Logic China’s rapid economic growth has been coupled with a degradation of its scarce natural resources. China is one of the most water-scarce nations in the world, and water scarcity is worsening due to increasing demand, water pollution, and the effects of climate change. Forest coverage remains relatively small, despite policies that led to a doubling of forest coverage since the 1980s. Forests figure prominently in China’s NDCs and they are also important for income and employment in poorer rural areas. Desertification affects over one quarter of China ’s land area and impedes development in northwest China. China is giving sustainable natural resource management high priority, with strong demand for Bank support. The Bank will continue to provide policy advice on water governance issues. Several ongoing projects demonstrate integrated watershed management and new activities are planned to incentivize coordinated water governance and more efficient water resource management across jurisdictions, with a focus on the Yangtse and Yellow River basins. In addition, ongoing operations are demonstrating ways to better manage and restore ecosystems and conserve biodiversity, including wildlife conservation and controlling desertification, and a proposed forestry operation will enhance forest ecosystem resilience. IFC will support investments in 50 water and sanitation projects, for example to improve municipal and industrial water efficiency and water quality. It will also aim to crowd in more private investment in sectors with potential for risk-sharing and private service provision, including in water, waste water management, and waste to energy. Indicators Supplementary Progress Indicators WBG Program 2.4.1 Targeted forest area rehabilitated Landscape (Ecosystem) Management and Restoration Ongoing and restored through successful • Ecological conditions for recovery of threatened IBRD: Ningxia Desertification Control and Ecological demonstration of sustainable forest biodiversity created and demonstrated by bringing 369,000 Protection Project (P121289, 5/12-1/20); Ma'anshan Cihu management models (ha.) ha. under enhanced biodiversity protection in existing and River Basin Improvement (P126813, 6/13-7/20); Guangxi - Baseline: 0 (2018) new nature reserves by 2020. (GEF Landscape Approach to Laibin Water Environment (P126817, 5/13-1/20); Poyang - Target: 142,730 (2024) Wildlife Conversation in Northeast China) Lake Basin Town Water Environment Management (Forest Development in the Yangtze River • Increased average management effectiveness achieved in 4 (P153604, 3/17-12/22); Chongqing Small Towns Water Economic Belt PforR; Zhejiang Qiandao existing natural reserves by 2020 (METT Baseline 38, Environment Management (P133117; 12/14-12/20); Jiangxi Lake and Xin’an River Basin Water Target: 60. (GEF Landscape Approach to Wildlife Poyang Lake Basin and Ecological Economic Zone Small Resources Environment Project) Conversation in Northeast China) Town Development (P126856, 3/13-12/19); Jiangxi • Integrated cross-provincial ecological monitoring program Wuxikou Integrated Flood Management (P128867, 3/13- functional in 2020. (GEF Landscape Approach to Wildlife 6/20); Zhejiang Qiandao Lake and Xin'an River Basin Water Conversation in Northeast China) Resources and Ecological Environment Protection Project • Institutional and technical framework for implementing (P159870, 6/18-6/24); Hezhou Urban Water Infrastructure inclusive approach to Sichuan provincial forest carbon and Environment Improvement Project (P158622, 6/18- offset and trade developed (TBD) (Forest Development in 6/24); Shaanxi Sustainable Towns Development Project the Yangtze River Economic Belt PforR). (P162623, 5/19-12/25) • Longer-term forest management plan developed (2022) (Forest Development in the Yangtze River Economic Belt GEF: Landscape Approach to Wildlife Conservation in PforR) Northeast China (P122383, 2/16-3/20); Mainstreaming Integrated Water and Environment Management Project (P145897, 5/16-12/21) 2.4.2. People protected from flooding or Water Resources Management IFC Investment: Guangxi Fenglin (35042, 39801); Stora benefitting from improved drainage • 4 policy recommendations made under the project Enso (Guangxi) Forestry Co., Ltd. (34978, 34977, 27286) through successful demonstration incorporated into the policies on water consumption control projects (number) issued by MWR, and on pollution control issued by MEP, ASA: Evaluating and Realizing the Value of Water in the - Baseline: 456,582 (2018) respectively by 2021. (Forest Development in the Yangtze Construction of an Ecological Civilization for China - Target: 760,500 (2024) River Economic Belt PforR). (P171215, FY21); Review on Sustainable Forest (Ma'anshan Cihu River Basin Improvement • 4 flood risk maps prepared and disseminated for awareness Management and Financing in China (P161175, FY20) Baseline; Guangxi Laibin Water raising in all project counties. (Chongqing Small Towns Environment; Chongqing Small Towns Water Environmental Management) Pipeline: Water Environmental Management; Jiangxi • Lake Management Platform established and operational by IBRD: Forest Ecosystem Improvement in the Upper Reaches Poyang Lake Basin and Ecological 2022. (Poyang Lake Basin Town Water Environment of Yangtze River Basin PforR (P164047, FY20) Economic Zone Small Town Development; Management) 51 Hezhou Urban Water Infrastructure and • Integrated water and environment management approach GEF: Climate Smart Management of Grassland Ecosystem Environment Improvement) demonstrated and scaled up to cover MEP defined problem (P166853, FY20). areas in 3 river basins (km2). Baseline: 0 (2018); Target: 125,380 (2021). (Mainstreaming Integrated Water and Environment Management Project) • Women participation to increase water productivity and reduce water pollution through WUAs during IWEMP implementation reaching 50 percent in 2021 (measuring unit: increased percentage of female membership in the WUAs). (Mainstreaming Integrated Water and Environment Management Project) • National Water Environment Technology Extension Platform established at the MEP in 2021. (Mainstreaming Integrated Water and Environment Management Project) • Integrated coordination platform for flood risk management and urban drainage management established and functioning in 2024. (Hezhou Urban Water Infrastructure and Environment Improvement) (Hezhou Urban Water Infrastructure and Environment Improvement) 52 Objective 2.5: Promoting Low-Carbon Transport and Cities Intervention Logic China needs to scale up its efforts to develop low-carbon and efficient transport systems to mitigate the effects of rapid motorization and economic growth. Due to growing private car ownership and freight intensity of the economy, the transport sector in China is the fastest growing contributor to overall GHG emissions. Up to 80% of inland freight in China is moved by a highly polluting trucking sector (in 2017 the total number of trucks was estimated at 23 million). An undeveloped and fragmented logistics industry and lack of multi-modal transportation result in an underutilization of greener modes of transport, such as railways and inland water transport. The WBG will support projects that improve integrated planning of transport and urbanization to minimize carbon emissions and environmental impact. While China has developed the basic public transport infrastructure, it needs to promote market-based policies to manage transport demand and develop integrated urban transport systems in large metropolitan regions to reduce traffic congestion and carbon emissions. Projects that promote public transit and demonstrate good practice that can be replicated will be supported. In addition, through the new GEF 6 - Green and Efficient Logistics Project, the results of in-depth analytical work will be used to support policies and measures that accelerate modal shifts and clean up the trucking industry. Also, through the multi-modal pilot projects, digital solutions for freight and passenger mobility demand management will be supported. New projects will focus on two engagement areas: (i) low carbon transport and logistics; and (ii) new urbanization and digitalization. Indicators Supplementary Progress Indicators WBG Program 2.5.1 Increased public transport Low-Carbon Transport Ongoing Transport ridership annual in million (bus and • 3 cities incorporate transit-oriented development (TOD) IBRD: Liaoning Coastal Economic Zone Urban metro) strategies into their future urban and transit plans by 2022. Infrastructure and Environmental Management (P126611, - Baseline: 18.83 (2018) (GEF China Sustainable Cities Integrated Approach Pilot) 3/13-9/19); Sichuan Chongqing Cooperation: Guang'an - Target: 56.89 (2021) • Reduced energy consumption by buses along the targeted Demonstration Area Infrastructure Development (P133456, (Gansu Qingyang Urban Infrastructure corridors (Harbin) (Unit: Liter Diesel by Vehicle 3/15-9/20); Yunnan Honghe Prefecture Diannan Center Improvement; Second Urumqi Urban Kilometers Travel). Baseline: 0 (2018); Target: 0.3 (2020). Urban Transport (P101525, 5/14-6/20); Qinghai Xining Transport; Wuhan Integrated Transport (Heilongjiang Cold Weather Smart Public Transportation Urban Transport (P127867, 12/13-9/19); Second Urumqi Development; Jiaozuo Green Transport and System Project) Urban Transport (P148527, 12/15-12/21); Gansu Qingyang Safety Improvement; Tianjin Urban Urban Infrastructure Improvement (P123133, 5/12-11/19); Transport Improvement; Yunnan Honghe Green Freight and Logistics in China Tianjin Urban Transport Improvement (P148129, 12/15- Prefecture Diannan Center Urban • Percentage of empty trucks in 3 selected projects. Baseline: 3/21); Jiaozuo Green Transport and Safety Improvement Transport) 50 percent (2018); Target: 40percent (2022) (Hubei Inland (P132277, 5/14-6/21); Heilongjiang Cold Weather Smart Waterway Improvement; Hubei Xiaogan Logistics Public Transportation System (P133114, 3/14-6/20); Wuhan Infrastructure; Three Gorges Modern Logistics Center Integrated Transport Development (P148294, 2/16-12/21); 2.5.2 Annual number of non-motorized Infrastructure) HaJia Railway (P117341, 3/14-12/20); ZhangHu Railway trips within green corridor • Adoption of National multimodal freight transport plan (P122319, 3/12-6/20); Zhengzhou Urban Rail (P128919, - Baseline: 11,052 (2018) (GEF6) 12/14-6/21); Nanchang Urban Rail (P132154, 6/13-12/19); - Target: 376,500 (2021) • Develop unified technical standards for standardization of Hubei Inland Waterway Improvement (P158717, 5/18-6/23); (Jiaozuo Green Transport and Safety vehicles and equipment, units, operational rules and Hubei Xiaogan Logistics Infrastructure (P132562, 5/16- Improvement; Tianjin Urban Transport documentations as well as data standards for information 6/21); Three Gorges Modern Logistics Center Infrastructure Improvement) sharing among various modes (GEF6) (P153473, 6/17-9/23); Yunnan Highway Asset Management • Develop and adopt Great Urban Freight Index (GEF 6) (P132621, 3/15-12/20); Anhui Road Maintenance Innovation 2.5.3 Floor space of buildings that (P153173, 2/17-12/23) Anhui Rural Road Resilience PforR received green building certification due Green Cities (P158733, 09/18-6/23). 53 to IFC’s efforts (metric: millions of • Urban environmental investments in Shanghai province square meters) benefit 10 million people (2025) (Urban Financing and GEF: China Sustainable Cities Integrated Approach Pilot - Baseline: 0 (2020) Innovation Project) (P156507, 7/17-3/23); Efficient and Green Freight Transport - Target: 1 million of square meters • Industrial or municipal solid waste reduced or recycled Project (P159883, 12/18-12/22). (2025) under the project (%) Baseline: 4.7 (2018) and Target: 15 (IFC: China Green Building Phase II (2020). (Ningbo Municipal Solid Waste Minimization and IFC Investment: Best Logistics Technologies Ltd. (41037); (602733); early stage AS on Green Growth Recycling Project) ESIP HuoCheBang and Full Truck Alliance Co. Ltd. (39207; for Industry (602940)) 41333); China Education Group (40453,41568); Minsheng Resilience Education (38573); Eurasia University (37659) 2.5.4 GHG emissions expected to be • Establishment of an institutional platform for collaboration reduced through scale-up adoption of of towns along the Han River Corridor to support regional ASA: Programmatic Urban ASA (FY21); China City Cluster green building standards and development plans; 50% of (project) output indicators Mobility Institutional Development and Financing implementation of green initiatives in achieved by the new platform by 2022. (Shaanxi Mechanisms (P172388); Transport Transformation and urban areas (metric: tons/year during the Sustainable Towns Development) Innovation Knowledge Platform (TransFORM) Phase 3 CPF period) • Regional flood risk management system in operation (2025) (FY21). - Baseline: 0 (Shaanxi Sustainable Towns Development) - Target: 277,920 (2025) • Risk management system developed and operationalized in Pipeline (IFC: China Green Building Phase II Shimian County (2021) IBRD: Chuzhou-Nanjing Intercity Railway PPP Project (602733); early stage AS on Green Growth (P168181, FY20); Greening Fuzhou High Tech Zone for Industry (602940)) Demonstration Project (P158079, FY20); Institutional Development and Financing Mechanisms (P172388, FY21); China City Clusters and Low Carbon Mobility (FY21/22) GEF: Low carbon and intelligent transport IFC Investment: Potential investment in leasing finance services for electric vehicles to truck drivers; other potential green building investments across TRP, services and other sectors Engagement Area 3: Sharing the Benefits of Growth Objective 3.1: Increasing Access to Quality Health and Aged Care Services Intervention Logic China’s healthcare system is fragmented, hospital-centric, and volume-driven—contributing to rising costs. The ongoing China Health Reform PforR (FY17) is supporting the government’s program to implement comprehensive healthcare reforms in Anhui and Fujian p rovinces to improve quality and efficiency. A knowledge generation and learning component will ensure that lessons are shared countrywide. World Bank ASA will also contribute towards specific reform areas, including provider payment reform and strengthening quality of care. IFC will continue to focus on supporting private sector provision of affordable healthcare in areas where it can be more efficient and effective than public provision. 54 The WBG will help build a policy and institutional framework for aged care. The ongoing Anhui Aged Care System Demonstration Project (FY18) was the first standalone lending operation for aged care across the Bank. It promotes basic stewardship functions, supports development of a system of home- and community-based care, and takes initial steps to introduce the regulatory model for private sector involvement. The Guizhou Age Care System Development P4R built on this pilot to deepen reforms including financing. Engagement in this area is expected to continue with modest financial contributions and technical assistance at the national level. IFC will seek opportunities to support private sector provision in aged care and bring best practices through international network providers, which will complement World Bank-supported reforms to build a policy framework for private sector provision. Indicators Supplementary Progress Indicators WBG Program 3.1.1 Proportion of (improved) inpatients Health Ongoing treated through standardized clinical • Health reform program experience is disseminated and IBRD: Chongqing Urban-Rural Integration - Health pathways at all county-level public shared within China and with other countries through two (P126210, 6/12-8/20); Guangdong Social Security general hospitals in Anhui and Fujian national workshops and one international workshop by Integration and Rural Worker Training (P117596, 6/13- - Baseline: AH 4; FJ 0 (2017) 2022. (Health Reform PforR) 10/20); Health Reform PforR (P154984, 5/17-12/21); Anhui - Target: AH 50; FJ 50 (2022) Aged Care Demonstration (P154716, 6/18-12/23); Guizhou (Health Reform PforR) Social Protection/Elderly Care Aged Care System Development Program PforR (P162349, • The integrated provincial MIS for exchanging social 3/19-12/24) 3.1.2 Family doctor empanelment is insurance beneficiary data is established and scaled up to expanded to the whole population of cover most prefectures in Guangdong by 2021. (Guangdong IFC Investment: American Pacific Medical Group (32115); Anhui and Fujian provinces by 2022 Social Security Integration and Rural Worker Training) Beijing United Family Rehabilitation Hospital (33304); (Health Reform PforR) • Volume of health insurance transactions serviced across Guangzhou United Family Hospital Limited (35988); prefectures through the provincial clearinghouse platform. Shanghai Fosun Pharmaceutical (Group) Co., Ltd. (32999); 3.1.3 Number of elderly receiving Baseline: 0; Target: 650,000 (2020) (Guangdong Social Essex Bio-Technology Ltd (38104); Jointown diversified and three-tier aged care Security Integration and Rural Worker Training) Pharmaceutical Group Co., Ltd. (41947); Shandong Weigao services at the project site in Anhui • 36 aged care standards developed by Anhui Province by Group Medical Polymer Co., Ltd. (34313) - Baseline: 59,287 (2018) 2021. (Anhui Aged Care Demonstration) - Target: 350,000 (2024) • Government aged care stewardship capacity strengthened ASA: Programmatic ASA for International ta – china Health (Anhui Aged Care Demonstration) by establishing a provincial information system, introducing Reform PforR Implementation Support (P165204, FY18-21) a needs assessment toolkit, and implementing aged care 3.1.4. Number of eligible elderly receiving standards in 22 districts/counties in Guizhou by 2024. Pipeline the basic package of aged care services in (Guizhou Aged Care PforR) IBRD: Hainan Health Sector Reform Project (P171064, Guizhou • 900 aged care facilities in Guizhou comply with new quality FY20); Aged Care Systems (FY21) - Baseline: 0 (12/2018) standards by 2022. (Guizhou Aged Care PforR) - Target: 400,000 (2024) IFC Investment: Early stage engagements with health and - Target Female: 200,000 (2024) aged care providers and pharmaceuticals companies (Guizhou Aged Care System Development Program PforR) IFC Advisory: Potential advisory engagements with private sector companies in elderly care 3.1.4. Number of patients served by IFC advisory services or investments in 55 healthcare in China during the CPF period (number) - Baseline: 89,303 (2016) - Target: 2.5 million patients served by 2025 (IFC: American Pacific Medical Group (32115); Beijing United Family Rehabilitation Hospital (33304); Guangzhou United Family Hospital Limited (35988); Shanghai Fosun Pharmaceutical (Group) Co., Ltd. (32999); Essex Bio- Technology Ltd (38104); Jointown Pharmaceutical Group Co., Ltd. (41947); Shandong Weigao Group Medical Polymer Co., Ltd. (34313)) 3.1.5 Private elderly care facilities opened or expanded with IFC financing (number) - Baseline: 0 - Target: 5 facilities (2025) Objective 3.2: Strengthening the Quality of Early Learning and Skills Development Programs Intervention Logic China has large educational disparities between rural and urban areas. Access to early childhood education (preschool) in rural areas is low, putting rural and migrant children at a disadvantage. In addition, due to inequalities of basic education and costs associated with continuing education, rural children are learning less in compulsory school and are less likely to progress to higher levels of education. Through an ongoing operation, the Bank is piloting improvements to improve the quality of and access to early childhood education in Yunnan, one of China’s least developed provinces. Another ongoing Bank operation is piloting ways to decrease educational disparities in Guangdong, Building on successful TVET projects in Guangdong, Liaoning, Shandong, and Yunnan, IBRD is financing two ongoing projects in Xinjiang and Gansu to support reforms and investments to improve the quality and relevance of TVET. The projects are demonstrating how to upgrade equipment for hand-on training, update curricula and connect it to industry requirements, improve teacher skills, and improve management and governance in order to increase the graduates’ employment rate, skill certificate rate, and salary. About 70% of students are from disadvantaged socio-economic backgrounds. TVET projects have been models both within China and for other countries. For example, IBRD has facilitated a partnership between Guangdong, Yunnan, and Bangladesh on teacher training and student exchange programs. Indicators Supplementary Progress Indicators WBG Program 3.2.1 Number of kindergartens that Early Learning Ongoing comply with the new kindergarten • 3-year kindergarten GER in the Yunnan Project counties IBRD: Xinjiang TVET (P147367, 5/15-12/20); Gansu TVET quality standards by 2021 (percentage). Baseline: 62.4 percent (2018). Target: 69 (P154623, 3/17-6/23); Yunnan Early Childhood Education - Baseline: 0 (2018) 56 - Target: 158 (2022) percent (2022). [what is difference between these 2 Innovation (P152860, 12/16-12/21); Guangdong (Yunnan Early Childhood Education bullets?] Compulsory Education (P154621, 10/17-6/23) Innovation) • 3-year kindergarten GER in rural areas in the Project counties (Percentage). Baseline: 54.0 percent (2018). IFC Investment: China Education Group Holdings Ltd 3.2.2 Percentage of graduates finding Target: 69 percent (2022) (Yunnan Early Childhood (40453); China Yuhua Education Corp Ltd (40811); Maple initial employment in specialties in which Education Innovation) Leaf Educational Systems (34950); Minsheng Education they were trained within 6 months • Policy paper capturing recommendations on pilots and Group Co Ltd. (38573); Xi'an Eurasia University (37659); - Baseline: 38 percent (37 percent their evaluation on improving learning facilities and Shanghai Zhangmen Education Technology Co., Ltd. female) (2018) teaching quality in public primary and junior secondary (42177) - Target: 52 (50 percent female) (2022) schools developed by 2022. (Guangdong Compulsory (Gansu TVET) Education) ASA: China and the World in Education Reforms (FY21) (P166718) 3.2.3 Students reached by universities Skills Development and vocational schools that expanded • Number of competency-based training standards Pipeline their operations with IFC investments or developed and adopted (Xinjiang TVET). Baseline: 160 IBRD: Life Cycle Vulnerability and Human Capital advisory services (number) (2018); Target: 210 (2020) (FY21/22) - Baseline: 0 (2020) • Number of managers and teachers trained domestically and - Target: 500,000 students by 2025 internationally (disaggregated by gender and ethnic group) IFC Investment: Pipeline projects include potential (IFC: China Education Group Holdings Ltd (Xinjiang TVET) investments in tertiary education CEEH (42328); China (40453); China Yuhua Education Corp Ltd Baseline: 3,441 (2018); 2,132 (female); 848 (ethnic); Education Group Holdings Ltd III (41690) (40811); Maple Leaf Educational Systems Target: 4,264 (2020); 2,233 (female); 1,827 (ethnic) (34950); Minsheng Education Group Co ASA: Programmatic ASA on education Ltd. (38573); Xi'an Eurasia University (37659); Shanghai Zhangmen Education Technology Co., Ltd. (42177); CEEH (42328); China Education Group Holdings Ltd III (41690)) 57 Annex 2: WBG Completion and Learning Review CHINA: COMPLETION AND LEARNING REVIEW OF THE COUNTRY PARTNERSHIP STRATEGY FY13 to MID-FY17 Date of CPS: October 11, 2012 Date of PLR: January 6, 2016 Period Covered by CLR: FY13 to mid-FY17 (July 1, 2012—December 31, 2016) 1. INTRODUCTION 1. This Completion and Learning Review (CLR) assesses implementation of the World Bank Group (WBG) Country Partnership Strategy (CPS, FY13-16) for the People’s Republic of China, discussed by the Board in November 2012. A Performance and Learning Review (PLR), discussed by the Board in January 2016, updated the CPS and extended it by six months to December 31, 2016. This CLR reports on: (i) achievement of the CPS objectives; (ii) WBG performance; and (iii) lessons learned for the preparation of the new Country Partnership Framework (CPF). 2. The CPS was aligned with China’s 12th Five Year Plan (2011-2015) and focused on two strategic themes (supporting greener growth and promoting inclusive development) and one-crosscutting theme (advancing mutually beneficial relations with the world). The WBG also provided client-driven knowledge services to help underpin reforms needed to reenergize the drivers of growth. The original CPS results framework comprised eleven CPS objectives linked to indicators and milestones. The 2016 PLR extended the CPS to mid-FY17 to allow for time to consult with the government on the 13th Five Year Plan, which was announced in March 2016. The PLR also increased IBRD lending during FY16-17 to address national reform priorities, introduced new lending instruments, and made a few adjustments to the results framework, including dropping one CPS objective. 2. KEY FINDINGS AND RATINGS 3. Achievement of CPS objectives is rated satisfactory. Of the 10 CPS objectives, as revised and updated in the PLR, 7 were achieved and 3 were partially or mostly achieved as of December 31, 2016. Out of 28 outcome indicators, 22 were achieved, 4 were partially achieved, and 2 were not achieved or unavailable. The results framework also included 89 milestones of which only 3 were not achieved. 4. WBG performance is rated good. The WBG program was well aligned with China’s priorities and placed knowledge sharing at its core, including through projects as platforms for knowledge exchange. Given that WBG financial support is modest in comparison to China’s own resources, the WBG program was designed to have an impact beyond its size through policy dialogue and analytical inputs and by introducing innovations and demonstrating new approaches that could be scaled up. The program was implemented largely as planned in the CPS and PLR; and in several areas, the program exceeded the expectations of the original CPS (see paragraph below). Over the CPS period (FY13 to mid-FY17), the International Bank for Reconstruction and Development (IBRD) program delivered 55 new projects and US$7.6 billion in new commitments and the International Finance Corporation (IFC) committed US$5.2 billion in financing (combined IFC’s own account and mobilization) across 107 long-term finance projects. Program delivery and performance were also strong based on portfolio indicators and Independent Evaluation Group (IEG) reviews of projects that exited the portfolio. 58 5. Overall, the CPS period was marked by deepening cooperation in analytics, financing, and global cooperation. The reform program that emerged from China’s Third Plenary Session of the 18th Central Committee of the Communist Party of China (CPC) in November 2013 opened new opportunities for WBG support. Cooperation deepened in producing joint studies linked to China’s reform program, and annual IBRD financing increased to address reform priorities, such as energy conservation, urban air pollution, subnational fiscal reform, and health service delivery. IBRD lending included Program-for-Results (PforR) and Development Policy Financing (DPF) for the first time. IFC investments showed strong and steady growth, exceeding the estimates of the 2012 CPS, and the IFC portfolio demonstrated strong performance both financially and in impact. There was also increased cooperation between China and the WBG in the global arena, including the establishment of China’s first single-donor trust fund with the WBG. 3. DEVELOPMENT OUTCOMES 6. The overall CPS Development Outcome is rated satisfactory. Strategic theme one, supporting greener growth, was aligned with six CPS objectives and strategic theme two, promoting more inclusive growth, with four CPS objectives. Fourteen outcome indicators measured progress under strategic theme one and fourteen outcome indicators measured progress under strategic theme two. The rating of each objective is shown in Table 1 and in more detail in Annex 1. In cases where the objective was not fully achieved, there were two main reasons: (i) delays in implementation; and (ii) changes to planned IFC investments and/or to IBRD-financed projects (during preparation or due to restructuring during implementation). The CPS cross-cutting theme, advancing mutually beneficial relations with the world, was not part of the results framework, but cooperation deepened with positive impact in multiple areas, including over 50 learning exchanges between China and other countries; the establishment of China’s first trust fund with the WBG, the China-WBG Partnership Financing Facility; and cooperation during China’s G20 presidency to promote infrastructure financing and universal financial inclusion. In addition, while also not part of the results framework, the WBG provided client-driven knowledge services to help underpin reforms needed to reenergize the drivers of growth. Table 1: Development Outcome Ratings by Themes and Objectives Themes and Objectives Ratings Strategic Theme 1: Supporting Greener Growth Satisfactory Objective: 1.1: Shifting to a Sustainable Energy Path Achieved 1.2: Enhancing Urban Environmental Services Achieved 1.3: Promoting Low-Carbon Urban Transport Partially Achieved 1.4: Promoting Sustainable Agricultural Practices Achieved 1.5: Demonstrating Sustainable NRM Approaches Achieved 1.6: Demonstrating Pollution Management Measures Partially Achieved Strategic Theme 2: Promoting More Inclusive Growth Satisfactory Objective: 2.1: Increasing Access to Quality Health Services and Social Protection Programs Mostly Achieved 2.2: Strengthening Skills Development Program, including for Migrants Achieved 2.3: Enhancing Opportunities in Rural Areas and Small Towns Achieved 2.4: Improving Transport Connectivity for more Balanced Regional Development Achieved Development Outcome Rating Satisfactory 59 Reenergizing the Drivers of Growth 7. WBG knowledge services supporting China’s structural reform program grew in importance during the CPS period, providing a platform for operations and future engagement. The Third Plenary Session of the 18th Central Committee of the CPC in November 2013 set the stage for far-reaching structural reforms to reenergize and reorient the drivers of growth, including in public finance, the financial sector, innovation, and public-private partnerships (PPPs). Through Urban China (2014), a flagship report undertaken jointly with the Development Research Center (DRC) of the State Council, the WBG supported China’s National Plan on New Urbanization and provided technical input to fiscal and tax reform, nearly all of which was reflected in China’s 2014 Budget Law, which came into effect in January 2015. The Bank has continued to support implementation of the law at both national and subnational levels through advisory work, a fiscal technical assistance loan (FY16), and two subnational Development Policy Operations (DPOs, FY17). A Financial Sector Reform Strategy (FY15), also undertaken with the DRC, presented recommendations to address financial sector shortcomings and risks and to build a modern financial system and informed a Financial Sector Assessment Program (FSAP) Update (delivered in FY18). In 2014, a joint Bank-IFC team began supporting China’s efforts to promote public-private partnerships (PPPs), sharing global experience to help strengthen the institutional, policy, and regulatory environment for PPPs in China, including guidelines and incentives for subnational governments. Shanghai 2050 (FY16) provided recommendations on the transition to an innovation-driven growth model at the subnational level. In February 2016, the Government of China asked to make New Drivers of Growth the topic of the next joint study between China and the WBG. Strategic Theme 1: Supporting Greener Growth 8. Overall progress under Strategic Theme 1 was satisfactory. This theme represented the bulk of the WBG’s portfolio given that over 70 percent of the IBRD/GEF portfolio has environmental objectives and over 25 percent of IFC’s total committed volume (own account and mobilization) was in climate-positive investments. The WBG aimed to support China’s commitment to improve the environment and address climate change, focusing on the six objectives described below. Objective 1.1: Shifting to a Sustainable Energy Path [achieved] 9. The WBG financed innovative investments in renewable energy and energy efficiency in support of China’s policy to expand clean energy. Making energy sustainable in China requires a reduction of its dependency on fossil fuels. The 12th Five Year Plan, with which the CPS was aligned, aimed to reduce energy intensity by a further 17 percent and set a target, for the first time, to reduce carbon intensity by 17 percent. WBG support contributed to cumulative savings of 15 million tons of coal equivalent (World Bank) and 22 million tons of greenhouse gas (GHG) emissions avoided (IFC), exceeding CPS targets. Both World Bank and IFC investments introduced innovative financing mechanisms and leveraged large amounts of commercial financing. In addition, the World Bank and IFC helped develop policies and regulations supporting renewable energy, emission trading schemes, and green credit policy. 10. World Bank support focused on greater use of commercial programs for energy efficiency and renewable energy. Programs have featured the expansion of energy service companies (ESCOs) through national financial intermediaries such as Huaxia Bank, the Export- Import Bank of China (EXIM), and Minsheng Bank. The China Energy Efficiency Financing Project (CHEEF) leveraged the U$400 million IBRD loan eight times over, with a total investment 60 of US$3 billion in energy efficiency and renewable energy, leading to a reduction of nearly 11 million tons of CO2 emissions. The project also increased participating banks’ capacity in energy efficiency financing and mainstreamed energy efficiency lending as one of their main business lines. Building on the success of the CHEEF program, the Bank financed a US$500 million Innovative Financing for Air Pollution Control in Jing-Jin-Ji in the first PforR operation in China (approved in FY17). The Bank also provided support to ESCOs at the provincial level (Shandong) and helped to build capacity to implement energy efficiency policy and monitor progress towards energy savings goals in three provinces (Jiangxi, Shanxi, Shandong), although China’s economic slowdown and restructuring affected the performance of energy efficiency projects in heavy industries, such as iron and steel, cement, and chemicals. Support also focused on developing policies and regulations for the scale up of renewable energy, such as power sector reform, renewable energy pricing and subsidies, and technical studies for grid integration, improving quality and reducing costs for off-shore wind, and developing grid access regulations for distributed energy generation under the China Renewable Energy Scale-Up Program. The Bank provided inputs on clean energy for China’s 13th Five Year Plan, including setting targets for renewable energy and energy efficiency, developing transparent financial incentive mechanisms to guide the closure of small thermal power plants and the piloting of SO2 emission trading, and sharing lessons and experience for China’s national carbon market. A Partnership for Market Readiness grant supported research and studies that play a key role in informing the design of China’s national carbon emission trading scheme, which came into effect in 2018 and will be the largest cap-and-trade system in the world. 11. IFC engagement included the China Climate Finance Advisory Services Program , a successful, innovative, market-based solution to China’s energy and environmental challenges. The program, first established in 2006 and known previously as the China Utility- Based Energy Efficiency Finance Program, or CHUEE, stimulated green investment by private banks by demonstrating the technical feasibility and commercial profitability of energy efficiency (EE) and renewable energy (RE) investments. Through workshops and seminars, market studies, and media, the program also raised the awareness of key stakeholders about the environmental and economic benefits of EE and RE projects. IFC also worked with sectoral associations to build a sustainable energy finance platform that supports policy dialogue and information exchange among policy makers, banks, end-users, and technical experts. In addition to guiding investment, the program provided in-depth training for financial institutions, helping banks grow their green portfolios and change their perceptions of risks related to EE and RE lending. By the end of June 2016, the eight commercial partner banks under the China Climate Finance Advisory Services Program provided over 231 loans for energy efficiency and renewable energy projects worth US$924 million under the risk-sharing facilities provided by IFC. In addition, IFC provided support to strengthen green credit policy and make lending by Chinese banks more resource- efficient and environmentally sustainable. IFC’s support to private natural gas distribution companies reached, on average, 58 million customers annually while demonstrating the role of the private sector in helping China transition from coal and oil to cleaner energy sources, especially in third-tier cities and frontier regions. Objective 1.2: Enhancing Urban Environmental Services [achieved] 12. WBG support helped expand water supply and improve sanitation, solid waste, and other urban services in more than 50 small towns and cities, while reducing pollution and creating models of good urban practices. China’s rapid urbanization over the past few decades has helped drive growth and increases in living standards; but it has also brought challenges to 61 meeting the growing demand for urban services, especially in lesser developed areas. WBG support has gradually shifted from large cities to more complex projects in smaller cities and towns, which have lower capacity and fewer resources. Investments in urban regeneration, environmental remediation, urban flood management, solid waste, and municipal asset management directly supported small cities and towns to manage urban growth and increase access to water supply, wastewater, and other urban environmental services in a sustainable manner, improving the ability of water resource management authorities to address pollution. IFC supported private-sector investments in water and sanitation projects and launched the China Water Advisory Services Program in 2013 to promote industrial water efficiency and water quality by demonstrating the business case for voluntary savings of water, energy and chemicals. 13. During the CPS period, the WBG helped China formulate a new vision of urbanization. Building on China 2030, which advocated for “smart urbanization,” the WBG and Development Research Center of the State Council jointly undertook the flagship study Urban China: Towards More Efficient, Inclusive, and Sustainable Urbanization, which informed China’s National Plan on New Urbanization (2014-2020). The WBG urban portfolio has increasingly focused on supporting the government’s New Urbanization Plan—making cities more livable and greener. Objective 1.3: Promoting Low-Carbon Urban Transport [partially achieved] 14. Through both policy advice at the central government level and demonstration projects in cities, the World Bank supported China in a paradigm shift in urban transport policies and investments. During the CPS period, China invested more than any other country to promote public and non-motorized transport to reduce road congestion, air pollution, and GHG emissions. Through Global Environment Facility (GEF) grants, the Bank worked with the central government to develop policies that incentivize local governments to shift from building roads that accommodate a growing number of cars to development of mass transit systems. For example, the GEF Urban Transport Partnership Program supported studies that helped shape the new strategic framework for urban transport development (State Council Directive 64). At the subnational level, the Bank catalyzed low-carbon transport development by supporting urban transport improvements in about ten cities. The demonstration projects increased public transit ridership, reduced travel time, and improved safety. Due to restructuring of Bank-financed projects that altered project design and components, fewer demonstration corridors were completed than anticipated (hence the “partially achieved” objective rating); however, this shortfall did not materially affect the Bank’s objective to support a critical mass of successful demonstration projects, contributing to China’s experience base and helping to mainstream bus public transport corridors. The complementary use of GEF-funded policy support at the central government level and IBRD-funded investments at the subnational level ensured that the national policy framework drew on the experiences of demonstration projects in pilot cities. In addition, the Bank helped China shift from a focus on physical investments to a broader perspective that incorporated road safety, transit oriented development, travel demand management, and sustainable municipal financing mechanisms. 15. China and the World Bank also established TransFORM—a knowledge platform to share Chinese and international urban transport experiences and facilitate city-to-city peer learning. Within China, TransFORM attracted over 2,000 participants to workshops to learn from pilot projects and provided “Leaders in Urban Transport” training to mid- and senior-level managers and policy makers from Beijing, Fuzhou, and Xining. TransFORM also facilitated a 62 South-South knowledge exchange between Ethiopia and China, leading to the development of Africa’s first expressway. Objective 1.4: Promoting Sustainable Agricultural Practices [achieved] 16. World Bank-financed projects helped demonstrate the benefits of sustainable agricultural and livestock practices that provide both environmental and economic benefits. CPS targets measuring the households and farms adopting innovative sustainable practices and the scale on which they were demonstrated were exceeded. More importantly, the demonstration projects are being successfully replicated. For example, China’s first household-based Clean Development Mechanism biogas digester project has been replicated in other provinces and outside China. In addition, the Bank supported the multi-province Eco-Farming Project, which piloted approaches that reduced livestock waste and improved the living environment in villages surrounding livestock farms. The Bank also supported integrated watershed rehabilitation models with strong farmer participation to protect the environment in highly degraded watersheds. This program improved farmers’ livelihoods with several design features already replicated in government-funded watershed programs. Finally, the Bank supported pilot demonstrations of six mostly low-cost techniques to reduce agricultural and non-point source pollution, which are now commonly used in rural Shanghai. IFC agribusiness projects helped advance the food security and food safety agenda in supply chains in China, with specific benefits to local farmers in frontier regions. On average, IFC agribusiness activities supported 400,000 farmers per year. Objective 1.5: Demonstrating Sustainable Natural Resource Management Approaches [achieved] 17. The WBG supported China’s shift to sustainable natural resource management in some of China’s most fragile and degraded ecosystems and poorest communities. In ecosystem management and restoration, these changes included replacing plantation monocultures with diversified species in one of China’s least forested provinces. The forest projects tested over 30 different forest plantation or management models per soil type, level of degradation, and needs of communities. These projects resulted in 400,000 ha of sustainably managed forest directly supported by the projects. The projects also had an important demonstration effect, with at least an additional 200,000 ha already being managed by the provinces per models used in the projects. Through the Guangxi Integrated Forestry Development and Conservation Project, the first-ever project that combined IBRD, GEF, and carbon finance in one single project in China, the Bank helped integrate production forestry, ecological forestry management, and biodiversity conservation. This approach allowed Bank support to move from the protection of a nature reserve itself to addressing water resources as part of a more integrated landscape approach. In water resources management, Bank support shifted from flood control to demonstrating integrated water resources management. A common finding across several projects was the importance of community participation to ensure that the needs of communities are integrated into sustainable natural resource management. Alternative livelihoods for communities that depend on natural resources were included in the design and in some cases strengthened during implementation of diverse forestry and watershed projects. Participatory approaches for sustainable land management and adaptation provided recommendations for consideration in China’s new 13th Five Year poverty reduction agenda and piloted practices now extended to China’s “targeted poverty alleviation” program. Objective 1.6: Demonstrating Pollution Management Measures [partially achieved] 63 18. The World Bank helped demonstrate pollution clean-up and reduction measures. Two ongoing projects to reduce persistent organic pollutants (POPs) successfully demonstrated adoption of best available techniques and best environmental practices in six municipal solid waste incinerators and pulp and paper mills. This demonstration effect of techniques and practices is also expected to be achieved for the Dioxin Reduction from the Pulp and Paper Industry Project even though one of the four mills dropped out of the project due to changed market conditions. In another project to remediate a specific type of POP, Polychlorinated Biphenyls (PCBs) contaminants, the Government of China scaled up PCB management activities in 12 other PCB- target provinces and used project inputs for the national 12th Five-Year POPs Plan. China is a signatory of the Stockholm Convention on Persistent Organic Pollutants and is using the lessons from Bank-financed projects in its national plan to meet the commitments defined in the Convention. 19. China’s phase-out of ozone depleting substances was a major achievement supported by the Bank. One of the largest and longest-implemented Bank-financed projects in China— running over 15 years—was the Fourth Montreal Protocol Ozone Depleting Substances (ODS) Phase-out Project, involving central and numerous provincial government agencies and enterprises from production and manufacturing sectors. Due to this program, China succeeded in phasing out consumption of ODS in a timely and cost-effective manner as mandated under the Montreal Protocol, including accelerating the phase-out of chlorofluorocarbons and halons. These phase- outs were achieved earlier than the Protocol’s targets and contributed directly to Protocol compliance. The phase-out also generated important climate change mitigation co-benefits by eliminating emissions equivalent to 133 million tons of CO2. In retrospect, the results indicators for Objective 1.6 should have been better designed to also capture the results of the ODS phase- out rather than focusing narrowly on the number of demonstration projects to reduce POPs. Strategic Theme 2: Promoting More Inclusive Growth 20. Overall progress under Strategic Theme 2 was satisfactory. The WBG supported various reform efforts to equalize access to basic public services across urban/rural areas, coastal/inland provinces, and different groups, notably migrants and permanent urban residents. First introduced as explicit goals in the 12th Five Year Plan and further reflected in the 13th Five Year Plan, these equalization efforts sought to address growing spatial and social disparities. Government programs focused on a broad range of social services including employment services; health; training and education; social assistance; social insurance; and aged care. Programs also focused on opportunities in rural areas and small towns, and transport connectivity. Bank support to these programs is detailed below. Objective 2.1: Increasing Access to Quality Health Services and Social Protection Programs [mostly achieved] 21. The WBG made important contributions to China’s ongoing healthcare reform. Using a “learning by doing” approach that facilitated local innovation, the Bank-financed Rural Health Project, which closed in FY15, helped strengthen the rural medical insurance system and financial accessibility to health services by the poor in eight provinces and 40 counties. The project helped the government design a quality-based and service-oriented long-term performance management system as well as to improve rural healthcare infrastructure and expand physical access to care, feeding directly into the government’s efforts to operationalize healthcare reforms and creating a model for other countries. In 2014, the WBG, Government of China, and World Health Organization began preparing a flagship joint study, Healthy China, to help China deepen 64 its health reforms and build an affordable, high-quality health service delivery system.24 The study proposed eight sets of strategic reform directions, which were endorsed by the government and embedded in national policy. The study was followed by the Health Reform PforR (approved in May 2017) to help test and operationalize recommended reforms in two provinces. IFC’s participation in the Healthy China study helped ensure attention to the role of the private sector in healthcare. During the CPS period, IFC supported three projects in the healthcare sector with a combined reach of 1.2 million patients, including a US$50 million financing package to Concord Medical Services Holdings Ltd., a holding company and well-established healthcare service provider operating the largest network of radiotherapy and diagnostic imaging centers in China. IFC supported the expansion of the company’s network targeting primarily middle- and lower- income households in frontier regions of China, thereby improving their access to private, affordable, and high-quality healthcare services. 22. Bank support helped advance social protection policy implementation and policy reforms. The ongoing Guangdong Social Security Integration and Rural Workers Training Project (approved in FY13) helped the provincial government develop a centralized and integrated Management Information System (MIS), to enhance the portability of social security data and beneficiary entitlements across 21 prefecture cities. There were delays in rolling out the MIS, but the project was restructured, including to benefit more migrant workers, and the targets are expected to be fully achieved. In addition, policy dialogue and analytical support provided by the Bank led to policy recommendations on the targeting of the rural minimum living standard guarantee (Dibao) program and coordination between rural Dibao and area-based antipoverty programs, policy dialogue on an integrated pension reform framework with parametric and structural reform measures, and knowledge sharing of international experiences and practices on social safety nets, pension reform, labor redundancy management, and active labor market programs. Bank analytics outlined the key elements of building an efficient and sustainable aged care system in China, leading to the preparation of the first Bank-financed operations in this sector—an investment operation to support Anhui province in establishing and managing a diversified (public, private, and mixed) aged care services system and a PforR operation to support Guizhou province in promoting aged care reform. Objective 2.2: Strengthening Skills Development Programs, Including for Migrants [achieved] 23. WBG support focused on supporting China’s efforts to address disparities in skills development opportunities. China has made impressive progress in education: the net enrollment rate in primary schools in 2015 reached 99.9 percent and the gross enrollment ratio in junior secondary schools stood at 104 percent. Disparities between localities and income levels persist, however, with rural, poor, and migrant children exhibiting significantly lower progression to senior secondary education. Over the past years, China significantly increased access to education and skill development programs—especially technical vocational and education training (TVET)—for those groups, but quality and relevance have remained a concern. Private sector presence in tertiary and vocational education in China is small, accounting for only 1 in 5 students enrolled. 24 The study, Deepening Health Reform in China: Building High Quality and Value-Based Service Delivery, includes several products: a 30-page policy note (delivered to the government in 2015); a 180-page policy summary report (which was publicly launched in July 2016, coinciding with the launch of China’s Five Year Health Plan); and a 500- page final report (publication forthcoming). 65 24. TVET pilots in five provinces showed strong results. Training materials and methods were updated and an increased number of students were enrolled in competency-based training and passed skill certification exams. Most importantly, there was a significant increase in the number of graduates finding employment in their field; and pilot programs for rural migrants in three provinces helped to increase the percentage of graduates finding employment within six months of training completion. Ultimately these efforts helped improve the incomes, employment services and working conditions of rural migrant workers and facilitated the smooth transfer of rural to urban migration. The Ministry of Finance selected the Guangdong Project for its “best cases database” to encourage national replication and learning. Project management staff from Bangladesh implementing a similar project will be trained in Guangdong to replicate the project’s achievements. IFC has helped demonstrate TVET solutions from a private sector perspective, focusing on sponsors with good reach and scale-up potential, especially in rural areas and frontier regions, and with strong capacity to drive improvements in standards In the area of early childhood education (ECE), which has gained attention in China as an important national education agenda, Bank ASA (completed in December 2013) helped introduce international good practice to inform the policy dialogue and programs at the provincial level, leading to a request for the first Bank- financed project in ECE in China, the Yunnan Early Childhood Education Innovation Project (approved in December 2016). Objective 2.3: Enhancing Opportunities in Rural Areas and Small Towns [achieved] 25. To support China’s efforts to boost rural economic development, the WBG helped improve rural roads, enhance services, and pilot ways to boost incomes. For example, in Ningxia, one of China’s poorest provinces, geography and lack of transport—and with it lack of access to employment—were seen as a main hindrance for socioeconomic development. As a result, the average income for urban residents was three times that of rural residents. The construction of all-season rural roads connecting villages to urban centers improved access to key services, including health and education, and contributed to the area’s development—poverty in surveyed project villages decreased by over 30 percent and average annual per capita income increased by 40 percent. Other project components helped to increase wastewater treatment infrastructure in rural areas and access to reliable and high-quality water supply. In addition, the Sustainable Development in Poor Rural Areas Project, the fifth in a series of grassroots poverty reduction projects in collaboration with the State Council Leading Group Office for Poverty Alleviation and Development, rolled out community-driven development approaches for the first time on a large scale in three provinces. Bank-financed cultural heritage projects helped demonstrate cultural preservation and sustainable tourism as a means to boost local economic development in poorer areas. 26. IFC helped expand financial services, especially in western provinces and rural areas. IFC supported China in further improving its secured transactions framework, which enables lenders to take movable assets as collateral, facilitating in particular the expansion of credit to MSMEs. During the CPS period, the movable asset finance market grew impressively, a national internet-based accounts receivable finance platform became operational, and a collateral management industry emerged. As a result, the share of commercial credit involving movable assets grew from 12 percent in 2004 to around 45 percent in 2018. Cumulatively, for accounts receivable and lease finance only, over 3 million transactions have been registered at the security interest registry with a financing volume of at least US$15 trillion (as of 2017). Annual disbursements of debt finance involving movable assets is around US$3 trillion. IFC, through its advisory business, also helped the People’s Bank of China (PBC) improve the credit reporting 66 system, including by issuing several regulations and guidelines. China’s credit reporting system grew during the CPS period and is now the largest in the world—910 million individuals now have a credit profile, increasing their access to finance. In addition, IFC assisted the Credit Reference Center of PBC to develop the standard format of small business credit report. Objective 2.4: Improving Transport Connectivity for More Balanced Regional Development [achieved] 27. The Bank helped improve transport connections between developed and less developed regions through efficiency, capacity, and safety improvements to railways, waterways, and roads. Improving transport connectivity was a high priority for China for sustainable economic development and for reducing rural-urban and regional disparities, with an emphasis on lower-carbon options. Bank-financed operations in the railway sector have led to increased capacity and substantial reductions in transit times, and the Bank provided institutional support through policy dialogue and just-in-time policy notes. Inland waterway projects successfully helped increase cargo capacity. Road and expressway projects improved passenger and freight flow while also addressing connectivity with local road networks, safety, asset management, and environmental impact. More recently Bank support has shifted from supporting the construction of new roads to helping to improve the management of existing assets, rural connectivity, and providing better services to users. Cross-Cutting Theme: Advancing Mutually Beneficial Relations with the World 28. WBG support for China’s growing global role increased significantly over the CPS period, at a time when China’s contribution to both the world economy and international development and cooperation grew considerably. From 2012, when the CPS went to the Board, to 2016, China’s economy grew from US$8.6 trillion to about US$11.4 trillion and its per capita income increased from US$6,329 to about US$8,261. China has been a strong voice for developing countries in international fora, including in the 2016 G20 presidency, and a major driver behind the Sustainable Development Goals. China has in particular focused on Africa’s development, and has increasing outward investments—through FDI as well as through portfolio investment of its accumulated balance of payment surpluses. The country has assumed a leadership role in international development finance through its initiatives in new development banks and is strengthening engagement with existing development organizations, including the World Bank Group. China played a key role in IDA18 replenishment and in the creation of the special theme of “Jobs and Economic Transformation,” and has been an important player in IDA18 implementation. South-South Cooperation 29. The Bank’s China program supported well over 50 learning exchanges between China and other countries. Many projects in the portfolio foster South-South cooperation and learning exchanges between China and other countries. Key areas in which exchanges took place are health care service delivery, social safety nets, TVET, public transport, expressways, urban development, energy (pumped storage, clean stoves, and energy efficiency), climate change adaptation, integrated water resource management, MSME financing, and infrastructure development in Africa. The WBG’s knowledge and relationships built through lending and ASA in China have contributed to the WBG’s global knowledge thus enabling it to help facilitate China’s South-South cooperation. In addition, building on a 2012 MOU with China’s Ministry of Finance (MOF) to establish a partnership on Science of Delivery, China has become a partner in 67 the Global Delivery Initiative (GDI), which leverages country know-how and expertise in delivering development solutions. Ten case studies highlighting China’s implementation knowledge in areas that include highway construction, eco-farming, water management, and balancing cultural heritage preservation and urban development are now part of the Global Library of Case Studies; and China hosted a global conference of the GDI in Chongqing in 2016. 30. The CPS period saw a substantial increase in IFC-China joint cross-border engagements and cooperation. Promoting sustainable cross-border development with Chinese partners through knowledge sharing and coinvestment was one of IFC’s three strategic priorities. In May 2016, IFC invested US$125 million equity in the China Three Gorges South Asia Investment Limited (CSAIL), a subsidiary of the China Three Gorges Corporation, a Chinese state- run firm and leading renewable energy company. CSAIL is an investment platform that supports a series of renewable power projects to be implemented in Pakistan, where the growing deficit in power supply impedes economic growth. This transformational engagement will boost generation capacity in the country by 15 percent, and will provide electricity to estimated 11 million people while the country’s reduced reliance on imported fossil fuels as a result of this engagement will lead to estimated fuel costs savings of around US$1 billion per annum. Through its participation, IFC will leverage its global knowledge, relationships, due diligence, and structuring expertise to attract international investors and lenders to support this investment model and finance individual project companies under this platform. IFC’s participation will ensure compliance with IFC’s Performance Standards and facilitate the adoption of international best practice corporate governance standards. Other examples of IFC investments that supported cross-border commercial transactions involving Chinese sponsors were: a US$300 million investment platform sponsored by CITIC Construction Co., Ltd, a Chinese multinational construction and engineering company, to develop affordable housing in Sub-Saharan Africa; a commercial building project in Tanzania sponsored by the China Railway Engineering Co.; a US$280 million syndication for a full-service telecommunications infrastructure company, IHS Nigeria, to build telecommunications towers, where the Industrial and Commercial Bank of China (ICBC) provided US$60 million; and a 668 million India rupee loan to help China’s leading player in the electrical industry, Chint Group’s JV, develop solar power in India. 31. China has become an increasingly important source of capital mobilization for IFC projects. In FY14, China’s PBOC became the first investor under IFC’s innovative Managed Co- Lending Portfolio Program (MCPP), a syndications product that allows institutional investors the opportunity to passively participate in IFC’s future loan portfolio. In 2015, PBOC, through its State Administration for Foreign Exchange, pledged US$3 billion to be committed in six years. As of end-December 2016, global MCPP committed portfolio stood at US$1.5 billion. Chinese banks’ committed exposure in IFC projects totaled $2.2 billion or 14 percent of IFC’s total participants’ committed exposure – the highest exposure among countries in IFC’s syndicated portfolio. Chinese institutional investors (CIC, CDB, SAFE, The Silk Road Fund) became limited partnership (LP) investors in four IFC’s AMC funds. In the same vein, IFC has been continuously enhancing institutional cooperation with agencies focusing on Belt and Road Initiative and Africa, such as The Silk Road Fund, China Africa Development Fund, China Africa Fund for Industrial Cooperation, CDB, CIC, EXIM, and China-WBG Partnership Facility. 32. China and the WBG also broke new ground in tripartite cooperation with Africa. In May 2014, the Bank’s Board of Executive Directors approved the first project co-financed by the World Bank and China EXIM Bank: the South Sudan Africa Regional Transport, Trade, and Development Facilitation Project. In May 2015, the Board approved the Ethiopia Expressway Development Support Project, co-financed by the World Bank, African Development Bank, China 68 EXIM Bank, and South Korea EXIM Bank, bringing together traditional and non-traditional development partners with very different business models to share a standardized project design, safeguards, and joint supervision. In June 2015, the WBG, CDB, China-Africa Development Fund, Government of Ethiopia, and the UN Industrial Development Organization organized an “Investing in Africa” Forum in Addis Ababa that was followed by a second forum in Guangzhou, China in September 2016.25 In 2015, the World Bank also assisted the CDB in establishing and co-sponsoring the Investing in Africa Think Tank Alliance. The World Bank signed an MOU with the NDRC in 2013 to collaborate in addressing climate change, including to promote South-South cooperation related to climate change mitigation and adaptation. In 2016, the World Bank, MOF, and China’s National Energy Administration (NEA) signed a MOU to develop South-South cooperation focusing on clean and renewable energy sectors in Africa. 33. China’s first single-donor trust fund administered by the WBG—the China-WBG Partnership Facility (CWPF)—was established in 2015. China pledged US$50 million over three years (2015-2017) to help WBG members achieve inclusive and sustainable development and enhance tripartite cooperation between China, recipient countries, and the WBG. Under the first call for proposals in 2016 for window 1 (investment projects and operations) and window 2 (knowledge development and South-South learning), US$9.4 million was approved for 17 grants, with an emphasis on Africa, regional integration, and the sectors of agriculture, transport, health, and education.26 Grants included support for: disease surveillance and emergency responses in Sierra Leone; climate-smart agriculture in Mozambique; new climate investments by IFC in India, Sri Lanka, and Vietnam; advice by IFC to the Agricultural Bank of China on green finance; establishment of the secretariat of the Global Infrastructure Connectivity Alliance; and the 2016 Investing in Africa Forum in Guangzhou, China. In addition, China committed $20 million from the CWPF to the Global Infrastructure Facility. Supporting China as a Global Stakeholder 34. The WBG supported China’s G20 Presidency in 2016. WBG support to China’s G20 presidency included work on infrastructure investment, specifically multilateral development bank (MDB) efforts to optimize their balance sheets, joint MDB actions to support infrastructure finance, and enhancing infrastructure connectivity. The Bank also supported China’s initiative t o create the Green Finance Study Group and China’s focus on digital financial inclusion, which presents an opportunity for significant progress in reaching women and other relatively excluded market segments through digital technologies and other new approaches to financial inclusion. 35. The WBG provided technical support for establishing the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB) and is co-financing projects with AIIB. The WBG’s technical support for establishing the AIIB ranged from advice on key institutional and policy foundations, including institutional governance, procurement, and safeguards, to advice on building management and ICT. IFC has helped AIIB develop private sector lending capacity. The WBG provided similar assistance to the NDB. In 2016, the World Bank and AIIB signed a Co-Financing Framework Agreement (CFA). WBG-cofinanced projects accounted for over 65 percent of AIIB’s financing during its first year of operation (CY16). In addition, the World Bank Treasury is providing asset management services to the AIIB to help 25 Beyond the period of the original CPS, there was a third forum in Senegal in September 2017, and a fourth forum in Hunan, China, in September 2018. 26 A second call for proposals in 2017 resulted in approval of 11 more grants for US$7.1 million, bringing total approvals for windows 1 and 2 to US$16.5 million for 28 grants. 69 safeguard the paid-in capital of the AIIB’s shareholders while it develops the internal capacity and institutional infrastructure to undertake and/or oversee its own asset management operations. 36. The World Bank (IBRD) supported the development of China’s capital markets and internationalization of the renminbi. The World Bank Treasury issued the market’s first ever SDR denominated bond coinciding with the RMB's entry to the SDR. The “Mulan bond”—the largest bond ever (in RMB terms) by a foreign issuer in Chinese markets—was issued by IBRD in September 2016 and received 2.5 times over subscription from over 50 investors. 4. WBG PERFORMANCE 37. WBG performance over the CPS period is rated good. The WBG program was implemented in line with the CPS objectives. As discussed above, program implementation over the CPS period achieved good results, with all ten CPS objectives either partially, mostly, or fully achieved. Program delivery and performance were also strong based on portfolio indicators and IEG reviews of projects that exited the portfolio. 38. The China-WBG partnership was strengthened over the CPS period. China’s Third Plenary Session of the 18th Central Committee of the CPC opened new opportunities for cooperation. China and the WBG deepened their collaboration in producing joint studies linked to China’s reform program. Both the IBRD and IFC also scaled up financial support. Responding to government demand, the Bank introduced new financing instruments (PforR and DPF) for larger programmatic engagements linked to reform priorities. In addition, as described in the previous section, the WBG provided substantial support to strengthen China’s contributions in various international development and cooperation arenas. 39. Both the Bank and IFC made good progress in mainstreaming gender into operations. One of the key lessons learned in the previous CPS was to strengthen efforts to mainstream gender in the portfolio. During the CPS time period, 98 percent of all approved IBRD-financed projects (55 projects) addressed gender in at least one of the following dimensions: analysis, design and/or M&E framework. Moreover, 65 percent of new projects addressed gender in all three of these dimensions, as compared to 33 percent at the start of the CPS. Social assessments were systematically carried out during project preparation to analyze a range of potential social impacts—including gender impacts—and relevant findings were used to inform project designs. For example, social assessments for several rural road projects led to new design measures to address road safety issues involving women and children. Five gender-specific assessments were completed during the CPS period to inform both ongoing and pipeline operations. IFC has also increased its attention to gender in investment operations, including through a flagship partnership with the Alibaba Group. In partnership with Goldman Sachs’ 10,000 Women Initiative and as part of the first-ever global financing facility for women-owned small- and medium-sized enterprises (the Women Entrepreneurs Opportunity Facility), IFC provided a senior loan of RMB500 million to Ant Financial to expand its lending to women entrepreneurs who run businesses on Alibaba Group’s online marketplaces and who often face difficulties in obtaining loans. Advisory Services and Analytics 40. ASA during the CPS period focused increasingly on flagship studies linked to major reforms. The Bank carried out 44 ASA during the CPS period ranging from major flagship studies to just-in-time advice on specific issues. Flagship reports during the CPS period included China 2030: Building a Modern, Harmonious, and Creative Society (2013), and Urban China: Toward 70 Efficient, Inclusive, and Sustainable Urbanization (2014), both prepared jointly with the Development Research Center of China’s State Council; and Deepening Health Reform in China: Building High Quality and Value-Based Service Delivery (policy summary report, 2016), prepared jointly with the Ministry of Finance, National Health and Family Planning Commission, Ministry of Human Resources and Social Security, and World Health Organization. Others included studies on early child development, low-carbon city in Shanghai, municipal asset management in small cities and towns, and regional railway impact. A full list of ASA is provided in Annex 2. 41. IFC’s Advisory Services (AS) engagement centered on access to finance, green finance, and PPPs. During the CPS period, AS remained stable at around 12 projects with around US$25 million worth of funds under management and US$4.9 million in annual spending. To accelerate access to finance, IFC worked with regulatory authorities to support the development of payment systems, a credit bureau, and microfinance institutions. IFC helped to promote green finance through the China Climate Finance Advisory Program, which helps Chinese financial institutions build profitable and sustainable green businesses and helps partner banks mainstream energy efficiency lending. This model is being replicated to new areas such as green buildings and emissions trading pilots. IFC also worked with China to establish the Sustainable Banking Network: a global community of financial regulators and banking associations from 21 countries with the goal of promoting sustainable finance. IFC’s PPP transaction advisory services in China aimed to help local governments in the design and implementation of PPPs in infrastructure and basic public services. As of the end of 2016, the AS portfolio comprised 9 projects worth US$27.1 million, with climate-related engagements at 56 percent of the total portfolio, engagements supporting SMEs at 83 percent, and engagements in frontier markets at 37 percent. A full list of IFC AS completed from FY13 to mid-FY17 is provided in Annex 3. IBRD Portfolio and Performance 42. IBRD lending increased to address some of the country’s most important cross- sectoral challenges. The CPS at its outset anticipated IBRD lending of about US$1.5 billion for 10-13 new projects per year. As reflected in the 2016 PLR, China requested an increase in IBRD lending to about US$2.5 billion annually to address key national reform priorities, such as pollution control, health reform, and subnational fiscal reform, as well as the use (for the first time in China) of PforR and DPF instruments. Accordingly, lending increased at an average rate of about 9 percent per year from US$1.54 billion in total commitments (14 operations) in FY13 to US$1.62 billion (12 operations) in FY14, US$1.82 billion (14 operations) in FY15, US$1.98 billion (11 operations) in FY16, and US$0.6 billion (4 operations) in the first half of FY17 (total FY17 commitments were US$2.4 billion for 13 operations). In total, the Bank approved 55 IBRD- financed projects during the CPS period for US$7.6 billion in new commitments. As of the end of December 2016, the active IBRD portfolio stood at 82 projects, totaling US$10.7 billion in net commitments. 43. Overall portfolio performance was good. IEG reviewed 34 of the 61 projects that exited the portfolio during the CPS period and found 85 percent of projects reviewed to be moderately satisfactory or above in achieving the desired outcomes, above East Asia and the Pacific (EAP) and Bank averages (74 percent and 71 percent, respectively). The Bank was proactive in restructuring the portfolio: 77 percent of projects underwent restructuring, and about 16 percent went through more than three restructurings, demonstrating efforts by the task teams to address implementation issues and adjust projects as needed. Proactivity increased from 57 percent in FY13 to 75 percent in FY16. See Annex 3 for an overview of key portfolio indicators. 71 44. Key portfolio issues raised at the outset of the CPS were addressed during the CPS period. For example, disbursement ratios in the first two years of CPS implementation were slightly below EAP and Bank averages. In 2014, the Bank undertook an in-depth diagnostic review of projects with persistent low disbursements, revealing several issues: (i) more innovative and complex project designs; (ii) lower implementation capacity by new implementing entities in western and central regions and small towns, causing start-up delays; and (iii) risk aversion by both the government and the World Bank, leading to excessive review and monitoring. The Bank and government agreed on joint actions, resulting in an increase in the disbursement ratio from 16.5 percent in FY13 to over 20 percent in FY15 and FY16. The Bank and the government continued to engage regularly in results-based joint portfolio reviews and discussions of problem projects. 45. In line with CPS priorities, the portfolio focused on environmental objectives and the less-developed western and inland provinces. Over 70 percent of projects approved during the CPS period had environmental objectives. About 65 percent of IBRD loans approved during the period, representing 50 percent of the lending volume, generated climate change co-benefits. Over 80 percent of new financing supported China’s western and central regions. In addition, about 65 percent of financing went to secondary and smaller cities. Trust Fund Portfolio and Performance 46. Trust funds were integral to the WBG’s environmental objectives in China. As of end- December 2016, the recipient-executed trust fund (RETF) portfolio stood at US$376 million in commitments through 31 grants. The Global Environmental Facility (GEF) and the Ozone Trust Fund (OTF) accounted for about 90 percent of the portfolio in terms of volume. During the CPS period, the WBG helped China secure US$121.5 million in GEF financing, with more than 70 percent of the commitments addressing climate change. Many GEF grants cofinanced IBRD operations and played a crucial role in deepening the policy dialogue. Trust fund-financed operations performed overall satisfactorily: of the 31 RETF grant-funded projects in the portfolio as of end-December 2016, 81 percent were performing moderately satisfactory (MS) and above in achieving their development objectives (DO), while 77 percent were MS and above on implementation progress (IP). See Annex 5 for GEF commitments from FY13-mid FY17 and the active GEF portfolio. Annex 6 presents the trust fund portfolio, excluding GEF, over the CPS period. IFC and MIGA Portfolio and Performance 47. IFC’s strategy focused on (i) climate change—with a goal to demonstrate viable market- based solutions to reducing the energy intensity of GDP and increasing the efficient use of water resources; (ii) balanced rural/urban development—aimed at reducing the gap in living standards between urban and frontier/rural areas through investment and advisory engagements in agribusiness, infrastructure, and micro, small, and medium enterprise (MSME) finance; (iii) sustainable cross-border development—helping China contribute sustainably to global economic development by mobilizing Chinese sponsors and investments to invest in frontier regions; and (iv) bringing to scale innovative technologies and new business models by working to harness innovation across all sectors to grow economic opportunities, and use technologies to act as a catalyst for entrepreneurship and growth of SMEs. 48. IFC’s investment operations showed strong and steady growth during the CPS period. Total commitments (IFC’s own account and mobilization, long-term finance only) 72 averaged US$1.2 billion per fiscal year, exceeding the CPS’ expected range of US$500-1,000 million per year. The number of projects averaged 25 per year, in line with CPS expectations. Cumulatively, IFC’s commitments for the period FY13 through mid-FY17 stood at US$5.2 billion, comprising US$3.7 billion for IFC’s own account and US$1.5 billion mobilization, across 107 long-term finance projects. New investments were primarily concentrated in the financial sector and supporting MSMEs (US$1.9 billion, 36 percent of total), followed by utilities (US$1.3 billion, 24 percent) and agriculture and forestry (US$416 million, 8 percent). Over half of investments were in frontier regions of China, while around a quarter of the total committed volume (own account and mobilization) was in climate-positive investments. 49. China was ranked third globally in terms of both committed and outstanding exposure for IFC at the end of the CPS period (December 31, 2016). IFC’s committed portfolio increased from US$2.5 billion at the end of FY12 to US$3.0 billion at the end of the CPS period— representing 20 percent growth and spanning 109 active clients. The committed portfolio peaked at US$3.7 billion at the end of FY15. The committed portfolio is concentrated in finance and insurance (US$1.2 billion for IFC’s own account, 39 percent), followed by utilities (US$386 million, 13 percent), collective investment vehicles (US$337 million, 11 percent), chemicals (US$249m, 8 percent), and agriculture and forestry (US$196 million, 7 percent). The CPS timeframe saw a gradual increase of equity product in the mix, from 40 percent at the end of FY12 to nearly half of the portfolio by mid-FY17. In the same vein, IFC’s outstanding portfolio during the same timeframe increased from US$1.8 billion to US$2.4 billion, representing 31 percent growth. 50. IFC’s investment portfolio demonstrated solid performance – both financially and across different development impact dimensions, with strong development reach. IFC’s equity portfolio in China yielded US$1.3 billion in cumulative realized capital gains – the highest value across countries and 25 percent of IFC’s total. The level of non-performing loans stood at 4.59 percent as of December 31, 2016, below the 5.87 percent IFC average. In 2016, IFC’s client financial institutions in China had nearly 7 million micro and SME loans outstanding (11 percent of IFC’s total) worth US$176 billion (11 percent of IFC’s total micro loans and 43 percent of IFC’s total SME loans). IFC clients in other sectors supported nearly 500,000 jobs (21 percent of IFC’s total), over US$1.6 billion in payments to government (11 percent), over 460,000 farmers (15 percent), around 58 million gas distribution customers (97 percent), and 3 million water distribution customers (20 percent). Of the 37 projects rated in the Development Outcome Tracking System (DOTS), slightly over half were rated as overall successful in achieving the desired outcomes and 27 (73 percent) were rated positively on their contribution to private sector development.27 51. During the CPS period, the improving investment climate in China limited the demand for political risk insurance, but the Multilateral Investment Guarantee Agency (MIGA) supported one project into China amounting to US$10 million in the water and wastewater sector, which was approved in December 2015. 27 Based on data from IFC’s development impact monitoring system measuring development results at the transaction level. 73 Design of the CPS Program 52. Relevance and Alignment with the Government Program. The CPS was designed to closely align with the Government’s 12th Five Year Plan (FYP). It broadly supported the FYP’s goal of achieving a harmonious society through improvements in economic efficiency and sustainability with an emphasis on energy conservation and environment protection, in addition to a focus on inclusive and equitable development. The IBRD program proved to be relevant and well-aligned with government priorities. All projects that exited the portfolio over the CPS period were rated as either highly or substantially relevant to the country’s development objectives. In addition, 83 percent of projects rated the relevance of project design as high or substantial. The 2016 PLR concluded that the CPS themes and objectives remained relevant but nevertheless made a few changes to the results framework further discussed below. Results Framework 53. The CPS presented a selective results framework linked to the WBG portfolio. The CPS learned from the results framework of the previous CPS, which was overly complex and had qualitative indicators that made it difficult to evaluate WBG impact.. The new results framework presented a more realistic link between the country development goals, CPS objectives, WBG- financed interventions, and expected results. Outcome indicators were measurable with specific baseline and target values, although the sheer volume of the portfolio made it challenging to conglomerate results in some areas. Milestones provided a link between indicators and outputs achieved by WBG interventions. Proactive monitoring allowed the country team to adjust the results framework at the PLR stage by dropping one objective, reducing indicators from 30 to 27, and modifying 8 indicators to improve their clarity. Risk and Mitigation Measures 54. Risks remained overall moderate over the CPS period as identified at the outset and confirmed by the PLR. Two areas, already discussed above, where risks have increased during CPS implementation, include more complex project design and lower implementation capacity in the lesser-developed areas where many Bank-financed projects were implemented. These factors led to start-up delays that contributed to declines in the disbursement ratio at the outset of CPS implementation. 5. LESSONS 55. The joint flagship studies that have been undertaken since China 2030 in 2013 have been important for deepening the dialogue on policies and Bank programs and provided a model for other middle-income countries. Building on the success of China 2030, Urban China and Healthy China brought about deep policy dialogue and provided a solid foundation for lending. The approach inspired joint studies in other countries, such as the Vietnam 2035 study. 56. DPFs and PforRs were helpful instruments in supporting strategic policy-level discussions between China and the World Bank. PforRs and DPFs, which entered the portfolio at the end of the CPS period, enabled deep and strategic dialogue in several key areas, such as subnational debt, air pollution control, and health sector reform. 57. In some cases, stronger engagement at the national or ministerial level would increase the impact of the Bank’s work. Focusing on innovation and pilots at provincial and subprovincial 74 levels continues to be a good way to leverage World Bank financing given that China often supports reforms at the subnational level before scaling them up. Going forward, to maximize institutional impact, it would be useful for subnational investments to be more systematically complemented by engagement at the national or ministerial level. Support for South-South development and knowledge exchange would benefit from a more systematic and programmatic approach. During the CPS period, the WBG continued to provide substantial support for South-South learning and various forms of knowledge exchange. But their ad hoc nature made them difficult to track, coordinate, and evaluate. Many of the Bank’s engagements in China provide lessons learned and many approaches that have been piloted in China are relevant for other countries. There is an opportunity to more effectively channel both the Bank’s knowledge and China’s knowledge on a global scale. A more programmatic approach to supporting global cooperation and South-South learning, including systems for tracking, coordinating, and evaluating the work, would enable the WBG to better leverage China’s development experiences for the benefit of other developing countries. 75 CLR Annex 1: China CPS (FY13 to mid-FY17) Results Matrix Indicators and Status Milestones and Status WBG Interventions STRATEGIC THEME 1. SUPPORTING GREENER GROWTH 1.1 SHIFTING TO A SUSTAINABLE ENERGY PATH China 12th FYP Targets: Non-fossil fuel energy accounts for 11.4% of primary energy consumption; energy consumption per unit of GDP drops by 16%; and CO2 emissions per unit of GDP declines by 17%. Result: Achieved. China’s non-fossil fuel energy accounted for 12% of primary energy consumption; energy consumption per unit of GDP dropped by 18.2%; and CO2 emissions per unit of GDP declined by 20%. 1.1.1 Associated cumulative energy savings Renewable Energy (RE) On-going (closed on and after 12/31/16): IBRD: Energy from energy efficiency investments (million - Policies promoting smoother grid integration developed by mid-2014. Efficiency (EE) Financing 1+2 (closed 12/31/16); tons of coal equivalent) Achieved. The GEF-financed China Renewable Energy Scale Up Program Shandong EE, Shanxi Coal Bed Methane Development; Baseline: 0 (2011) Target: 10 mtce supported the development of the 13th Renewable Energy Five Year Plan, Beijing EE and Emission Reduction Demonstration; (2016)Progress (12/2016): 15 mtce which, for the first time, integrated renewable energy generation plans with Green Energy Schemes for Low-carbon City in Shanghai; [Achieved] transmission plans to address grid integration bottlenecks. Hebei Rural Renewable Energy Dev.; Hebei Clean - Renewable energy quota system established by mid-2014. Achieved with Heating; Shanxi Gas Utilization; GEF: Provincial EE Scale- The World Bank supported credit lines to delay. The renewable energy quota system was submitted to the State up (closed 12/31/2016); Renewable Energy Scale-up participating financial institutions, which on- Council in late 2014 and issued in 2015. Phase II; Green Energy Schemes for Low-carbon City in lent to industrial enterprises and energy - Distributed generation piloted by mid-2014. Achieved Shanghai; Urban Scale Bldg EE and Renewable Energy; service companies for energy efficiency Large-city Congestion and Carbon Reduction; China EE investments. IBRD loans were leveraged 7-8 Energy Efficiency (EE) Financing (closed 12/31/16); CF: Xiaogushan times over, leading to sizable energy savings of - Innovative pilots for promoting adoption of energy efficiency in at least Hydropower; Nanjing Steel Factory Gas Recovery; Inner more than 15 million tons of coal equivalent, three provinces promoted by 2015. Achieved. The pilots (in Jiangxi, Mongolia Huitengxile Wind Farm; Hubei Guangrun while also helping to build bank capacity and Shandong, and Shanxi) had significant impact in terms of policies, programs, Hydropower, Baotou Iron & Steel EE (closed 12/31/16); mainstream energy efficiency lending in the and institutional capacity. IFC: China Wind Power; CHUEE SME IB; CHUEE II SPDB; banking sector. In parallel, World Bank ASA - Energy consumption monitoring system designs developed by 2015. CHUEE II IB, Sunpreme Silicon; Microvast; Shuoren; Sino focused on strengthening clean energy policies Achieved Green Fund; EAP ALOE III Fund) and building capacity to implement policies at - EE standards and guidelines for green field investments developed by mid- national and provincial levels. 2014. Achieved Closed during CPS period: IBRD: Urumqi District Heating; - 6 FIs and 3 Hangzhou banks have stronger capacities to offer EE/RE products Liaoning Medium Cities Infra. III; GEF: Heat Reform & 1.1.2 GHG emissions expected to be avoided by 2015 (WB/IFC). Achieved. IFC, through CHUEE (later renamed the China Bldg EE; Thermal Power Efficiency; Sino-Singapore (metric tons/year) Climate Finance Advisory Services Program), worked with 8 partners (IB, Tianjin Eco-City; EE Promotion in Ind.; EE Financing (EE Baseline: 0 Target: 20 million (IFC) BOB, SPDB BON, BOJS, BOS, BORZ and ABC), and supported 53 green loans Phase III with Exim Bank); Technology Needs under risk sharing facilities with a volume of US$141 million, mobilizing Assessment; Green Freight Demonstration; CF: Progress (2016): 22 million US$525 million in green investment. The World Bank CHEEF mobilized nearly Shandong Manure Biogas; Yingkou Economic Dev Zone [Achieved] $900 million from two banks (Huaxia and China Export Import Bank) for EE Heating; Dashiqiao Central Heating; IFC: Zhongda Hydro, investments in large and medium enterprises. Also, the Shandong Energy Yanjin; CHUEE IB; C&G Environmental Protection In addition to avoiding GHG emissions, IFC’s Efficiency Project helped demonstrate the viability of using financial leasing Holdings; CHUEE SME BRCB; CHUEE I BOB; Nature China Climate Finance Advisory Services for energy efficiency projects. Elements Renewable Energy and Clean Tech Fund Program demonstrated the technical - Green Building Codes for commercial and residential buildings developed by feasibility and commercial profitability of 2015 (IFC). Achieved. The Ministry of Housing and Urban-Rural ASA/AS: IBRD: Carbon Capture & Sequestration; Tech – energy efficiency (EE) and renewable energy Development (MOHURD) began implementing its green building rating Economic Evaluation of Incentives for Wind; Green (RE) investments. The program helped private system (known as 3-star rating system) in 2015. Since then, IFC has worked Energy Schemes for Low Carbon City in Shanghai; Smart banks grow their green portfolio and change with the private sector to promote its EDGE system, which has been rolled Grid Development; EE in Public Institutions; Provincial 76 Indicators and Status Milestones and Status WBG Interventions their perception of the risks related to lending out globally to help the building sector understand the business Energy Conservation Practitioner’s Forum; Defining and for EE and RE. IFC also provided support to opportunities in developing green buildings. Measuring Low Carbon Cities; Clean Stove Initiative; strengthen green credit policy and make Heat Regulation Phase II; Electricity Regulation; lending by Chinese banks more resource- Low Carbon Cities Monitoring, Verification and Reporting in Energy efficient and environmentally sustainable. - Innovative pilots and programs for promoting cleaner energy use in targeted Efficiency; Developing Innovative EE Financing cities launched by 2013. Achieved. The Bank energy team co-led the Mechanism in China; Developing Shenzhen Low-carbon development of the Green Urbanization Chapter in the Urban China report Strategy; Study on Fossil Energy Subsidy in China; IFC: launched in 2014 that defined a comprehensive agenda for sustainable CHUEE I IB AS; CHUEE SME IB AS; CHUEE I BOB AS; urban development. The Green Energy for Low Carbon City Project and the Performance Standards for the Banking Sector; Zhongda Urban Scale Energy Efficiency and Renewable Energy Project supporting Hydro, Yanjin; CHUEE SME IB; Nature Elements Beijing and other cities in selected low carbon city policies are ongoing. This Renewable Energy and Clean Tech Fund; C&G is complemented by studies including Developing a Low Carbon Strategy in Environmental Protection Holdings, CHUEE SME BRCB Shenzhen and Applying Abatement Cost Curve Methodology for Low Carbon Strategy in Changning District, Shanghai. New Technologies - Gas utilization application demonstrations launched by 2015.Achieved with delay. The Shanxi Gas Utilization Project effective in 2014 is currently under implementation, and the major procurement activities have been completed. The project will be mostly completed by 2018. The Shanxi CBM Development and Utilization Project, effective in 2009, has the LNG plant installed and fully operational in 2017, and the upstream gas drilling also completed in 2017. - Schemes to promote access to clean household energy developed by 2015. Achieved. The China Clean Stove Initiative ASA, supported by the Government of Australia, is completed. - Knowledge on feasibility of CCS deployment gained. Achieved. China CCS Capacity Building Technical Assistance deliverables were submitted to the clients. 1.2 ENHANCING URBAN ENVIRONMENTAL SERVICES China 12th FYP Targets: The urbanization rate increases by 4 percentage points, and the coordination of urban, rural and regional development is further strengthened. Result: Achieved. The number of permanent urban residents increased from 49.9% in 2010 to 56.1% in 2015. 1.2.1 People with access to improved water Water supply On-going (closed on and after 12/31/16): IBRD: Liuzhou supply in more than 50 targeted small towns - Increased water production capacity, rehabilitation and expansion of Environment Management II; Sichuan Small Towns and cities: distribution networks in 20 Henan and 84 Jiangsu towns by 2015. Achieved. Development (closed 12/31/16); Chongqing Urban-Rural Baseline: 1.72 million (2011) Target: 6.5 Henan: The total number of beneficiaries added by the project accounts to Integration; Yunnan Urban Environment; Shanghai million (2016) (WB) 1.087 million in 20 project counties (the number of participating countries Urban APL 3; Guizhou Cultural and Natural Heritage; Baseline: 4.6 million (2010) Target 5.0 was reduced from the original 38). Jiangsu: On track with about 500,000 Shandong Confucius & Mencius Culture; Gansu Qingyang million (2014) (IFC) cubic meters per day of treated bulk water supply added. Another 200,000 Urban Infrastructure Improvement; Ningbo Domestic cubic meter per day capacity will be added by the Nanjin Longtan water Waste Collection & Recycling Demonstration; Jiangxi Progress (12/2016): 11.5 million (WB) treatment plant to be completed in mid-2015. Transmission and coverage of Small Towns Infrastructure Development [Achieved] water supply has increased to 84 towns and villages in total, exceeding the Demonstration; Liaoning Coastal Economic Belt target. Coverage of water supply in project cities has now reached 100%. Infrastructure and Environment; Guangxi Laibin Water 77 Indicators and Status Milestones and Status WBG Interventions The IBRD target was exceeded and included a - Bengbu Municipality (population 3.5 million) has increased water reliability and Environment Management; Chongqing Small Towns major water intake system in Shanghai to (90 days of emergency water supply) by mid-2014. Achieved. Tianhe Pump Water Resources Integrated Management; Shaanxi supply more than 5 million m3/day water to Station was completed and put into operation in 2014, raising the water Small Towns Infrastructure; Qinghai Xining Integrated 6.65 million people – a quarter of the storage level of Tianhe River by 1 m to improve the reliability of the water Environment Management; Guilin Integrated population – while protecting the supply from supply of the city. Environment Management; Ningbo Municipal Solid saline intrusion due to climate change-related - 3 banks improve lending process for water efficiency and water quality Waste Minimization and Recycling; Hubei Jingzhou rising sea water levels. The project introduced improvement projects and lend $100 million by mid-2014 (IFC). Partially Historic Town Conservation; Ningbo Sustainable innovations relevant for other coastal cities Achieved. By 2016, one bank had improved its lending process for water Urbanization; Lushan Earthquake Reconstruction and with salinity intrusions. efficiency and water quality improvement projects, with more than $189 Risk Reduction; IFC: Asia Environment million in financing and facilitated amounts Progress: (12/2016): 3.5 million (IFC) - 20 industrial facilities or 3 industrial zones reduce 20% of water Closed during CPS period: IBRD: Han River Urban [Partially achieved. consumption, or increase the alternatives of fresh water by 20%, or decrease Environment; Henan Towns Water, Shandong 20% of total pollutants from wastewater discharge by mid-2014 (IFC). Environment 2; Shanghai Urban APL 2; Sichuan Urban IFC increased water reliability and helped Achieved. 20 industrial facilities and more than 100 mills reduced water Development; Fuzhou Nantai Island Peri-Urban expand client banks’ lending for water usage by more than 13 million m3 in 2014 alone. By 2016, the cumulative Development; Gansu Cultural & Natural Heritage; efficiency and water quality improvement result has grown to almost 29 million m3 per year. This translates into more Nanning Urban Environment; Bengbu Integrated projects. IFC’s clients expanded their than one half million tons of GHG per year. Environment Improvement; Chongqing Small Cities wastewater treatment leading to 20% - Increased water supply capacities by 25 million m3 per year (IFC). Achieved. Infra.; Guangdong/PRD Urban Environment 2; Hunan reduction in industrial water consumption, Two investment clients expanded wastewater treatment capacity (thus Urban Development; Jiangsu Water and Wastewater; benefitting 3.5 million customers per year. In saving freshwater as a result) by almost 25 million m3 per year between Liaoning Med Cities Infrastructure 1+2+3; Tianjin Urban addition, IFC helped expand wastewater 2012 and 2015. The capacity grew to 64 million m3 per year and benefitted Development 2; Xining Flood and Watershed Mgmt; treatment capacity by 102,000 m3/day. 3.5 million customers per year in 2015. Wenchuan Earthquake Recovery; IFC: Epure BOT/Sound Global Ltd.; CEI Water; Aqualyng; United Water 1.2.2 Targeted towns and cities with at least Wastewater collection, disposal and treatment 70% of municipal wastewater treated - Three new wastewater treatment plants in five second-tier cities in Hubei by annually 2015. Partially Achieved. The project was restructured: it extended ASA/AS: IBRD: Shandong Culture Heritage; China 2030; Baseline: 0 Target: 25 (2015) wastewater services with 3 (newly built wastewater treatment plants in 3 Urban China; Shanghai 2050; IFC: Water Efficiency second tier cities in Hubei (Han River Basin). Finance; CHUEE Water; Epure BOT/Sound Global Ltd.; Progress (12/2016): 27 - Wastewater treatment plan with installed capacity of 100,000 m3 day in United Water; Aqualyng; CEI Water [Achieved] Tianjin meeting class 1B discharge standards by mid-2014. Achieved - 200,000 m3/day additional WWTP capacity in four cities in Liaoning by mid- The target was exceeded because waste water 2014. Achieved. Three new wastewater treatment plants with a combined services were extended to several neighboring capacity of 250,000 tons per day were completed in Yingkou, Panjin, and towns, which also increased the efficiency of Gaizhou. the treatment process. - 240,000 m3/day additional WWTP capacity in Jiangnan WWTP in Nanning by 2015. Achieved. The treatment capacity of the Jiangnan Wastewater Treatment Plant was expanded from 240,000 m3/day to 480,000 m3/day as 1.2.3 People with access to improved planned, and the additional capacity is in full operation. In addition, wastewater management services (number) wastewater treatment capacity of 102,000 m3/day has been established in Baseline: 554,000 (2011) Target: 6.7 million five Nanning county seats. 5 out of 6 project areas reached a treatment level (2016) of more than 70%. Progress (12/2016): 7.1 million Solid waste collection and disposal [Achieved] - Land fill capacity constructed : Liaoning 1,400 tons/day by 2012; Yunnan 535 78 Indicators and Status Milestones and Status WBG Interventions tons/day by mid-2014. Achieved. Liaoning: A modern sanitary landfill Improved wastewater networks and capacity by 1,400 ton/day was constructed in Fushun. The construction of a treatment facilities across multiple waste sanitary landfill in Panjin was completed with alternative source of water collection zones led to public health funds. Yingkou EDZ also decided to cancel the solid waste sub-component benefits as well as environmental outcomes. due to difficulties in securing a sustainable location for the landfill. The project scope was formally restructured in April 2014. Yunnan: All planned sanitary landfills are operating, providing a combined the capacity to dispose of up to 535 tons of solid waste per day. Hebei: All five sanitary landfills have 1.2.4 Targeted cities with at least 90% of been completed and are either under commissioning or test run. waste collected and disposed (number) - 16 ha dump sites closed (Hubei five cities) by 2015. Achieved. By mid-2015, Baseline: 0 Target: 8 (2016) a total of 20.4 ha of old dump sites in five cities had closed. Two cities identified alternative financing for the solid waste infrastructure and Progress (12/2016): 8 withdrew from the project, bringing the total number of project cities down [Achieved] from 7 to 5. - New program piloting household-based waste source separation launched in In addition to financing solid waste collection Ningbo by 2015. Achieved. Numbers of households in pilot communities and disposal facilities, the projects introduced participating stood at 340,000, and 100 ton/d kitchen waste was collected for the first time a “3Rs” (Recycle, Reuse, and from the communities as of 2016. Reduction) campaign to reduce the amount of solid waste being disposed and which will Earthquake restoration in Sichuan and Gansu extend the service life of the landfills. In Reconstruction and appropriate expansion of infrastructure services in 16 Ningbo, the WB supported the first stand- counties in Sichuan and 7 counties in Gansu with 100% of facilities built to alone solid waste management project for at- applicable government standards for flood and seismic hazards. Achieved. source separation of waste by urban Infrastructure, health, and education services in Sichuan and Gansu households. provinces were restored to levels at least or better than prior to the Wenchuan earthquake, while also reducing vulnerability to future seismic and flood hazards. 1.3 PROMOTING LOW-CARBON URBAN TRANSPORT China 12th FYP Targets: Energy consumption per unit of GDP drops by 16%; and CO2 emissions per unit of GDP declines by 17%. Result: Achieved. Energy consumption per unit of GDP dropped by 18.2%; and CO2 emissions per unit of GDP declined by 20% 1.3.1 Demonstration corridors successfully Public Transport On-going (closed on and after 12/31/16): IBRD: Wuhan meeting public transport ridership, peak hour - National sustainable urban transport framework and associated technical Second Urban Transport; Xi'an Sustainable Urban travel time and road safety targets guidelines developed and issued by mid-2014 (GEF). Achieved Transport; Anhui Medium Cities Urban Transport; Baseline: 0 - 30 cities use updated technical guidelines in designing 5 year master plan Sichuan Small Towns Development (closed 12/31/16); Target: 25 corridors in 15 cities (2016) updates by 2015 (GEF) Achieved Hubei Xiangyang Urban Transport; Changzhi Sustainable - Bus terminals, bus depots and stops, maintenance facilities constructed in Urban Transport; Xinjiang Yining Urban Transport; Progress (12/2016): 14 corridors in 10 cities four cities in Anhui by 2015. Not available. This data was no longer tracked Kunming Urban Rail; Zhengzhou Urban Rail; Yunnan [Partially Achieved] after project was restructured in 2015, although it was on track in 2015 Honghe Prefecture Urban Transport; Qinghai Xining when was last reported. Original target number of facilities for the four Urban Transport; Jiangxi NanChang Urban Rail; Jiaozuo Due to restructuring of Bank-financed projects cities: 4 for Huaibei; 2 for Anqing; 2 for Wuhu; and 1 for Luan. Green Transport; Urumqi Urban Transport 2; Wuhan that altered project design and components, Integrated Transport Dev.; Tianjin Urban Transport fewer demonstration corridors were Urban Transport Efficiency Improvement; Wuhan Integrated Transport Dev.; GEF: completed than anticipated. However, this - Road improvements on major urban traffic routes (>100 kms) in six cities in Large-City Congestion and Carbon Reduction; Promotion shortfall did not materially affect the Bank’s Liaoning, four cities in Anhui, and Xian by 2015. Achieved. Liaoning: of Sustainable Cities in China 79 Indicators and Status Milestones and Status WBG Interventions objective to support a critical mass of completed 87 km rehabilitated, 20 km constructed – exceeding targets. successful demonstration projects, Anhui: 15.3 km new constructed roads and 11.2 km of rehabilitated roads. Closed during CPS period: IBRD: Liaoning Medium Cities; contributing to China’s experience base and Xi’an: 15.19 km. Scope of Wuhan: Road component has been reduced, 22.18 Guiyang Transport; Taiyuan Urban Transport; Fuzhou helping to mainstream bus public transport km of roads improved / constructed. Taiyuan: project cancelled. Nantai Island Peri-Urban Development; Second Tianjin corridors. - Roads constructed (17.1 km) and rehabilitated (7.31 km) in 6 small Model Urban Development and Environment; GEF: Urban Development Towns demonstrating sustainable infrastructure service Transport Partnership; City Cluster Eco-Transport; Green provision in Sichuan by 2015. Achieved. A total of 38.26 km of roads were Freight Demonstration constructed and/or upgraded in 6 town by project closing. ASA: China Urban Transport Knowledge Management Urban Transport Safety Platform TA Program; Rail Financial Futures Analysis; Traffic management measures including Area Traffic control system and road Transport System Safety; Low-carbon Eco-city Financing safety program implemented in Xi’an. Achieved Models and Low-carbon Industry Development; China 2030; Urban China; Shanghai 2050 1.4 PROMOTING SUSTAINABLE AGRICULTURE PRACTICES China 12th FYP Targets: Efficient use co-efficient of water used in agricultural irrigation rises to 0.53. Result: Achieved. Agricultural irrigation efficiency rose to 0.532. 1.4.1 Households and farms adopting Agriculture Technology Ongoing (closed on and after 12/31/16): IBRD: Jilin targeted innovative sustainable practices - Pilot the establishment of 30,000 biogas digesters leading to an estimated Agricultural Product Quality and Safety; Xinjiang Turpan (number) annual reduction in CO2 emissions of 60,000 tons (EFP). Achieved. Water Conservation; Sichuan Wudu Irrigated Agriculture Baseline: 0 (2011) Establishment of 470,000 biogas digesters leading to an estimated annual Dev; Integrated Modern Agriculture Development; Target: 450,000 (2015) reduction in CO2 emissions of 785,000 ton (EFP) by 2014. Guangdong Agricultural Pollution Control; GEF: - 30,000 farm technician training days in proved livestock production and Mainstreaming Integrated Water and Environment Progress (12/2016): 643,000 waste management methods by mid-2014 (HELP). Achieved. 71,750 farm Management; Huai River Basin Marine Pollution [Achieved] technician training days in proved livestock production and waste Reduction (closed 12/31/16); Climate Smart Staple Crop management methods by mid-2014. Production; Guangdong Agricultural and Non-Point 1.4.2 Area where innovative sustainable - Effective livestock waste management technologies demonstrated on large Pollution Control; IFC: Muyuan Pig; Hwagain; Jiuda Salt practices have been demonstrated (ha) and medium scale farms in Shanghai rural areas by 2014. Achieved. Baseline: 0 (2011) Construction of Jinshan Dairy Farm (the biggest subproject) and Shenye Closed during CPS period: IBRD: Eco-Farming; Henan Target: 100,000 ha (2015) Dairy Farm has been completed and commissioning is ongoing, contributing Ecological Livestock; Changjiang/Pearl River Watershed to pollutant reduction. Rehabilitation; GEF: Mainstreaming Climate Change Progress (04/2015): 208,152 ha - Use of organic fertilizer and scientific application of agricultural chemicals Adaptation in Irrigated Agriculture; Shandong [Achieved] demonstrated in Shanghai rural areas by 2014. Achieved. Integrated Environment II; Shanghai Agricultural and Non-point agricultural pollution reduction techniques, such as the use of organic and Pollution Reduction; Liaoning Bohai Sea Pollution; CF: Projects helped demonstrate sustainable chemical fertilizers, are proceeding well with 90% of farmers using green test Shandong Poultry Manure Biogas; participatory rural water resources control techniques promoted. Hubei Eco-farming biogas; IFC: Deqingyuan Egg; North management, improved agriculture - As a result, the share of commercial credit involving movable assets grew Andre Juice; JY Organic; Koyo Fertilizer; Nature Forestry; technology and integration of biogas in from 12 percent in 2004 to around 45 percent. 24 kms of irrigation canals Xiwang Sugar cooking and farming, sustainable livestock rehabilitated in the Turpan Basin (XTWCP) and area with improved irrigation waste management practices, and practices to technologies increase in target areas from 0 to 8,000 ha by mid-2014 ASA: Mainstreaming Water User Associations (IDF); reduce agricultural and non-point pollution, (CPRWRP). Achieved. Turpan Project: 24 kms and 8,000 ha in in Xinjiang Economics of Adaptation to Climate Change in Water resulting in direct economic and were completed by the end of 2014. and Agriculture Sectors; Food Safety Engagement environmental benefits as well as creating - 12 Farmer Drainage and Irrigation Associations functioning as per models that are being replicated by local requirements by 2013 and appropriate incentives for water saving technologies and behaviors piloted (HRBFMR). Achieved. Huai Basin Flood 80 Indicators and Status Milestones and Status WBG Interventions governments and integrated into provincial Management Project: About 20 Farmer Drainage and Irrigation Associations strategies. have been functioning with incentives for O&M of their on-farm works. - Female membership for Water User’s Associations and Producer Groups in targeted areas in Sichuan Wudu increases from 0 in 2012 to 40 by mid-2014. Achieved. Female membership for WUAs increased from 0 in 2012 to about 45 by the end of 2014. Food Safety 30 technical standards for safe agricultural practice developed and adapted to local conditions in Jilin by mid-2014 (JFSP). Achieved. 83 technical standards developed and passed. 1.5 DEMONSTRATING SUSTAINABLE NATURAL RESOURCE MANAGEMENT APPROACHES China 12th FYP Targets: Water usage per unit of industrial value added declines by 30%, and the efficient use co-efficient of water used in agricultural irrigation rises to 0.53. Forest cover rising to 21.66%, and the volume of standing forest adding 600 million m3. Result: Achieved. Water use reduction per unit of industrial value added was 35%; the efficient use co-efficient of water used in agricultural irrigation rose to 0.532; and the increase in forest coverage met the target of 21.66%. 1.5.1 Targeted forest and range-land area Ecosystem Management and Restoration On-going (closed on and after 12/31/16): IBRD: rehabilitated and restored through successful - Mixed forest structures built with at least three tree species in IFDP project Integrated Forestry Development (closed 12/31/16), demonstration of sustainable forest sites by 2013 and 38 different types of local tree and shrubs species in the Xinjiang Turpan Water Conservation, Huai River Basin management models (ha) Shandong project area by mid-2014 (SEAFP). Achieved. The project closed on Flood Mgmt (closed 12/31/16), Bayannaoer Water Baseline: 0 (2011) July 31, 2016, with around 66,910 ha of mixed plantations established – Reclamation & Environment, Zhejiang Qiantang River Target: 400,000 ha (2015) 101% of the project target. More than 45 species (at least 3 species per site) Basin Small Towns (closed 12/31/16), Ningxia were used in the plantations. Desertification Control, Second Water Conservation, Progress (04/2015): 400,100 ha - 27 different planting models introduced in five provinces to establish new Hunan Forest Restoration and Development, Jiangxi [Achieved] multi-function forest plantations by mid-2014 (IFD). Achieved. The project Wuxikou Integrated Flood Management, Ma'anshan closed on Dec. 31, 2016 and achieved its PDO. 30 planting models were used Cihu River Basin Environment, Guangxi Laibin Water The project agencies were successful in and 132,300 ha were planted and rehabilitated -- 100% of the target. Management, Huainan Mining Area Rehabilitation, promoting the implementation of innovative - 8 different afforestation models for degraded mountainous area introduced Huainan Mining Area Rehabilitation, Ningbo Sustainable ecological afforestation models to restore in Shandong province by mid-2014 (SEAP). Achieved. Eight afforestation Urbanization; GEF: Promotion of Sustainable Cities in forest cover in highly degraded mountainous models have been introduced to planning in degraded mountainous and five China, Mainstreaming Integrated Water and areas and saline coastal land to reduce water, models have been adopted to the planning in coastal saline areas, as project Environment Mgmt., Landscape Approach to Wildlife soil, and wind erosion as well as to stabilize design. The project agencies have been successful in promoting the Conservation in Northeast China; CF: Reforestation on newly created alluvial lands. implementation of innovative ecological afforestation models to restore Degraded Land in Northwest Guangxi; IFC: Hwagain forest cover in highly degraded mountainous areas and saline coastal land to Paper, Nature Flooring II, Stora Enso II In addition, IFC’s projects contributed to reduce water, soil and wind erosions as well as to stabilize newly created improving plantation productivity and alluvial lands. Closed during CPS period: IBRD: Guangxi Integrated processing raw material wood into high-value - Guangxi provincial forest strategy formulated by 2012 (GIFD). Achieved. The Forestry Development; Jiangxi Shihutang Navigation and products, as well as mitigating climate change strategy provided guidance for integrated forest resources management and Hydropower; Hunan Urban Development; Shandong through carbon sequestration identified priorities for Guangxi forestry sector development through year Ecological Afforestation; Changjiang/Pearl River 2020. Watershed Rehab; Sustainable Development in Poor - Technical and methodological approaches related to credible carbon Rural Areas; Xining Flood and Watershed Mgmt; 1.5.2 Targeted watershed area treated to sequestration piloted in Guangxi by mid-2014. Achieved. Two CDM Changjiang/Pearl River Watershed Rehab; GEF: Guangxi reduce soil erosion afforestation pilots have been successfully implemented with validated, Integrated Forestry Dev and Conservation; Sustainable Baseline (2010): 0 Target (2015): 1,800 km 2 registered forest established, and the first verification completed by the end 81 Indicators and Status Milestones and Status WBG Interventions of 2012. It was transferred in July 2013 to Carbon Finance Unit for its second Management and Biodiversity Cons. of Lake Aibi; IFC: Progress (04/2015): 1,792 km2 stage-monitoring stage. The project successfully demonstrated the most Nature Flooring [Achieved] innovative technical and methodological approaches of using reforestation on degraded land to sequester carbon and pilot carbon trading, biodiversity ASA: State Forest Reform in Northeast China, Land Implementation of watershed management conservation, control soil erosion control and income generation for local policy dialogue, Transboundary rivers; Trial Conservation and rehabilitation has convinced policy communities. The experience has been largely extended worldwide. of Cultural Heritage Assets in Shandong Province; makers, planners, and local communities that - Shelter Belt Plantation contracts in place to protect farmland and Gender of China’s Forest Tenure Reform land conservation is compatible with infrastructure in Ningxia by mid-2014 (NDCP). Partially Achieved. The sustainable and productive agriculture and project physical progress is catching up with around 32,730 ha sand dune that they are mutually reinforcing. and degraded sand land having been treated and the shelter belt plantations established, accounting for 69% of the project target. However, 1.5.3 Groundwater overdraft reduced in the project disbursement is lagging behind with 26% of loan disbursed. The Turpan basin (million m3) project agencies are making every effort to speed up this process. It is Baseline: 0 (2011) Target: 3.75 (2015) expected that the project will achieve its PDO. - Management Effectiveness Score in Lake Aibi National Wetland Reserve Progress: (12/2016): 3.24 million increased by 10% and in five targeted nature reserves in Guangxi from score [Mostly Achieved] 43 (2006) to 70 by mid-2014. Achieved. (a) METT score increased by about 10% in March of 2014 for Lake Aibi Project. (b) In Guangxi, the METT score The integrated approach to river basin increased from 43 to 76 in the target five nature reserves. A number of management has been adopted with support innovative approaches were introduced in nature reserve management. from remote sensing technologies. As a result, the groundwater overdraft reduced Water Resources Management significantly while farmer incomes increased - Waterways strengthened for improved flood protection and reduced soil and the ecological environment (Aiding Lake) erosion (85 km - Xining area; 61.4 km - Xiang River; 757 kms -Huai River was restored. basin) by 2014. Achieved Xining: 99.9%; Huai River Basin: 589 km; Xiang: X - Three dams constructed in Turpan Basin (17 out of 29 contracts completed 1.5.4 People protected from flooding by mid-2014) (XTWCP). Achieved. By the end of 2014, 24 out 29 contracts (number) were already completed. By the end of the CPS period, all contracts and Baseline: 0 (2011) Target: 6.5 million related works on the dams had been completed. (2016) 4389 Ha of crop fields protected against 10 year flood in the Jiangxi Gan river area by mid-2014. Achieved Progress (10/2016): 7.8 million [Achieved] 1.6 DEMONSTRATING POLLUTION MANAGEMENT MEASURES China 12th FYP Targets: 8% reduction of SO2 emissions; 10% reduction in NOx emissions Result: 18% reduction of SO2 emissions; 18.6% reduction in NOx emissions 1.6.1 Successful demonstration of clean Air / Water On-going (closed on and after 12/31/16): IBRD: up/pollution reduction measures (e.g. - Motor Vehicle Emission Control Plan for Xian by mid-2014 (XUTP). Achieved. Bayannaoer Water Reclamation & Environment adoption of best available techniques (BATs) Development and submission to the Xi’an Municipality of a plan to reduce Improvement; Xi’an Sustainable Urban Transport; in municipal incinerators and pulp and paper vehicle emissions. Ningbo Municipal Solid Waste Minimization and mills) - Demonstration of wetland for pollution reduction (66.5 ha) in Shanghai rural Recycling; Guangdong Agricultural Pollution Control; Baseline: 0 Target: 6 (2016) areas by 2015. Not achieved. The appraised subproject for wetland pollution Huainan Mining Area Rehabilitation; Zhuzhou Progress (12/2016): 3 reduction demonstration (Jiading subproject) was dropped shortly after the Brownfield Remediation; Hebei Air Pollution Prevention [Partially Achieved] and Control Program; GEF: Dioxins Reduction from the 82 Indicators and Status Milestones and Status WBG Interventions effectiveness of the project due to land use master plan change. The WB Pulp and Paper Industry; Municipal Solid Waste Three mills completed BAT investments under team had thereafter appraised a new river wetland pollution reduction Management; Contaminated Sites Management; the GEF Pulp and Paper Project (P125528). An demonstration subproject in Shuxin Town of Chongming Island, with a Promotion of Sustainable Cities in China; Guangdong additional mill completed investments under smaller size (2.2 ha; 1.5km length river section) given that the new PIU has Non-Point Pollution Control; Mainstreaming Integrated the project but was later closed, so it is not limited counterpart funds. Water and Environment Mgmt.; Capacity Strengthening counted here. BAT investments in mills under for Implementation of Minamata Convention of the GEF SWM program were delayed as POPs Mercury; MP: HCFC Phase-Out (Stage I) reflected in the milestones comments. - All temporary PCB storage sites in Zhejiang identified, the low contaminated Closed during CPS period: IBRD: Shandong Flue Gas waste cleaned up and the highly contaminated waste disposed of by mid- Desulfurization; Urumqi District Heating; Liaoning China’s phase-out of ozone depleting 2014 (PCB management project). Achieved. All PCB-contaminated sites in Medium Cities 3; GEF: PCB Management & Disposal; substances was a major achievement Zhejiang Province that were identified and deemed technically feasible for Shanghai Agricultural and Non-point Pollution supported by the Bank. clean-up were remediated of PCB wastes, while those that could not be Reduction; Green Freight Demonstration; MP: ODS IV cleaned due to inaccessibility of the sites continue to benefit from ongoing Phaseout; CF: HFC-23 Emissions Reduction and monitoring to mitigate risks and ensure safety. All obtained low and high Sustainable Development Benefits; IFC: Universtar contaminated waste disposed. - Best available techniques (BAT)/best environmental practices adopted in ASA: Brownfields/Land remediation, Air Quality Action three selected municipal solid waste incinerators (GEF MSWP) and in four Planning, Non-Point Source Water Pollution selected non-wood pulp mills by 2015 (GEF Pulp). Partially Achieved. GEF SWM –Capital investments that support BAT/BEP in three demonstration incinerators will be undertaken by the end of 2017. Full adoption of the said techniques and practices in the operations of these three incinerators is expected to occur gradually through CY 2019 and will be monitored as key PDO indicators as part of the project results framework. GEF Pulp - Treplacement mills were identified and completed BAT/BEP investment in CY2016. However, one initial mill stopped operation permanently though it had already completed the BAT/BEP investment, due to its parent company’s strategic investment decision. Already-disbursed grant to the mill has been returned. Hence at the end of the project it will claim successful completion of BAT/BEP investments in 3 mills only. A project restructuring was completed in June 2016, which aims to promote BAT/BEP replication in the sector, enhance environmental agencies’ monitoring and enforcement capacity and knowledge sharing. The project closing date was extended by 1 year from June 30 2017 to June 30, 2018. ODS - Completion of the ODS phase-out plan for the pharmaceutical aerosol sector by mid-2014. Achieved. Pharmaceutical aerosol sector plan also contributes to the permanent phase-out of CFCs in this important sector by 485 MT. - Demonstration projects to phase out HCFCs completed by mid-2014 Achieved. This demonstration project contributes to the phase-out of HCFC- 141b by 62 tons. - Implementation of the HCFCs Phase-out Management Plan in the production sector (Phase I) by end of 2015. Achieved. This achievement includes the phase-out of HCFCs production by 104,609 tons during 2013-15, 83 Indicators and Status Milestones and Status WBG Interventions equivalent to avoiding emissions of greenhouse gases by 184.24 million tons CO2. Completion of the HCFCs Phase-out Management Plan in the PU foam sector by end of 2015 (phased I). Achieved. This achievement includes the phase-out of HCFC-141b consumption by 14,209 tons during 2013-15, equivalent to avoiding emissions of greenhouse gases by 10.302 million tons CO2. STRATEGIC THEME 2. PROMOTING MORE INCLUSIVE DEVELOPMENT 2.1 INCREASING ACCESS TO QUALITY HEALTH SERVICES AND SOCIAL PROTECTION PROGRAMS China 12th FYP Targets: The new rural social pension insurance regime provides full coverage, with the number of urban participants in the basic pension insurance scheme reaching 357 million, and the rate of participation in the three basic urban and rural medical insurance schemes rising by three percentage points. Result: Achieved. As of the end of 2016, the number of participants enrolled in the rural and urban resident pension schemes reached 508 million, and the rate of participation in the basic urban and rural medical insurances schemes rose by 4.8 percentage points. 2.1.1 Additional population with access to - At least 50% of targeted counties implementing the healthy village On-going (closed on and after 12/31/16): IBRD: primary health care services at community standards by mid-2014 (RHP). Achieved. By Oct 2014, 35 out of total 40 Chongqing Urban-Rural Integration; Chongqing Rural- level in targeted service areas project counties (87.5%) launched “Healthy Village” construction and 277 Urban Integration II (county health services); Guangdong Baseline: 0 (2010) Target: 280,000 (2016) villages met with the standards. Social Security Integration and Rural Workers Training; - At least 8 counties have implemented the successful models on Economic Transformation and Institutional Capacity Progress (10/2016): 340,000 comprehensive county hospital reform by mid-2014 (RHP). Achieved Building; TF: Avian Influenza; IFC: Q&M; Asia Heart [Achieved] - At least half of project hospitals have standard cost accounting system producing quarterly departmental unit cost data by 2016 (CURIP II). Not Closed during CPS period: IBRD: Rural Health; IFC: Aier To help address the large gap in health care Achieved (will be achieved with delay). Construction of new hospitals – Medical; BUFH; Chindex; Healthway; Wanjie Hospital; availability and services between urban and where systems were to be used – was delayed. Indicator should be met by Fosun Pharma Intnl; Weigao; BioChina; APMG rural areas, Bank financing helped equip and the end of 2017. strengthen the capacity of 687 village clinics - 320 standardized community-level health care facilities put into operation ASA: Health Management Information System IDF; and 37 urban community health centers. in targeted service areas in Chongqing by mid-2014 (CURIP). Achieved. 400 Options for Aged Care in China, (target exceeded). Deepening China’s Pension System Reform, Early Child In addition, IFC’s clients facilitated access to - Provincial approval by Guangdong of MIS architecture and technical Development, Deepening Health Sector Reform in China: quality and affordable medicines through an specifications by 2014. Achieved. Building High-quality and Value-based Service Delivery; expanded and improved distribution network. 2.1.2 Public Health System scorecard rating for targeted counties Baseline: 61.78 (2008) Target: >80 (2013) Progress (10/2014): 90.22 [Achieved] The scorecard is an evaluation tool for assessing and summarizing the performance of the county level public health system. The steady improvement of the score over 6 years demonstrated better management, improved capacity, and enhanced performance of the 84 Indicators and Status Milestones and Status WBG Interventions public health system in the 40 project counties. The IBRD-financed Rural Health Project series has been a pioneer in piloting rural health system reform in China and has been an inspiration for health reform in multiple developing countries. 2.1.3 Share of prefectures in Guangdong exchanging social insurance beneficiary data through integrated provincial MIS Baseline: 0% (02/2013) Target: 60% (2016) Progress (12/2016): 0% [Not achieved; will be achieved with delay] There were delays in developing an integrated provincial MIS system, but most requirements to launch the system were in place by the end of the CPS period. The pilot of the new MIS system in two cities will be launched in 2017, and the project closing date will be extended to 2020. The new MIS system will be applied to other cities from 2018 to 2020. 2.2 STRENGTHENING SKILLS DEVELOPMENT PROGRAMS, INCLUDING FOR MIGRANTS 2.2.1 Graduates who pass skill certification - Strengthened linkages between targeted institutes and industry through On-going (closed on and after 12/31/16): IBRD: exams in targeted institutions (%) advisory boards, partnerships and contract arrangements by 2015. Chongqing Urban-Rural Integration; Yunnan Technical Baseline: LN: 90%; SD:93.5%; GD: 70%; YN: Achieved and Vocational Education and Training; Guangdong 84% (2010) - Curricula and training materials in targeted training institutions in Social Security Integration and Rural Workers Training; Target: LN: 96%; SD:98%; GD: 85%; YN: 93% Chongqing, Liaoning, Shandong, Guangdong and Yunnan upgraded to Xinjiang TVET; Poverty Alleviation and Agri Dev (2015) increase the quality and relevance by 2015. Achieved. In total 158 curricula Demonstration in Poor Areas; Economic Transformation and training material updated. and Institutional Capacity Building; Economic Reform Progress (2014): LN: 97.3%; SD:88.9%; GD: - More than 50% of students in targeted institutions in Guangdong, Promotion and Capacity Strengthening; Xinjiang 85%; YN: 92.8% Shandong, Liaoning, enrolled in modular, competency-based curriculum by Technical and Vocational Education and Training; [Achieved] 2015. Achieved. Exceeded in all three provinces Yunnan Early Childhood Education; At least 60% of students in targeted institutions in Guangdong, Shandong, 2.2.2 Graduates finding initial employment Liaoning, assessed with outcomes-based systems by 2015. Achieved. Exceeded Closed during CPS period: IBRD: Guangdong Tech & within 6 months of graduation (%) in all three provinces. Vocational Education and Training; Rural Migrant Skills Baseline: LN:72%; SD 73.4%; GD: 34%; YN: Dev. and Employment; Liaoning and Shandong Technical 58% (2010) and Vocational Education; Sustainable Development in Target: LN: 82%; SD:88.2%; GD: 56%; YN: 75% Poor Rural Areas; IFC: Ambow Education Holding Ltd (2015) ASA: Developing Skills for Economic Transformation and Progress (2014): LN: 99.9%; SD:92.8%; GD: Social Harmony in Yunnan Province, Early Childhood 98%; YN: 84.2% Education 85 Indicators and Status Milestones and Status WBG Interventions [Achieved] Bank-financed operations in multiple provinces piloted approaches to improve the quality and relevance of TVET, yielding the strong outcomes shown in Indicators 2.1.1 and 2.2.2. Reforms and investments supported by the Bank included: strengthening school- industry linkages, improving school management, updating curricula and pedagogy, retraining instructors, and upgrading facilities and equipment. The operations provided models for replication in other parts of China and generated interest from other countries—the Bank and government are organizing an international conference in November 2017 to disseminate the experience. 2.2.3 Migrant trainees successfully completing targeted vocational training programs in project schools (%) Baseline: 84% (2011) Target: 96% (2014) Progress (2014): 96% [Achieved] 2.3 ENHANCING OPPORTUNITIES IN RURAL AREAS AND SMALL TOWNS 2.3.1 People with access to safe water supply Rural Water and Sanitation On-going (closed on and after 12/31/16): IBRD: and sanitation in targeted rural areas - 100 villages in Ningbo with wastewater treatment infrastructure by mid- Chongqing Urban-Rural Integration; Baseline: 40,392 Anhui, Chongqing, Guangxi 2014 (NNCDP). Achieved. More than 120 villages have improved wastewater Integrated Economic Development of Small Towns; (2011); 378,000 (Shaanxi, Sichuan) (2011) treatment infrastructure. Chongqing Small Towns Water Management; Guiyang Target: (i) Anhui, Chongqing, Guangxi – - All financed water supply schemes operating sustainably after one year. Not Rural Roads; Anhui Yellow Mountain New Countryside 150,000 (2014), (ii) Shaanxi – 326,716 (2012), achieved. Some water supply schemes were finished late and at project Demonstration; Anhui Xuancheng Infrastructure for Sichuan – 258,000 (2012) closure were not operating for a full year, so the data presented in the Industry Relocation; Zhejiang Rural Water Supply and borrower's ICRs are unreliable. Actual water consumption is much lower than Sanitation; Economic Transformation and Institutional Progress (04/2015): (i) 155,000 (ii) Shaanxi the design capacity. Shaanxi 90%; Sichuan 73%. Capacity Building; Guizhou Rural Development; Poverty 326,726, Sichuan - 262,737 Alleviation and Agri Dev. Demon; Sichuan Chongqing [Achieved] Rural Transport Cooperation Guang’an Demonstration Area Infra - Rehabilitation of about 5000 km of rural roads under Fujian’s Rural Roads Development; Tongren Rural Transport, Guangxi Poverty 2.3.2 People in targeted rural areas with Improvement Program by 2015. Achieved. 5,589 Alleviation; Chongqing-Dadukou Fiscal Sustainability access to an all season road - 500 kms of new village roads or paths connecting households to village DPO;; IFC: Fullerton Credit; CHUEE SME IB; CHUEE SME Baseline: 950,000 (Ningxia, Fujian, Guiyang) roads and 315 km of village roads connecting natural villages to each other SPDB; ZhongAn Credit; Shenzen VTB; MC China; CFPA (2010) in Anhui, Chongqing, Guangxi by 2014 (EFP). Achieved. 1800 km rural roads MFI; Xinjiang MCC; Harbin Bank VTB; Ant Finance, JD Target: 1.6 million (Ningxia, Fujian, Guiyang) constructed Rural Finance, Bank of Luo Yang (2015) - 241 villages connected by project roads and 348 villages serviced by project 86 Indicators and Status Milestones and Status WBG Interventions rural bus stations in Guiyang. Partially Achieved. Targets were revised in Closed during CPS period: IBRD: Fujian Highway Sector Progress (10/2016): 2012 to 118 villages connected by project roads and 118 villages services by Investment; Guiyang Transport; Ningbo New Ningxia: 240,000 rural bus stations – revised targets were achieved. (PLR mistakenly did not Countryside Development; Sustainable Development in Fujian: 1,300,000 revise milestone.) Poor Rural Areas; Western Provinces Rural Water Supply; Guiyang: 0 - 9 local roads (about 100 km) in the poorest counties in Ningxia improved by Ningxia Highway; IFC: Xiwang Sugar; North Andre Juice; [Achieved] mid-2014. Achieved. 37 Eppure BOT II—Water; Nature Elements—CC Fund in frontier; CGCCD—Earthquake Restoration; CGCCD Rsf. 2.3.3 Promoting greater financial inclusion Financial Inclusion (IFC) through increased access to financial services - Successfully transformed CFPA into a professionally managed microfinance ASA: Improving Public Expenditure in Rural China (IDF); for Micro Finance Clients, and support to institution (MFI) by 2014. Achieved. CPFA has been successfully transformed Sustainable Financing Mechanism for Small Town improve financial infrastructure, such as into a professionally managed microfinance institution. Risk management Infrastructure Development; The Mortgage of the Right credit reporting, secured transactions and and internal audit departments were created 2-3 years ago. By the end of to Contract for Management in Rural Areas, Housing movables finance (IFC) 2014, the number of active clients reached 237,817, with a total portfolio of Policies, China 2030, Urbanization Study; Inclusive Baseline: 0 Target: 7 million (2016) US$303 million. In the meantime, the company managed to keep a high Finance Academy in China (IFA); Innovation Model of [Likely Achieved – 4.3 million microloans were quality portfolio: PAR>30 days was 0.27% in December 2014. Affordable Housing Investment and Financing; outstanding as of 2015; 2 million as of end- - A full range of financial services developed for small and micro enterprises in Promoting Inclusive Innovation in China; Financial 2016] rural areas for client MFIs by 2014. Achieved. IFC supported another 7 MFIs, Consumer protection and Literacy; Sub-national Public including Xinjiang Micro Credit Company (MCC), Zhong An Credit (MCC), Finance and Debt Management, Sub-national During the CPS period, IFC changed its method Bayan Village and Township Bank (VTB), Shenzhen VTB, Chifeng Accion MCC, Government Financing, Promoting Inclusive Innovation of capturing reach for SME and microfinance Beichuan VTB and Renshou VTB. Through providing a holistic microfinance in China, Financing Small-Town Infrastructure, China clients. Based on the number of microloans capacity-building package to the MFIs serving frontier markets, a full range Financial Reform Strategy Report, Inclusive Finance outstanding with client banks as of 2015 (4.3 of financial products for micro and small businesses have been developed. Academy in China, Promoting Access to Finance through million) and 2016 (2 million), it is very likely On mobile banking side, IFC has conducted a market survey on the rural Strengthening Rural Credit Cooperatives, Asset that the cumulative target of 7 million was payments environment with China UnionPay with the objective of improving Management for Small Towns, Enhancing the Role of reached or exceeded. its rural product design; helped F-Road deploy a marketing strategy and e- Farmers Coops, Institutions for Local Debt Monitoring, commerce strategy, which has enabled 9.7million end customers of over Small Towns Infrastructure Financing Phase II, Evaluation IFC also supported the further improvement of 1,000 rural/MSME banks gain better access to finance via non-cash solutions System for Customer Financial Education; IFC: Network financial infrastructure (including credit by June 2016; developed the business case with Harbin Bank on rural agent China Foundation for Poverty Alleviation; Microfinance reporting, secured transactions and movables banking model, which can benefit 350,000 farmers of the bank in northeast Transformation IS; CHUEE AS; Beichuan VTB AS; (Alexei finance), which provides a foundation for China and work with the PBC Research’s research institution on micro/rural to confirm Xiwang Sugar; North Andre Juice; Epure BOT financial inclusion in China. For credit finance and mobile banking. II—Water; Nature Elements—CC Fund in Frontier; reporting, the Regulation on Credit Reporting CGCCD—Earthquake Restoration; CGCCD Rsf.) Industry was issued; the coverage of PBCO- Poverty Alleviation Approaches CRC (the Credit Registry) was extended - More innovative ways of providing poverty reduction assistance to the (covering 910 million individuals). For secured poorest communities and households in Henan, Shaanxi and Chongqing transactions and movables finance, the SME piloted through CDD and participatory approaches (with 60% of the 770 Promotion Law was issued, a digital accounts participating villages completing multiyear development plans by mid-2014) receivable finance platform under the central (SDPRAP). Achieved. 80% of the 776 participating villages by mid-2014, and bank was launched at the end of 2013 with a 85 % of 776 participating villages by end 2014. cumulative financing volume of more than - Women participating in village committees in targeted areas increase from 0 US$1 trillion (as of 2017); and a collateral % in 2011 to 25% by mid-2014 (SDPRAP). Achieved. 30 % by mid-2014, 35% management industry has been grown up and by end 2014. is now in the process of being formalized. Annual disbursements of debt finance 87 Indicators and Status Milestones and Status WBG Interventions involving movable assets is around US$3.0 trillion. In addition, IFC successfully supported the transformation of the China Foundation for Poverty Alleviation (CFPA) from an NGO into a professionally managed microfinance institution. 2.4 IMPROVING TRANSPORT CONNECTIVITY FOR MORE BALANCED REGIONAL DEVELOPMENT 2.4.1 Reduction in transit times on railway Railways On-going (closed on and after 12/31/16): IBRD: sections connecting less developed regions - 355 km high-speed passenger rail line between Shijiazhuang (Hebei) and Guizhou-Guangzhou Railway (closed 12/31/16); Jilin- with more developed (%, min) Zhengzhou (Henan) completed by 2015. Achieved. Opened in December Hunchun Railway (closed 12/31/16); Anhui Shaying River (i) Tumen – Jilin: 68% (315 min) (2015) 2012. The new travel time is 81 minutes in line with expectations, Channel Improvement; ZhangHu Railway; Harbin-Jiamusi (ii) Sanyanqiao – Litang West: 72% (450 compared to 198 minutes before the project. Railway; Fujian Meizhou Bay Waterways; Jiangxi min)(2015) - 254 km Liupanshui-Zhanyi section of the Guiyang-Kunming railway line Shangrao Sanqingshan Airport; Fujian Fishing Ports; (iii) Guiyang – Guangzhou: 78% (1170 upgraded to increase capacity and reduce travel times by 2012. Achieved. Yunnan Highway Assets Management; JiaoZuo Safe and min) (2016) The new travel time is 132 minutes in line with expectations, compared to Green Transport; Gansu Rural-Urban Integration; (iv) Liupanshui – Qujing: 53% (117 min) 240 minutes before the project. Heilongjiang Cold Weather Smart Public Transportation (2012) - 400 km high-speed passenger and freight line between Sanyanqiao – Litang System; Hubei Xiaogan Logistic Infra.; Zhengzhou Urban (v) Shijiazhuang – Zhengzhou: 61% (120 West completed by 2014. Achieved. The line opened in December 2014. Rail; Urumqi Urban Transport II; Wuhan Integrated min) (2013) The new travel time is 156 minutes compared with 620 minutes before the Transport Development line opening. Progress (4/2015): - 75% of civil works on new shorter and more direct railway line linking Closed during CPS period: IBRD: 3rd National Railway; i) 75% (347 min) northwestern China (Guiyang) with the Pearl River Delta completed by Jiangxi Shihutang Navi & Hydropower; ShiZheng Railway; ii) 74% (464 min) mid-2014. Achieved. The new line Guiyang to Guangzhou opened ahead of NanGuang Railway; Anhui Highway Rehab & iii) 83% (1251 min) time in December 2014. The new travel time is 249 minutes compared to Improvement; Hubei Yiba Highway; Fujian Highway iv) 52% (117 min) 1500 minutes at project start. Sector Investment; Ningxia Highway v) 59% (117 min) - 40% of civil works on new 360 km passenger-dedicated rail line between [Achieved] Tumen and Jilin completed by mid-2014. Achieved. The Tumen to Jilin ASA: Regional Impact Analysis of Railway; Rail Financial railway opened for service in September 2015. Futures Analysis; Urban Transport Knowledge 2.4.2 Increase in railway capacity (train Management Platform; Railway Equity Finance pairs/day) Waterways (i) Tumen – Jilin: 162% (2015) - Navigable time per year for 1000 ton vessels on 38 km channel on (ii) Sanyanqiao – Litang West: 185% Nanchang- Ganzhou corridor increase from 27% in 2007 to 95% by mid- (2015) 2014. Achieved (iii) Guiyang – Guangzhou: 400% (2016) - 205.6 kms of Class IV channel are upgraded along Anhui Shaying River by (iv) Liupanshui – Qujing: 61% (2012) 2015. Partially Achieved. 150 as of December 2014; 206 as of October 2016 Progress (4/2015): Roads i) 162% - Green Freight Technology Rebates and Performance Based Incentive ii) 342% schemes to improve energy and economic efficiency of fleet in Guangdong iii) 700% demonstrated by mid-2014. Achieved iv) 61% - Expressway connecting the two major industrial areas that are the [Achieved] backbone of Ningxia’s economy constructed by 2015. Achieved 88 Indicators and Status Milestones and Status WBG Interventions - 195.2 km Yong’an- Wuping Expressway (Fujian province) completed by 2.4.3 Annual volume of cargo along targeted mid-2014. Achieved waterways Shaying river (passing Yingshang - Pilot provincial road contract maintenance approaches in Fujian and Anhui Lock) by mid-2014. Achieved Baseline: 0.17 million ton (2009) - 890 km key national and provincial roads rehabilitated and maintained and Target: 3.07 million ton (2015) 320 km improved in Anhui by mid-2014. Achieved. 841 km key national and provincial roads rehabilitated; 321 km key national and provincial Progress (04/2015): roads improved. 10.6 million ton Innovative environmental compliance framework with incentive system [Achieved] developed and implemented in the Yiba Hiqhway project (Hubei). Achieved 2.4.4 Travel time reduction on targeted road corridors (i) Yongan (Fujian) – Wuping (Guangdong border): 67% (2013) (ii) Qingtongxia –Guyaozi (Ningxia):60% (2015) (iii) Yichang – Badong (Hubei):-2.5 hours (2015) Progress (04/2015): i) 67% ii) 60% iii) -2.5 hours [Achieved] 89 CLR Annex 2: IBRD Advisory Services and Analytics Delivered from FY13 to mid-FY17 CPS Themes Reenergizing Supporting Promoting Lead Global Titles of Reports Available to Public Drivers of Green Inclusive Practice Growth Growth Development FY13 ESW Macro China 2030: Building a Modern, Economics China 2030: Building a Modern, √ √ √ Harmonious, and Creative Society & Fiscal Harmonious, and Creative Society Management Social, Climate Risk Management and √ √ Urban, Rural Climate Trends and Impacts in China Adaptation & Resilience Developing Skills for Economic Developing Skills for Economic Transformation and Social Harmony √ Education Transformation and Social Harmony: (Yunnan Province) Yunnan Province China – Food Safety Engagement: Food Safety Engagement √ Agriculture Engagement Options for the World Bank Transport & Rail Financial Futures Analysis √ ICT TA Energy and Capacity Building for Smart Grid √ Extractives Economics of Adaptation to Climate Environment Economics of Adaptation to Climate Change in Water & Agriculture √ & Natural Change in Water and Agriculture Sectors Sectors Resources Enhancing the Institutional Model for Energy and Heat Regulation Phase II √ District Heating Regulation – Outside Extractives Perspectives and Suggestions JIT Financial Sector Reform Finance & √ Event: Roundtable Roundtable Markets Social, Qufu Zoucheng Confucius Mencius Urban, Rural Cultural Heritage Sites Conservation Shandong Cultural Heritage √ & Resilience Project: Previous Work for Conservation and Restoration of Colored Decorations, Stelae and Stone Inscriptions Social, Sub-national Government Financing √ Urban, Rural & Resilience FY14 ESW Building Benchmarks, Policy Frameworks, Green Energy Scheme for Low- Energy & √ and Business Models for Building Retrofit carbon City in Shanghai Extractives in Changning District, Shanghai 90 CPS Themes Reenergizing Supporting Promoting Lead Global Titles of Reports Available to Public Drivers of Green Inclusive Practice Growth Growth Development Environment State Forest Reform Northeast China √ & Natural Resources TA Reform Options for Collective Property Institutions and Policies √ √ Agriculture under Urbanization Social Incorporated into: Deepening China Pension System √ Protection China 2030: Building a Modern, Reform and Labor Harmonious, and Creative Society Early Childhood Education in Yunnan: Early Child Development √ Education Challenges and Opportunities Finance & JIT Financial Sector Activities √ Markets Promoting Inclusive Innovation in Finance & China Inclusive Innovation for Sustainable √ √ China Markets Inclusive Growth FY15 ESW Applying Abatement Cost Curve Defining and Measuring Low-carbon Energy & √ Methodology for Low-Carbon Strategy in Cities in China Extractives Changning District, Shanghai Macro Incorporated into: Subnational Public Finance & Debt Economics √ √ & Fiscal Urban China: Toward Efficient, Inclusive, Management Management and Sustainable Urbanization Macro Urban China: Toward Efficient, Economics Urban China: Toward Efficient, Inclusive, Inclusive, and Sustainable √ √ √ & Fiscal and Sustainable Urbanization Urbanization Management TA Air Quality in China √ Event: Workshop Application of Strategic Environmental Assessment at √ Environment Event: Workshop Sectoral Level & Natural Resources Assistance to Ministry of Environmental Protection in Capacity √ Event: Workshop Building Capacity Building for PIUs in Fiduciary Management, √ Governance Event: Workshop Disbursement, and Procurement Carbon Capture and Sequestration Energy & √ (CCS) Capacity Building Extractives China Financial Reform Strategy Finance & √ Report Markets China Energy Regulation to Integrate Energy & √ Climate Change Considerations Extractives 91 CPS Themes Reenergizing Supporting Promoting Lead Global Titles of Reports Available to Public Drivers of Green Inclusive Practice Growth Growth Development Information and Communications in the Transport & Gates Rural ICT Activity √ Chinese Countryside: A Study of Three ICT Provinces Finance & Inclusive Finance Academy in China √ Markets JIT China Capital Market Finance & Development Report 2013 √ Markets Energy & MRV of Energy Efficiency √ Extractives Promoting Access to Finance through Finance & strengthening Rural Credit √ Markets Cooperatives (RCCs) Promoting Affordable Housing in Social, √ Shanghai Urban, Rural and Urban Transport Knowledge Transport & Resilience TransFORM: From Pilot to √ Management Platform ICT Implementation FY16 ESW Developing an Innovative Energy Energy & Developing an Innovative Energy Efficiency Financing Mechanism in √ Extractives Efficiency Financing Mechanism in China China Learning from Best International Achieving Energy Savings by Intelligent Practice in Smart Transport and Transport & √ √ Transportation Systems Investments in the Energy Efficiency: Applications to ICT Context of Smart Cities WITDP and Beyond Social Options for Aged Care in China: Building Options for Aged Care in China √ Protection an Efficient and Sustainable Aged Care and Labor System Shanghai 2050: Building A Social, Competitive City in A Globalizing √ √ √ Urban, Rural World & Resilience Social Incorporated into: Strengthening China's Dibao Program √ Protection China 2030: Building a Modern, to Reduce Poverty and Inequality and Labor Harmonious, and Creative Society TA Social, Municipal Asset Management in China’s Asset Management for Small Towns √ √ Urban, Rural Small Cities and Towns: Findings and & Resilience Strategies Ahead Energy & China: Accelerating Household Access to Clean Stove Initiative for China √ Extractives Clean Cooking and Heating Developing Shenzhen Low-carbon Energy & Developing Low Carbon Strategy for √ Shenzhen Strategy Extractives Enhancing the Role of Farmer Enhancing the Role of Farmers √ √ Agriculture Cooperatives in Inclusive Agricultural Coops Growth in China: Summary Report 92 CPS Themes Reenergizing Supporting Promoting Lead Global Titles of Reports Available to Public Drivers of Green Inclusive Practice Growth Growth Development Financial Consumer Protection and Finance & √ Literacy Markets Environment Gender of China’s Forest Tenure Gender-Dimensions of Collective Forest √ & Natural Reform Tenure Reform in China Resources How Shanghai Does It: Insights and How Shanghai Does It √ Education Lessons from the Highest-Ranking Education System in the World Using the Government Financial Institutions for Local Debt Reporting Framework to Redraw the State √ Governance Monitoring and Market Boundary in China: A Two- Step Approach Transport & Attracting Capital for Railway Railway Equity Finance √ √ √ ICT Development in China Regional Economic Impact Analysis Transport & Regional Economic Impact Analysis of √ √ High-Speed Rail in China: Main Report of High-Speed Rail in China ICT Sustainable Infrastructure Financing for Social, Small Towns in China: Approaches to Small Town Infrastructure Financing √ √ Urban, Rural Attract Long-term Capital for Small-scale & Resilience Infrastructure Projects Study on Fossil Energy Subsidies in Energy & Fossil Fuel Subsidy and Pricing Policies: √ √ China Extractives Recent Developing Country Experience TE Integrated Program FM and √ Governance Event: Workshop Disbursement Workshop Mid-FY17 ESW Deepening Health Sector Reform in Health, Incorporated into: China: Building High Quality and √ Nutrition & Healthy China: Deepening Health Reform Value-based Service Delivery Population in China Evaluation System for Customer Finance & √ √ Financial Education in China Markets TA 2016 Assessment of Gender Impacts of ITS Transport & and Gender Impacts of ITS √ ICT Guideline for Incorporating Gender into ITS Planning, Design and Operation 93 CLR Annex 3: IFC Advisory Services Portfolio in FY13 to mid-FY17 CPS Strategic Theme Theme 2: Theme 1: Promoting More Supporting Implementation Status as of Inclusive Green Growth Project Name Business Line Timeframe Dec 31, 2016 Development China Utility-Based Energy Efficiency Access to Finance FY2006-2013 Completed √ √ Accion Inner Mongolia Microfin. Co Access to Finance FY2011-2013 Completed √ Sichuan CCBs TA Financial Institutions Group FY2009-2014 Completed √ Harbin Bank VTB Network Access to Finance FY2010-2013 Completed √ TA to Renshou VTB Access to Finance FY2009-2015 Completed √ TA to CFPA Microfin. Transformation Access to Finance FY2010-2013 Completed √ Xinjiang MCC TA Financial Institutions Group FY2012-2016 Completed √ Beichuan VTB TA Financial Institutions Group FY2011-2016 Completed √ China Climate Finance Advisory Financial Institutions Group FY2012-2020 Portfolio √ √ China RMS Credit Reporting Dev’t Finance and Markets FY2012-2017 Portfolio √ E&S & Governance / Financial E&S Risk Management for FIs Institutions Group FY2012-2017 Portfolio √ EAP CG Program Implementation E&S & Governance FY2012-2020 Portfolio Energy & Water Solutions for Corporates Cross-Industry Solutions FY2013-2017 Portfolio √ √ China Digital Financial Services Financial Institutions Group FY2013-2019 Portfolio √ China Rural Collateral Reform Finance and Markets FY2013-2017 Portfolio √ Cross-Industry Solutions / Green Building Regulation Finance and Markets FY2014-2017 Portfolio √ China Rural and Microfinance Dev’t Financial Institutions Group FY2014-2017 Portfolio √ China Emissions Trading Financial Institutions Group FY2014-2017 Portfolio √ 94 CLR Annex 4: IBRD Lending Program Delivered from FY13 to mid-FY17 Summary of Annual Lending, FY13-FY16: FY13 FY14 FY15 FY16 Average Yearly Growth Growth over 4 years Commitment Amt ($m) 1,540 1,615 1,821.5 1,982 8.8% 28.7% CPS Plans (October 2012), including contingency and standbys Actual Deliveries (December 2016) Outcomes Projects Status Board Date IBRD ($m) FY13 1.1/1.6 Beijing Energy Efficiency &Emission Reduction Demonstration Delivered 03/20/13 120 1.1 Shandong Renewable Energy Dropped 0 1.1 Green Energy Schemes for Low-carbon City in Shanghai Delivered 03/20/13 100 1.2 Liaoning Coastal Economic Zone Urban Infrastructure and Environmental Delivered 03/20/13 150 Management 1.2 Jiangxi Small Towns Infrastructure Development Demonstration Delivered asJiangxi Poyang Lake Basin and 03/20/13 150 Ecological Economic Zone Small Town Dev. 1.2/1.5 Shaanxi Yan'an Water Supply Dropped 0 1.2/1.6 Ningbo Municipal Solid Waste Minimization and Recycling Delivered 05/31/13 80 1.4 Integrated Modern Agriculture Development (SOCAD) Postponed to FY14 0 1.5 Hunan Forest Restoration and Development Delivered 01/17/13 80 1.5 Anhui Ma'anshan Cihu River Basin Environnent Delivered 06/04/13 100 2.1/2.2 Guangdong Social Security Integration & Rural Worker Training Delivered 06/20/13 80 2.4 Fujian Meizhou Bay Navigation Improvement Delivered 02/28/13 50 2.4 Harbin-Jiamusi Railway Postponed to FY14 0 2.4 Jiangxi Shangrao Sanqingshan Airport Development Delivered 05/13/13 50 Additionally Delivered Projects: 1.3 Nanchang Urban Rail Delivered, originally FY14 pipeline 06/20/13 250 1.5 Guangxi Laibin Water & Environment Management Delivered, originally FY14 pipeline 05/31/13 80 1.5 Jianxi Wuxikou Integrated Flood Management Delivered, originally FY14 pipeline 03/20/13 100 2.3 Anhui Xuancheng Infrastructure for Industry Relocation Delivered, originally FY14 pipeline 06/20/13 150 Total 1540 FY14 1.1 Concentrated Solar Power Dropped 1.3 Jiangxi NanChang Urban Rail Advanced to FY13 0 1.3 Qinghai Xining Urban Transport Delivered 12/27/13 120 1.3 Zhengzhou Urban Rail Postponed to FY15 0 1.3 Yunnan Honghe Prefecture Diannan Center Urban Transport Delivered 05/15/14 150 1.4/1.6 Guangdong Agricultural Pollution Control Delivered 12/27/13 100 1.5 Jianxi Wuxikou Integrated Flood Management Advanced to FY13 0 1.5 Guangxi Laibin Water & Environment Management Advanced to FY13 0 2.3 Anhui Xuancheng Infrastructure for Industrial Relocation from Coastal Advanced to FY13 0 Area 2.3 Anhui Yellow Mountain New Countryside Demonstration Delivered 12/27/13 100 2.3 Guiyang Rural Roads Delivered 03/06/14 150 2.4 Fujian Fishing Ports Delivered 06/03/14 60 2.4 YinXi Railway Dropped 0 Additionally Delivered Projects: 1.1 Shanxi Gas Utilization Delivered, originally FY15 pipeline 03/28/14 100 1.3/2.4 Jiaozuo Green Transport and Safety Improvement Delivered, originally FY15 pipeline 05/15/14 100 1.4 Integrated Modern Agriculture Development (SOCAD) Delivered, originally FY13 pipeline 12/27/13 200 2.2/2.3 Economic Transformation and Institutional Capacity Building Delivered, originally FY15 pipeline 05/22/14 35 2.4 Heilongjiang Cold Weather Smart Public Transport System Delivered, originally FY15 pipeline 03/28/14 200 2.4 HaJia Railway Delivered, originally FY13 pipeline 03/28/14 300 Total 1615 95 CPS Plans (October 2012), including contingency and standbys Actual Deliveries (December 2016) Outcomes Projects Status Board Date IBRD ($m) FY15 1.1 Shanxi Coal-bed Methane Utilization Advanced to FY14 0 1.1 Hebei Rurual Renewable Energy Development Delivered 03/13/15 71.50 1.2 Qinghai Xining Water Environment Management Delivered 09/25/14 150 1.2 Guilin Integrated Environment Management Delivered 02/02/15 100 1.2 Shaanxi Small Towns Infrastruture Delivered 09/25/14 150 2.3 Zhejiang Rural Water Supply and Sanitation Delivered 09/25/14 200 1.3/2.4 Jiaozuo Safe & Green Transport Dev. in Transforming Economy Advanced to FY14 0 2.3 Chongqing Small Towns Water Environment Delivered 12/23/14 100 1.5/1.6 Huainan Mining Area Rehabilitation Delivered 05/11/15 100 2.2/2.3 Poverty Alleviation and Agriculture-based Industry Pilot and Delivered 06/23/15 150 Demonstration in Poor Areas 2.2/2.3 Economic Reform Promotion and Capacity Strengthening Advanced to FY14 0 2.3 Guizhou Rural Development Delivered 09/30/14 100 2.3 Sichuan Chongqing Cooperation: Guang'an Demonstration Area Delivered 03/16/15 100 Infrastructure Development 2.4 Hubei XiaoGan Logistic Infrastructure Postponed to FY16 0 2.4 Yunnan Highway Assets Management Delivered 03/31/15 150 2.4 Heilongjiang Cold Weather Smart Public Transportation System Advanced to FY14 0 2.4 Gansu Rural-Urban Integration Delivered 03/31/15 150 Additionally Delivered Projects 2.4 Zhengzhou Urban Rail Delivered, originally FY14 pipeline 12/23/14 250 2.2 Xinjiang Technical and Vocational Education and Training Delivered 05/29/15 50 Total 1821.5 FY16 2.3 Chongqing-Dadukou Fiscal Sustainability DPO Postponed to FY17 0 1.6 Hebei Air Pollution Prevention and Control Program Delivered 06/06/16 500 1.1 Hebei Clean Heating Delivered 01/19/16 100 1.2 Hubei Jingzhou Historic Town Conservation Delivered 01/19/16 100 2.4 Hubei Xiaogan Logistic Infrastructure Delivered 04/29/16 100 2.3 Hunan Fiscal Sustainablity DPO Postponed to FY17 0 1.6 Innovative Financing for Air Pollution Control in Jing-Jin-Ji Delivered 03/22/16 500 1.2 Lushan Earthquake Reconstruction and Risk Recution Postponed to FY17 0 2.3 Fiscal Technical Assistance Delivered as Building a Modern Fiscal System 04/29/16 22 TA 1.5 Ningbo Sustainable Urbanization Postponed to FY17 0 2.3 PPP Promotion and Demonstration Postponed to FY19 0 1.5 Second Gansu Cultural and Natural Heritage Protection & Dev Postponed to FY17 0 1.3 Tianjin Urban Transport Improvement Delivered 12/21/15 100 2.3 Tongren Rural Transport Delivered 09/25/15 150 1.3 Urumqi Urban Transport II Delivered 12/21/15 140 1.3 Wuhan Integrated Transport Development Delivered 02/26/16 120 1.6 Zhuzhou Brownfield Remediation Delivered 03/31/16 150 Total 1982 Mid-FY17 2.3 Guangxi Poverty Alleviation Delivered 12/21/16 100 2.2 Yunnan Early Childhood Education Innovation Delivered 12/09/16 50 Additionally Delivered Projects: 1.2 Lushan Earthquake Reconstruction and Risk Reduction Delivered, originally FY16 pipeline 10/13/16 300 1.2/1.3 Ningbo Sustainable Urbanization Delivered, originally FY16 pipeline 07/15/16 150 Total 600 Total (FY13-mid FY17 Delivered Program): 7559 96 CLR Annex 5: GEF Delivered from FY13 to mid-FY17 and Active GEF Portfolio GEF Delivered (US$m) FY13-15 Climate Change China Renewable Energy Scale-up Program (CRESP) Phase II 27.28 Climate Smart Staple Crop Production 5.1 Green Energy Schemes for Low-carbon City in Shanghai 4.35 Large-City Congestion and Carbon Reduction 18.18 Promotion of Sustainable Cities in China 2.0 Urban Scale Building Energy Efficiency and Renewable Energy 12.0 Chemicals and Pollutants Contaminated Site Management 15.0 Guangdong Non-Point Pollution Control 5.1 Municipal Solid Waste Management 12.0 Total 101.01 FY16-Mid FY17 Biodiversity Landscape Approach to Wildlife Conservation in Northeast China 3.0 Climate Change Mainstreaming Integrated Water and Environment Management 9.5 Chemicals and Pollutants Capacity Strengthening for Implementation of Minamata Convention of Mercury 8.0 Total 20.5 GEF Active Portfolio (as of December 2016) Biodiversity Landscape Approach to Wildlife Conservation in Northeast China 3.0 Climate Change China Renewable Energy Scale-up Program (CRESP) Phase II 27.28 China Energy Efficiency Financing 13.50 Climate Smart Staple Crop 5.1 Green Energy Schemes for Low-carbon City in Shanghai 4.35 Large-City Congestion and Carbon Reduction 18.18 Mainstreaming Integrated Water` and Environment Management 9.5 Promotion of Sustainable Cities in China 2.0 Provincial Energy Efficiency Scale-up Program 13.39 Urban Scale Building Energy Efficiency and Renewable Energy 12.0 Chemicals and Pollutants Capacity Strengthening for Implementation of Minamata Convention of Mercury 8.0 Contaminated Site Management 15.0 Dioxins Reduction from the Pulp and Paper Industry 15.0 Guangdong Non-point Pollution Control 5.1 Municipal Solid Waste Management 12.0 Total 163.4 97 CLR Annex 6: Recipient-Executed Trust Fund Portfolio, FY13 to mid-FY17, excluding GEF Program Project Name Approval Closing Grant FY FY Amount ($m) BIOCFT Facilitating Afforestation Program 2007 2018 2.01 Reforestation on Degraded Land in Northwest Guangxi 2009 2020 1.60 Carbon Jiangxi Shihutang Navigation and Hydropower Complex Project 2010 2015 2.10 China HFC-23 Emissions Reduction and Sustainable Development 2006 2014 1041.00 Benefits Project China Power Sector Transformer Efficiency Program 2012 2015 757.01 CN-CF-Yingkou Economic Dev Zone Heating 2010 2015 0.89 Dashiqiao Central Heating Supply Project 2010 2015 5.60 CN-CF-Meishan CDQ Project 2008 2013 4.75 China-PCF-Tianjin Landfill Gas Recovery and Utilization 2007 2015 0.63 Shandong Minhe Poultry Manure Biogas 2009 2016 6.50 China Guangdong Huizhou CCGT project 2008 2015 60.72 CN-PCF Jincheng Coal Bed Methane Project 2005 2014 54.91 CN-PCF Xiaogushan Hydropower Project 2005 2018 13.50 Baotou Iron & Steel Energy Efficiency Project 2008 2017 11.79 China-PCF-CDCF Hubei Guangrun Hydropower 2007 2018 1.49 CN-CF-Inner Mongolia Huitengxile Wind Farms 2007 2018 10.17 CDCF - CHINA GUANGRUN HYDROPOWER 2007 2018 1.50 Nanjing Steel Convertor Gas Recovery Project 2006 2020 10.92 Yunnan Whitewaters Hydro Project 2007 2018 10.68 Shandong Minhe Poultry Manure Biogas 2008 2016 6.51 Hubei Eco-Farming Biogas Project 2008 2018 4.72 IDF Capacity Building of China Food and Drug Administration 2015 2018 0.48 Capacity Building for a South-South Cooperation Platform in 2014 2017 0.30 China-IPRCC Project OTF China HCFC Phase-Out Project (Stage I) 2013 2018 168.30 PMR China Partnership for Market Readiness 2015 2018 8.00 98 CLR Annex 7: IFC Commitments, FY13 to mid-FY17 Core Commit- Own Mobiliza- ment Industry Account, tion, Fiscal Year Project Name Group Sector US$m US$m 2013 Anyou MAS Other Animal Production 20.0 - Aqualyng Infra Water and Wastewater Utilities 12.0 - CEF III RI CTT Growth Equity Fund 0.3 - CEI Water Infra Water and Wastewater Utilities 70.0 - CFPA RI Add-on FM Microfin. and Small Business - Non Commercial Banking 3.6 - Changlin SDF MAS Agriculture, Construction, and Mining Machinery 13.0 - CHUEE Jiangsu FM Commercial Banking - General 74.1 - CHUEE SME BOB FM / Infra Commercial Banking - SME Finance 70.7 - CHUEE SME BON FM Commercial Banking - SME Finance 40.2 - CHUEE SME BOS FM Commercial Banking - SME Finance 40.3 - Concord Medical MAS Hospitals and Clinics 20.0 - Concord Medstar MAS Hospitals and Clinics 30.0 - Daguan Infra Large Hydro - Renewable Energy Generation 17.0 - Dushan Infra Large Hydro - Renewable Energy Generation 6.0 - ENN Energy Infra Oil and Gas Production (Includes Development) 75.0 75.0 ESIP EDC CN RI CTT Computer Systems Design and Related Services 10.0 - ESIP QD Jason MAS Computer & Electronic Products 6.0 - Fosun Pharma 2 MAS Pharmaceuticals and Medicine 25.0 - F-Road FM / Infra Mobile channel service providers 5.5 - Fullerton CQ FM Microfin. and Small Business - Non Commercial Banking 14.9 - Fullerton HB FM Microfin. and Small Business - Non Commercial Banking 9.9 - Fullerton SC FM Microfin. and Small Business - Non Commercial Banking 24.8 - Harbin Bank VTB FM Commercial Banking - Microfin. 0.1 - Jiangxi TianRen MAS All Other Chemical Product 8.5 - Muyuan Loan MAS Other Animal Production 20.0 - Nature Forestry MAS Plantation Forests 40.0 - NH Fund II CTT / MAS Growth Equity Fund 20.0 - PeakRe FM Reinsurance 82.0 - SNF Taixing MAS All Other Chemical Product 30.0 - Yingjiang Infra Large Hydro - Renewable Energy Generation 27.0 - 2013 Total 815.6 75.0 2014 Alibaba MCC Loan FM Microfin. and Small Business - Non Commercial Banking 160.8 - Baishan Mg MAS Other (Copper, Rolled Copper, Brass, etc.) 25.0 - BVCF III CTT / MAS Venture Capital Fund 20.0 - CDH Fund V CTT Growth Equity Fund 45.1 - CenturySunshine2 MAS Fertilizer (Mixing Only) 15.0 - ESIP Ayla CTT Computer Systems Design and Related Services 4.5 - ESIP Ioxus CTT / MAS Energy Efficiency 5.0 - ESIP SunpremeRI2 CTT / MAS Engineering Services 2.6 - ESIP SunpremeRI3 CTT / MAS Engineering Services 3.3 - Fullerton II FM Microfin. and Small Business - Non Commercial Banking 12.2 - Fullerton II HB FM Microfin. and Small Business - Non Commercial Banking 17.2 - GTLP RTAF FM Commercial Banking - Trade and Supply Chain 250.0 250.0 Hollysys MAS Computer & Electronic Products 20.0 - Muyuan Loan 2 MAS Other Animal Production 20.0 - Stora China III MAS Pulp Mills 58.8 - Stora Enso FJV1 MAS Plantation Forests 35.0 150.0 Stora Enso IJV MAS Paperboard (Including Boxboard, Fiberboard) 53.0 222.0 Yi Ming Fund CTT Growth Equity Fund 15.0 - Zhaoheng Hydro Infra Large Hydro - Renewable Energy Generation 25.0 - CEF IV CTT Venture Capital Fund - 10.8 2014 Total 787.5 632.8 2015 AHS RI CTT Other Services (Including IT Enabled Services) 1.7 - Alibaba MCC GF FM Microfin. and Small Business - Non Commercial Banking 81.4 - Anyou MAS Other Animal Production 15.0 - 99 Core Commit- Own Mobiliza- ment Industry Account, tion, Fiscal Year Project Name Group Sector US$m US$m Birla Carbon PRC MAS Carbon Black 7.5 - BVCF III RI MAS Venture Capital Fund 3.8 - CEI Water II Infra Water and Wastewater Utilities 35.0 - CenturyS2 Rights MAS Nitrogenous Fertilizer 4.0 - CFPA MFI Loan FM Microfin. and Small Business - Non Commercial Banking 20.5 - China Gas Infra Natural Gas Distribution 86.0 214.0 CHUEE Rizhao FM / Infra Commercial Banking - General 24.2 - CWAG Infra Water and Wastewater Utilities 20.0 - Dynamic Nanjing MAS Petrochemical 20.0 - Epure Warrants Infra Water and Wastewater Utilities 25.0 - ESIP Aihuishou CTT Other Services (Including IT Enabled Services) 5.0 - ESIP SunpremeRI4 CTT / MAS Engineering Services 3.0 - ESIP SunpremeRI5 CTT / MAS Engineering Services 2.5 - Fenglin II MAS Wood Panels and Engineered Wood Products 30.4 - Hekangyuan MAS Poultry Farming 10.0 - Ioxus Rght Iss 1 CTT Energy Efficiency 0.2 - JFLC Loan II FM Leasing Services 64.5 - Maple Leaf Edu MAS Elementary and Secondary Schools 15.5 - MC China RI III FM Microfin. and Small Business - Non Commercial Banking 10.0 - MC Nanchong Loan FM Microfin. and Small Business - Non Commercial Banking 8.1 - MC Sichuan Loan FM Microfin. and Small Business - Non Commercial Banking 6.5 - MTI Environment Infra Water and Wastewater Utilities 4.0 - New Hope SEA MAS Other Animal Production 40.0 20.0 PSBC Equity FM Commercial Banking - General 300.0 - Q and M Rights MAS Hospitals and Clinics 0.3 - SinoGreen Fund CTT Venture Capital Fund - 16.1 Tian Lun Gas Infra Natural Gas Distribution 75.0 62.5 United Water Infra Water and Wastewater Utilities 4.0 - Wasion Group MAS Other Machinery 19.5 - Weigao II MAS Pharmaceuticals and Medicine 96.7 - Zhengming Infra / MAS Storage (Including Agricultural Products) 27.1 - 2015 Total 1,066.4 312.6 Microfin. and Small Business Non-Commercial Banking - 2016 Ant ABS DCM FM Digital Finance 48.3 - Atopco Beef MAS Animal Slaughtering and Processing 30.0 - BE Water Infra Water and Wastewater Utilities 28.0 166.0 BE Water B Infra Water and Wastewater Utilities - 106.0 Best Logistics CTT / Infra Other (Including General Freight Trucking) 20.0 - Birla Carbon PRC MAS Carbon Black 40.0 60.0 BOW BOL RSF FM Commercial Banking - SME Finance 71.2 - Canvest WTE Infra Waste to Energy - Waste 60.0 - CCI Equity FM / MAS Other Non-Banking Financial Institution (NBFI) 20.0 - CEI Water II Infra Water and Wastewater Utilities 95.0 60.0 CHG Loan FM / MAS Other Non-Banking Financial Institution (NBFI) 40.1 - Columbia China MAS Hospitals and Clinics 25.0 - CPLF - CSunshine MAS Phosphatic Fertilizer 2.0 - CWAG Infra Water and Wastewater Utilities 49.7 30.0 ESIP Ayla RI-1 CTT Content (B2C Companies) 3.1 - Eurasia Univ MAS Colleges, Universities, and Professional Schools 35.1 - Genesis China CTT Venture Capital Fund 25.0 - Henan Tian Lun Infra Natural Gas Distribution 40.0 20.0 Lionbridge Loan FM Leasing Services 19.9 - Microvast Rights CTT / MAS Energy Efficiency 22.5 - PeakRe RI FM Reinsurance 14.9 - Principle IV CTT Growth Equity Fund 30.0 - SBCVC V CTT Growth Equity Fund 25.0 24.0 Sinovation III CTT Venture Capital Fund 15.0 - 2016 Total 759.6 466.0 100 Core Commit- Own Mobiliza- ment Industry Account, tion, Fiscal Year Project Name Group Sector US$m US$m Microfin. and Small Business Non-Commercial Banking - Mid-2017 Baidu MCC Loan FM Digital Finance 73.8 - CFPA Equity II FM Microfin. and Small Business - Non Commercial Banking 23.5 - Envision MAS Wind Turbine Machinery 50.0 - ESIP HuoCheBang CTT / Infra Other (Including General Freight Trucking) 15.0 10.8 Essex Bio MAS Pharmaceuticals and Medicine 19.3 - Hosen Fund III CTT/MAS Growth Equity Fund 30.0 - Long Hill CTT Venture Capital Fund 15.0 - Muyuan Loan 3 MAS Other Animal Production 38.4 - Nidera RI MAS Grains and Beans 8.0 - Mid-2017 Total 273.1 10.8 Grand Total 3,702.2 1,497.2 101 CLR Annex 8: Selected Indicators of Bank Portfolio Performance and Management, FY13- FY17 As of 07/27/2017 Indicator FY13 FY14 FY15 FY16 FY17 Portfolio Assessment Number of Projects Under Implementation ᵃ 96.0 102.0 104.0 97.0 93.0 Average Implementation Period (years) ᵇ 2.9 3.4 3.3 3.4 3.1 Percent of Problem Projects by Number ᵃ˒ ͨ 13.5 18.6 17.3 21.6 10.8 Percent of Problem Projects by Amount ᵃ˒ ͨ 12.6 17.8 15.5 19.0 9.9 Percent of Projects at Risk by Number ᵃ˒ ͩ 15.6 19.6 17.3 21.6 11.8 Percent of Projects at Risk by Amount ᵃ˒ ͩ 20.8 18.0 15.5 19.0 11.2 Disbursement Ratio (%) ͤ 16.5 17.7 22.1 20.2 19.0 Memorandum Item Since FY80 Last Five FYs Proj Eval by OED by Number 328 39 Proj Eval by OED by Amt (US$ millions) 41,748.4 4,197.1 % of OED Projects Rated U or HU by Number 9.8 7.7 % of OED Projects Rated U or HU by Amt 8.8 5.8 a. As shown in the Annual Report on Portfolio Performance (except for current FY). b. Average age of projects in the Bank's country portfolio. c. Percent of projects rated U or HU on development objectives (DO) and/or implementation progress (IP). d. As defined under the Portfolio Improvement Program. e. Ratio of disbursements during the year to the undisbursed balance of the Bank's portfolio at the beginning of the year: Investment projects only. * All indicators are for projects active in the Portfolio, with the exception of Disbursement Ratio, which includes all active projects as well as projects which exited during the fiscal year. 102 Annex 3: Selected Indicators of Bank Portfolio Performance and Management As of 09/23/2019 Indicator FY17 FY18 FY19 FY20 Portfolio Assessment Number of Projects Under Impl ementation ᵃ 93.0 97.0 94.0 93.0 Avera ge Impl ementation Peri od (yea rs ) ᵇ 3.1 3.6 3.8 4.0 Percent of Probl em Projects by Number ᵃ˒ ͨ 10.8 7.2 8.5 8.6 Percent of Probl em Projects by Amount ᵃ˒ ͨ 9.9 6.9 5.5 5.5 Percent of Projects a t Ri s k by Number ᵃ˒ ͩ 11.8 7.2 8.5 8.6 Percent of Projects a t Ri s k by Amount ᵃ˒ ͩ 11.2 6.9 5.5 5.5 Di s burs ement Ra tio (%) ͤ 19.0 21.3 17.8 3.9 Portfolio Management CPPR duri ng the yea r (yes /no) Supervi s i on Res ources (total US$) Avera ge Supervi s i on (US$/project) Memorandum Item Since FY80 Last Five FYs Proj Eva l by IEG by Number 359 46 Proj Eva l by IEG by Amt (US$ mi l l i ons ) 45,195.7 5,231.6 % of IEG Projects Ra ted U or HU by Number 9.8 8.7 % of IEG Projects Ra ted U or HU by Amt 8.6 4.2 a . As s hown i n the Annua l Report on Portfol i o Performa nce (except for current FY). b. Avera ge a ge of projects i n the Ba nk's country portfol i o. c. Percent of projects ra ted U or HU on devel opment objectives (DO) a nd/or i mpl ementation progres s (IP). d. As defi ned under the Portfol i o Improvement Progra m. e. Ra tio of di s burs ements duri ng the yea r to the undi s burs ed ba l a nce of the Ba nk's portfol i o a t the begi nni ng of the yea r: Inves tment projects onl y. * Al l i ndi ca tors a re for projects a ctive i n the Portfol i o, wi th the exception of Di s burs ement Ra tio, whi ch i ncl udes a l l a ctive projects a s wel l a s projects whi ch exi ted duri ng the fi s ca l yea r. 103 Annex 4: Operations Portfolio (IBRD/IDA and Grants) As of 09/23/2019 Closed Projects 372 IBRD/IDA* Tota l Di s burs ed (Acti ve) 4,842.5 of whi ch ha s been repa i d(1) 67.2 Tota l Di s burs ed (Cl os ed) 46,658.0 of whi ch ha s been repa i d 36,535.4 Tota l Di s burs ed (Acti ve + Cl os ed) 51,500.5 of whi ch ha s been repa i d 36,602.6 Tota l Undi s burs ed (Acti ve) 7,627.9 Tota l Undi s burs ed (Cl os ed) 0.0 Tota l Undi s burs ed (Acti ve + Cl os ed) 7,627.9 Active Projects Difference Between Last PSR Expected and Actual Supervision Rating Original Amount in US$ Millions Disbursements ͣ ̷ Development Implementation Fiscal Project ID Project Name IBRD IDA Grants Cancel. Undisb. Orig. Frm Rev'd Objectives Progress Year P154716 Anhui Aged Ca re Project S S 2018 118.0 0.0 0.0 115.5 5.3 0.0 P153173 Anhui Roa d Ma i ntena nce Innova ti on S MS 2017 150.0 0.0 0.0 121.3 48.8 0.0 P158733 Anhui Rura l Roa d Res i l i ence PforR S MS 2019 200.0 0.0 0.0 200.0 0.0 14.8 P129431 Anhui Xua ncheng Infr. for Indus t. Rel oca MS S 2013 150.0 0.0 60.0 22.8 82.8 15.3 P129563 Anhui Yel l ow Mt. New Countrys i de Demo. MS MS 2014 100.0 0.0 0.0 17.5 17.5 -0.1 P154694 Bui l di ng a Modern Fi s ca l Sys tem S MS 2016 22.0 0.0 0.0 18.4 10.9 0.0 P162299 CH Di s tri buted Renewa bl e Energy Sca l e-Up S S 2019 0.0 0.0 7.3 0.0 7.3 0.3 0.0 P126832 CH GEF Muni ci pa l Sol i d Wa s te Ma na gement MS MU 2015 0.0 0.0 12.0 0.0 4.4 4.0 0.0 P154623 Chi na : Ga ns u TVET Project S S 2017 120.0 0.0 0.0 80.5 -21.0 0.0 P154621 Chi na : Gua ngdong Compul s ory Educa ti on S MS 2018 120.0 0.0 0.0 114.7 12.8 0.0 P154984 Chi na Hea l th Reform Progra m S S 2017 600.0 0.0 0.0 393.8 0.0 0.0 P158717 Chi na : Hubei Inl a nd Wa terwa y Improvement S S 2018 150.0 0.0 0.0 112.7 2.7 0.0 P151281 Chi na Mi na ma ta Conventi on on Mercury S MS 2017 0.0 0.0 8.0 0.0 6.4 2.9 0.0 P163679 Chi na RE a nd Stora ge Project S S 2019 300.0 0.0 0.0 300.0 2.5 0.0 P133117 Chongqi ng Sma l l Towns Wa ter Env. Mgmt. S MS 2015 100.0 0.0 0.0 63.7 31.7 0.0 P149528 CH-Second Ga ns u Cul tura l a nd Na tura l Her MU MU 2017 100.0 0.0 0.0 80.1 21.1 0.0 P144531 Cl i ma te Sma rt Sta pl e Crop Producti on S MS 2015 0.0 0.0 5.1 0.0 1.5 0.6 0.5 P125022 CN-Bei ji ng Rooftop Sol a r PV Sca l e-Up MS MS 2013 120.0 0.0 15.0 56.8 71.8 42.4 P126210 CN-Chongqi ng Urba n Rura l Integra ti on II MS MS 2012 100.0 0.0 0.0 49.1 49.1 15.6 P123133 CN-Ga ns u Qi ngya ng Urba n Infra s tructure S S 2012 100.0 0.0 0.0 8.7 8.7 4.2 P127033 CN GEF CRESP Pha s e II S MS 2014 0.0 0.0 27.3 0.0 11.3 11.3 -0.5 P117341 CN-Ha Ji a Ra i l wa y S MS 2014 300.0 0.0 0.0 8.7 -61.3 0.0 P156397 CN HCFC Pha s eout Project Sta ge II S S 2019 0.0 0.0 141.5 0.0 141.5 4.7 0.0 P132562 CN-Hubei Xi a oga n Logi s ti cs S MS 2016 100.0 0.0 0.0 90.1 56.1 0.0 P125496 CN- Integra ted Modern Agr. Devel opment S S 2014 200.0 0.0 0.0 46.8 46.8 46.8 P122383 CN La nds ca pe Approa ch to Wi l dl i fe Cons er MS MS 2016 0.0 0.0 3.0 0.0 0.9 0.9 0.0 P123323 CN-Ni ngbo Muni ci pa l Sol i d Wa s te Recycl i n S MS 2013 80.0 0.0 0.0 7.4 7.4 0.0 P121289 CN-Ni ngxi a Des erti fi ca ti on Control S S 2012 80.0 0.0 0.0 27.3 27.3 18.5 P121414 CN-Si chua n Wudu Irri ga ted Agri c Dev S S 2012 100.0 0.0 0.0 12.2 12.2 9.5 104 Active Projects Difference Between Last PSR Expected and Actual Supervision Rating Original Amount in US$ Millions Disbursements ͣ ̷ Development Implementation Fiscal Project ID Project Name IBRD IDA Grants Cancel. Undisb. Orig. Frm Rev'd Objectives Progress Year P101525 CN Yunna n Honghe Prefecture Urba n Tra n MS MU 2014 150.0 0.0 0.0 100.7 95.7 0.0 P122319 CN-Zha ngji a kou-Hohhot Ra i l wa y S S 2012 200.0 0.0 0.0 32.9 32.9 19.1 P145533 Conta mi na ted Si te Ma na gement Project S MS 2015 0.0 0.0 15.0 0.0 9.6 6.1 2.7 P132748 Devel opi ng Ma rket-ba s ed Energy Effi ci enc S S 2017 0.0 0.0 17.8 0.0 15.3 -0.6 4.5 P144270 Economi c Tra ns forma ti on & Ca p. Bl dg MS MU 2014 35.0 0.0 9.0 22.0 27.0 6.0 P159883 Effi ci ent a nd Green Frei ght Tra ns port S S 2019 0.0 0.0 8.2 0.0 8.2 0.7 0.0 P154669 Fi na nci ng for Ai r Pol l uti on Control HS S 2016 500.0 0.0 0.0 293.5 0.0 79.9 P129791 Fuji a n Fi s hi ng Ports Project U U 2014 60.0 0.0 0.0 52.9 40.6 37.6 P158215 Ga ns u Rev a nd Innov Project S S 2019 180.0 0.0 0.0 180.0 3.5 0.0 P132775 Ga ns u Rura l -Urba n Integra ti on S S 2015 150.0 0.0 0.0 24.8 -50.2 7.5 P156507 GEF Chi na Sus ta i na bl e Ci ti es IAP S S 2018 0.0 0.0 32.7 0.0 29.6 8.9 0.0 P158124 Green Urba n Fi na nci ng a nd Innova ti on S S 2019 200.0 0.0 0.0 200.0 1.3 0.0 P127775 Gua ngdong Agri cul tura l Pol l uti on Control MS MS 2014 100.0 0.0 0.0 43.4 43.4 6.4 P127815 Gua ngdong Agri cul tura l Pol l uti on Control # MS 2014 0.0 0.0 5.1 0.0 1.4 1.4 0.0 P126817 Gua ngxi La i bi n Wa ter Envi ronment S S 2013 80.0 0.0 14.0 16.9 30.9 10.9 P153892 Gua ngxi Poverty Al l evi a ti on Project MS MS 2017 100.0 0.0 0.0 89.2 11.0 0.0 P163138 Gua ngxi Poverty Reducti on PforR S S 2018 400.0 0.0 0.0 298.3 223.3 0.0 P133017 Gui l i n Integra ted Envi ronment Ma na gement MS MS 2015 100.0 0.0 0.0 67.5 38.7 0.0 P129401 Gui ya ng Rura l Roa ds Project MS MS 2014 150.0 0.0 0.0 68.6 68.6 38.6 P162349 Gui zhou Aged Ca re Sys tem Devel op Progra m S S 2019 350.0 0.0 0.0 349.1 15.4 0.0 P133261 Gui zhou Rura l Devel opment Project S MS 2015 100.0 0.0 0.0 47.9 26.9 5.4 P148071 Gui zhou Tongren Rura l Tra ns port Project S S 2016 150.0 0.0 0.0 32.0 -31.8 0.0 P154672 Hebei Ai r Pol l uti on Preventi on S S 2016 500.0 0.0 0.0 0.0 0.0 0.0 P148599 Hebei Cl ea n Hea ti ng Project S HS 2016 100.0 0.0 0.0 38.0 -4.5 0.0 P132873 Hebei Rura l Renewa bl e Energy Devel opmentMS MS 2015 71.5 0.0 0.0 35.2 18.7 0.0 P133114 Hei l ongji a ng Publ i c Tra ns port MS MS 2014 200.0 0.0 0.0 136.0 109.7 86.6 P158622 Hezhou Urba n Wa ter Infra . a nd Env. Impro S S 2018 150.0 0.0 0.0 141.6 -0.9 0.0 P133000 Hua i na n Mi ni ng Area Reha bi l i ta ti on Proj. MU U 2015 100.0 0.0 0.0 70.5 44.0 0.0 P148523 Hubei Ji ngzhou Hi s tori c Town Cons erv. S S 2016 100.0 0.0 0.0 71.8 48.8 0.0 P153115 Huna n Integr. Ma na g of Agri La nd Project S MS 2018 100.0 0.0 0.0 96.8 7.5 0.0 P145897 Integra ted Wa ter a nd Envi ronment Mngmnt MS MS 2016 0.0 0.0 9.5 0.0 7.7 4.7 0.0 P147009 Ji a ngxi Fa rm Produce Di s tri buti on Sys tem S MS 2018 150.0 0.0 0.0 145.7 9.7 0.0 P158760 Ji a ngxi IRUWSWMP S MS 2018 200.0 0.0 0.0 197.5 37.5 0.0 P126856 Ji a ngxi Poya ng La ke Sma l l Town Project S S 2013 150.0 0.0 0.0 10.2 10.2 10.2 P128867 Ji a ngxi Wuxi kou Fl ood Ma na gement Project S MS 2013 100.0 0.0 0.0 17.2 17.2 0.0 P132277 Ji a ozuo Green Tra ns port & Sa fety Improve S S 2014 100.0 0.0 0.0 45.7 38.2 9.7 P126611 Li a oni ng Coa s ta l Economi c Zone Project MS MS 2013 150.0 0.0 0.0 31.8 31.8 29.8 P158713 Li a oni ng Sa fe a nd Sus ta i na bl e Urba n WS S S 2018 250.0 0.0 0.0 247.4 39.9 0.0 P153548 Lus ha n Ea rthqua ke Recons tructi on Project MS MS 2017 300.0 0.0 0.0 254.4 103.1 110.1 P126813 Ma 'a ns ha n Ci hu Ri ver Ba s i n Improvement MS MU 2013 100.0 0.0 0.0 38.9 38.9 17.7 P132154 Na ncha ng Urba n Ra i l Project S S 2013 250.0 0.0 0.0 72.8 72.8 72.8 P149485 Ni ngbo Sus ta i na bl e Urba ni za ti on Project MS MS 2017 150.0 0.0 0.0 124.6 43.3 0.0 P133326 Poverty Al l evi a ti on i n Poor Area s MS MS 2015 150.0 0.0 0.0 98.3 82.0 0.0 P153604 Poya ng La ke Wa ter Envi ronment Ma na gement S MS 2017 150.0 0.0 0.0 143.6 14.9 0.0 P159870 Qi a nda o La ke&Xi n'a n Ri ver & Ecos ys S S 2018 150.0 0.0 0.0 134.6 -8.6 0.0 105 Active Projects Difference Between Last PSR Expected and Actual Supervision Rating Original Amount in US$ Millions Disbursements ͣ ̷ Development Implementation Fiscal Project ID Project Name IBRD IDA Grants Cancel. Undisb. Orig. Frm Rev'd Objectives Progress Year P127867 Qi ngha i Xi ni ng Urba n Tra ns port Project MS MS 2014 120.0 0.0 0.0 63.0 59.3 0.0 P133116 Qi ngha i Xi ni ng Wa ter Envi ronment Mgmt. S MS 2015 150.0 0.0 0.0 60.0 0.0 57.0 P152959 Red./pha s e-out of PFOS i n pri ori ty s ecto S MS 2017 0.0 0.0 24.3 0.0 20.7 3.3 0.0 P117596 REG:CN-Soci a l Securi ty+Mi gra nt Tra i ni ng S MS 2013 80.0 0.0 0.0 18.1 18.1 4.9 P153541 Sha a nxi Poor Rura l Area s Communi ty Dev S MS 2017 100.0 0.0 0.0 66.1 -2.7 0.0 P133069 Sha a nxi Sma l l Towns Infra s tructure Proje S S 2015 150.0 0.0 0.0 63.6 40.6 22.4 P162623 Sha a nxi Sus tai na bl e Towns Devel opment S S 2019 100.0 0.0 0.0 100.0 2.5 0.0 P133531 Sha nxi Ga s Util i za tion MS S 2014 100.0 0.0 0.0 9.4 6.9 0.0 P133456 Si chua n Chongqi ng Coopera tion: Gua ng'a n MS MS 2015 100.0 0.0 0.0 66.6 24.1 0.0 P153473 Three Gorges Modern Logi s tics Center MS MS 2017 200.0 0.0 0.0 182.3 44.8 0.0 P148129 Ti a nji n Urba n Tra ns port Improvement Proj S MS 2016 100.0 0.0 0.0 80.2 37.2 22.6 P130786 Urba n Sca l e BEE a nd RE S S 2013 0.0 0.0 12.0 0.0 2.5 0.0 0.0 P148527 Urumqi Urba n Tra ns port Project II S S 2016 140.0 0.0 0.0 83.4 38.4 31.7 P148294 Wuha n Integra ted Tra ns port Devel opment S MS 2016 120.0 0.0 0.0 93.6 27.1 0.0 P147367 Xi nji a ng TVET Project S S 2015 50.0 0.0 0.0 24.3 15.5 0.0 P152860 YN Ea rl y Chi l dhood Educa tion Innova tion S S 2017 50.0 0.0 0.0 31.5 19.0 0.0 P132621 Yunna n Hi ghwa y As s et Ma na gement Project MS MS 2015 150.0 0.0 0.0 100.1 65.1 0.0 P133018 Zheji a ng Rura l Wa ter Suppl y & Sa ni tation S S 2015 200.0 0.0 0.0 65.5 -4.5 0.0 P128919 Zhengzhou Urba n Ra i l Project S S 2015 250.0 0.0 0.0 93.9 55.9 0.0 P147381 Zhuzhou Brownfi el d Remedi a tion Project MS MU 2016 150.0 0.0 0.0 138.1 84.7 0.0 Overall Result 12,396.5 0.0 328.8 98.0 7,627.9 2,345.7 860.7 * Di s burs ement da ta i s upda ted a t the end of the fi rs t week of the month. a . Intended di s burs ements to da te mi nus a ctua l di s burs ements to da te a s projected a t a ppra i s a l . 106 Annex 5: Statement of IFC’s Committed and Outstanding Portfolio As of 06/30/2019 Committed Outstanding Quasi- Commitment Institution Quasi-Loan/ Loan Equity Guarantee Risk Mgmt Total IFC Participants Loan Equity Loan/ Guarantee Risk Mgmt Total IFC Participants Fiscal Year Short Name Equity Equity 2001 SEAF Sichuan - 1.03 - - - 1.03 - - 1.03 - - - 1.03 - 2005 CDH China II - 0.38 - - - 0.38 - - - - - - - - 2005/ 2006 Changyu Group - 18.07 - - - 18.07 - - 18.07 - - - 18.07 - 2005/ 2006/ Stora Enso - - - - - - - - - - - - - - 2011 2005/ 2013/ 2009/ 2014/ Bank of Beijing - 9.17 - - - 9.17 - - 9.17 - - - 9.17 - 2007/ 2011/ 2015/ 2012 2006 CDH Venture - 3.63 - - - 3.63 - - 0.05 - - - 0.05 - 2006/ 2008 SBCVC II - 2.79 - - - 2.79 - - 0.03 - - - 0.03 - 2006/ 2019 Capital Today I - 3.35 - - - 3.35 - - - - - - - - 2007 DAC China - 12.13 - - - 12.13 - - 12.13 - - - 12.13 - 2007/ 2015 Weigao 87.35 - - - - 87.35 - 87.35 - - - - 87.35 - 2008 BVCF II - 2.34 - - - 2.34 - - 2.11 - - - 2.11 - 2008 Jiuda Salt 8.40 - - - - 8.40 - 8.40 - - - - 8.40 - 2009 Asia Envt I - 14.45 - - - 14.45 - - 14.39 - - - 14.39 - 2009 Suntech - - - - - - - - - - - - - - 2009/ 2010/ Sanchuan Energy 8.91 10.00 - - - 18.91 - 8.91 10.00 - - - 18.91 - 2011 2009/ 2013 China Envt III - 10.74 - - - 10.74 - - 10.72 - - - 10.72 - 2010/ 2011/ BRCB - 71.33 - - - 71.33 - - 71.33 - - - 71.33 - 2008 2010/ 2011/ MC China - 10.41 - - - 10.41 - - 10.41 - - - 10.41 - 2015/ 2008 2010/ 2013/ 2014/ 2017/ CFPA MF 18.34 26.46 - - - 44.80 - 18.34 26.46 - - - 44.80 - 2015/ 2012 2010/ 2018/ China WindPower - 10.00 29.94 - - 39.94 - - 10.00 29.94 - - 39.94 - 2011 2010/ 2018/ 2019/ 2011/ JFLC 131.02 39.26 - - - 170.28 - 131.02 39.26 - - - 170.28 - 2015/ 2012 2011 China Envt IV - 17.02 - - - 17.02 - - 16.59 - - - 16.59 - 2011 Hwagain - 15.73 - - - 15.73 - - 15.73 - - - 15.73 - 2011 Tianjin Haitai - 8.03 - - - 8.03 - - 8.03 - - - 8.03 - 2012 SinoGreen Fund - 20.00 - - - 20.00 - - 15.76 - - - 15.76 - 2012 Xinjiang MCC - 1.58 - - - 1.58 - - 1.58 - - - 1.58 - 2013 Changlin-SDF 1.42 - - - - 1.42 - 1.42 - - - - 1.42 - 2013 CHUEE SME BOB - - - 1.29 - 1.29 - - - - 1.29 - 1.29 - 2013 CHUEE SME BOS - - - 0.29 - 0.29 - - - - - - - - 2013 Jiangxi TianRen - 8.50 - - - 8.50 - - 8.50 - - - 8.50 - 2013 NH Fund II - 14.05 - - - 14.05 - - 11.31 - - - 11.31 - 2013 SNF China 6.00 - - - - 6.00 - 6.00 - - - - 6.00 - 2013/ 2007/ Fosun Pharma - 12.92 - - - 12.92 - - 12.92 - - - 12.92 - 2012 2013/ 2014/ Muyuan Pig 37.85 0.73 - - - 38.58 - 37.85 0.73 - - - 38.58 - 2017/ 2011 2013/ 2014/ 2017/ 2011/ Sunpreme Silicon - 18.00 - - - 18.00 - - 18.00 - - - 18.00 - 2015 2013/ 2017/ Anyou Biotech 39.67 14.07 - - - 53.74 - 39.67 14.07 - - - 53.74 - 2015 2014 CDH Fund V - 11.69 - - - 11.69 - - 10.46 - - - 10.46 - 2014 Hollysys - - 20.00 - - 20.00 - - - 20.00 - - 20.00 - 2014 Stora Enso FJV1 27.22 - - - - 27.22 90.00 27.22 - - - - 27.22 90.00 2014 Stora Enso IJV 41.22 - - - - 41.22 133.20 41.22 - - - - 41.22 133.20 2014 Stora Enso SEPP - 56.16 - - - 56.16 - - 44.01 - - - 44.01 - 2014 Yi Ming Fund - 13.77 - - - 13.77 - - 12.77 - - - 12.77 - 2014/ 2007/ Century Sunshine 10.89 19.00 - - - 29.89 - 10.89 19.00 - - - 29.89 - 2015/ 2016 2014/ 2015 BVCF III - 14.55 - - - 14.55 - - 12.34 - - - 12.34 - 2014/ 2016 Ayla Networks - 7.55 - - - 7.55 - - 7.53 - - - 7.53 - 2015 Hekangyuan - 10.00 - - - 10.00 - - 10.00 - - - 10.00 - 2015 Maple Leaf Ed - 4.78 - - - 4.78 - - 4.78 - - - 4.78 - 2015 MC Nanchong 2.08 - - - - 2.08 - 2.08 - - - - 2.08 - 2015 MC Sichuan 0.97 - - - - 0.97 - 0.97 - - - - 0.97 - 2015 NH Singapore 35.00 - - - - 35.00 - 35.00 - - - - 35.00 - 2015 Postal Savings - 278.57 - - - 278.57 - - 278.57 - - - 278.57 - 2015 Tian Lun Gas - 72.90 - - - 72.90 - - 72.90 - - - 72.90 - 2015 Wasion Group - 19.50 - - - 19.50 - - 19.50 - - - 19.50 - 2015 Zhengming 9.27 10.08 - - - 19.35 - 9.27 10.08 - - - 19.35 - 2015/ 2012 United Water - - 1.02 - - 1.02 - - - 1.02 - - 1.02 - 2015/ 2016 Aihuishou - 3.41 - - - 3.41 - - 3.41 - - - 3.41 - 2015/ 2016 CEWL 62.00 35.00 - - - 97.00 - 62.00 35.00 - - - 97.00 - 2016 BOW BOL - RSF - - - 7.93 - 7.93 - - - - 0.46 - 0.46 - 107 Committed Outstanding Quasi- Commitment Institution Quasi-Loan/ Loan Equity Guarantee Risk Mgmt Total IFC Participants Loan Equity Loan/ Guarantee Risk Mgmt Total IFC Participants Fiscal Year Short Name Equity Equity 2016 Eurasia University 16.56 - - - - 16.56 - 16.56 - - - - 16.56 - 2016 Genesis China I - 23.89 - - - 23.89 - - 22.98 - - - 22.98 - 2016 Henan Tian Lun 33.33 - - - - 33.33 - 33.33 - - - - 33.33 - 2016 Lionbridge 9.39 - - - - 9.39 - 9.39 - - - - 9.39 - 2016 SBCVC V - 25.00 - - - 25.00 - - 21.76 - - - 21.76 - 2016 Sinovation III - 11.54 - - - 11.54 - - 7.98 - - - 7.98 - 2017 Chint Solar Hong Kong 39.97 - - - - 39.97 - 39.97 - - - - 39.97 - 2017 Envision 28.57 - - - - 28.57 - 28.57 - - - - 28.57 - 2017 Essex Bio - - 19.21 - - 19.21 - - - 19.21 - - 19.21 - 2017 Guangxi Yangxiang 43.67 - - - - 43.67 - 43.67 - - - - 43.67 - 2017 Guangzhou UFH 40.00 - - - - 40.00 - 33.33 - - - - 33.33 - 2017 Hosen Fund III - 28.76 - - - 28.76 - - 23.85 - - - 23.85 - 2017 Kingenta 75.00 - 70.00 - - 145.00 - - - 50.00 - - 50.00 - 2017 Long Hill - 15.00 - - - 15.00 - - 11.00 - - - 11.00 - 2017 Maison China III - 19.95 - - - 19.95 - - 8.57 - - - 8.57 - 2017 Minsheng Education - 24.99 - - - 24.99 - - 24.99 - - - 24.99 - 2017/ 2011/ CDV - 5.05 - - - 5.05 - - 5.05 - - - 5.05 - 2008 2017/ 2015/ Birla Carbon 26.00 7.50 - - - 33.50 19.50 26.00 7.50 - - - 33.50 19.50 2016 2017/ 2016 Principle IV - 28.41 - - - 28.41 - - 16.29 - - - 16.29 - 2017/ 2019/ Microvast - 24.22 - - - 24.22 - - 24.22 - - - 24.22 - 2011/ 2016 2018 Full Truck Alliance - 15.00 - - - 15.00 - - 15.00 - - - 15.00 - 2018 GenBridge I - 20.10 - - - 20.10 - - 8.17 - - - 8.17 - 2018 JD Chongqing MCC 58.23 - - - - 58.23 - 58.23 - - - - 58.23 - 2018 Jiahe - 25.52 - - - 25.52 - - 25.52 - - - 25.52 - 2018 Morris Hong Kong - - 20.24 - - 20.24 - - - 20.24 - - 20.24 - 2018 Pengyao 51.15 - - - - 51.15 - 51.15 - - - - 51.15 - 2018 Roma Holding - 22.50 - - - 22.50 - - 16.07 - - - 16.07 - 2018 Welab Holdings - 10.00 - - - 10.00 - - 10.00 - - - 10.00 - 2018 XN - 9.59 - - - 9.59 - - 9.59 - - - 9.59 - 2018 YuHua Education 50.00 - 25.00 - - 75.00 - 50.00 - 25.00 - - 75.00 - 2018/ 2015/ Guangxi Fenglin 56.97 - - - - 56.97 - 56.97 - - - - 56.97 - 2012 2018/ 2016 Best Logistics - 16.86 - - - 16.86 - - 16.86 - - - 16.86 - 2018/ 2016 CCI Cayman - 24.04 - - - 24.04 - - 24.04 - - - 24.04 - 2018/ 2017 Baidu CQ MCC 176.72 - - - - 176.72 - 176.72 - - - - 176.72 - 2018/ 2017/ Canvest Env - 50.58 50.20 - - 100.78 - - 50.58 25.10 - - 75.68 - 2016 2018/ 2019 China Education Group 45.00 30.00 - - - 75.00 55.00 45.00 29.95 - - - 74.95 55.00 2018/ 2019 Sinovation IV - 20.00 - - - 20.00 - - 2.50 - - - 2.50 - 2018/ 2019/ Atopco - 14.19 - - - 14.19 - - 13.52 - - - 13.52 - 2016 2018/ 2019/ China Houze 59.39 - - - - 59.39 - 59.39 - - - - 59.39 - 2016 2019 Chenguang 37.85 - - - - 37.85 - - - - - - - - 2019 CT Yifeng - - - - - - - - - - - - - - 2019 Genesis China II - 10.00 - - - 10.00 - - 0.89 - - - 0.89 - 2019 Jointown 145.58 - - - - 145.58 - - - - - - - - 2019 Sumscope Inc - 10.00 - - - 10.00 - - 10.00 - - - 10.00 - 2019 Xiaomi MCC 58.23 - - - - 58.23 - - - - - - - - 2019 Zhangmen - 20.00 - - - 20.00 - - 20.00 - - - 20.00 - Chindex Rehab 8.40 - - - - 8.40 - 8.40 - - - - 8.40 - Grand Total: 1,587.64 1,445.81 235.60 9.52 - 3,278.57 297.70 1,264.31 1,325.61 190.50 1.75 - 2,782.18 297.70 108 Annex 6: China -- Indicative IBRD Financing, FY20-22 Proposed FY20: Lead CPF Selectivity IBRD Project Name GP Objective Criteria* (US$m) Engagement Area 1: Advancing Market and Fiscal Reform Sichuan Water Supply and Sanitation PPP Project WAT 1.2 I, PS 100 Chuzhou-Nanjing Intercity Railway PPP Project GTR 1.2 I, PS 150 Engagement Area 2: Promoting Greener Growth Shanxi Energy Transition and Green Growth DPF EAE 2.1 I, GPG, LR 300 Hubei Safe, Sustainable, Smart Agriculture Project AGR 2.3 I, GPG 100 Henan Green Agriculture Finance Fund AGR 2.3 I, PS, GPG 200 Forest Development in the Yangtze River PforR ENV 2.4 I, GPG 150 Greening Fuzhou High Tech Zone Demonstration Project SUR 2.5 I, GPG 200 Engagement Area 3: Sharing the Benefits of Growth Hainan Health Sector Reform Project HNP 3.1 I, LR 200 Total FY20 1,400 Proposed FY21-22: CPF Selectivity CPF Engagement Area Project Engagement Area Objective Criteria* Advancing Market and Fiscal Reform Provincial Fiscal Governance and Reform 1.1 I, LR Infrastructure PPP Demonstration 1.2 I, PS Promoting Greener Growth Energy Transformation 2.1 I, GPG Green Finance 2.1 I, GPG River Basin Management: Yangtze and 2.2 / 2.4 I, GPG Yellow River Restoration / Marine Plastics Food Safety 2.3 I, SP City Clusters and Low Carbon Mobility 2.5 I, GPG Aged Care Systems 3.1 I, SP Sharing the Benefits of Growth Life Cycle Vulnerability and Human Capital 3.1 / 3.2 I, LR *Selectivity Criteria: I = Policies and institutions for sustainable IBRD graduation GPG = Regional or global public goods PS = Fostering the private sector LR = Lagging regions and the poorest populations SP = Strategic piloting of approaches that address development priorities, especially those relevant to other developing countries 109