Yesterday the World Bank's Board of Executive Directors approved a loan of US$180 million to China in support of the Sichuan Urban Development Project.

The project will assist Sichuan Province to improve core urban functions in four of its second-tier cities -- Mianyang, Suining, Yibin, and Panzhihua -- by removing infrastructure bottlenecks hampering land development, transport and the environment.

Urbanization is a driver of the structural transformation and high economic growth in China. China's cities and towns generate more than 60% of the country's GDP. China's urban areas will gain about 425 million people over the next 30 years. In China's Western Region, the accelerated urbanization growth is expected to come primarily from the expansion of medium-sized cities.

Improving the investment climate of the secondary cities and attracting companies operating nationally and internationally requires: new urban development areas, developing inner city transport and road networks, complementary investment to tackle environmental challenges such as water pollution, and improving the environment and livability of the cities.

As the most important hinterland province accounting for one-third of the population and GDP of China's Western Region, Sichuan is driving the development in that part of the country. Its development strategy focuses on the development of medium-sized secondary cities, requiring them to grow quickly and adjust their urban infrastructure base rapidly.

The four cities selected and targeted for World Bank assistance under the Sichuan Urban Development Project are key, fast expanding medium-sized cities in Sichuan province. These cities are also faced with the common problems of high population density, land scarcity, inadequate transport systems, environmental deterioration, and a lack of municipal capacity to enhance city functions and urban planning.

The project supports key infrastructure investments that are integral parts of the urban development plans of the four project cities. The funding will be used to build local roads and associated bridges, river embankments, wastewater collection systems and sewerage, drainage infrastructure and landscaping. The World Bank will also provide technical assistance to support institutional development and capacity building of the project cities. It will help the municipalities improve their urban planning and capacities for spatial planning, land management, transport planning and utility and asset management through the use of management information systems (MIS) and geographical information systems (GIS).

Two other agencies within the World Bank Group, the International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA), are also working with the project cities to help enhance their competitiveness by promoting development and industrial linkages, and by improving their investment climate.

"The planned project is significant because, in the relatively underdeveloped Western Region, the cities are taking a pro-active role in managing this rapid urbanization process, strategically, professionally and efficiently," Said Hiroaki Suzuki, World Bank Task Manager for the Sichuan Urban Development Project. "The project cities, particularly Mianyang and Suining, are enhancing the development value of enclave land by providing a comprehensive plan to provide infrastructure, to improve their environment and to ensure well balanced economic and social development."

(China Development Gateway September 8, 2006)