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Toward an Environmentally Sustainable Future: Country Environmental Analysis of the People's Republic of China

Toward an Environmentally Sustainable Future: Country Environmental Analysis of the People's Republic of China

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This report presents the results of a 2-year effort to update environmental assessment in the People's Republic of China (PRC).
This report presents the results of a 2-year effort to update environmental assessment in the People's Republic of China (PRC).

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Published by: Asian Development Bank on Aug 14, 2012
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10/18/2013

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Between 1986—when the People’s Republic of China (PRC) joined the Asian
Development Bank (ADB)—and the end of 2011, the PRC received a total of
$24.86 billion in sovereign loans, $3.0 billion in nonsovereign assistance, and
$380.0 million in technical assistance (TA) grants from ADB, making it ADB’s second
largest borrower and its largest client for private sector financing. In spite of its growing
economic strength and amidst speculation that the need for development assistance will
soon disappear, the PRC remains one of ADB’s most important clients—total approved
assistance in 2011 was $1.79 billion, including $1.56 billion worth of loans (sovereign
and non-sovereign) and $23 million in TA grants.

The relationship between ADB and the PRC is much more than a one-way association
as the PRC, in addition to borrowing money from ADB, has also been making financial
contributions to support ADB initiatives. For example, in 2005, the PRC contributed
$30 million to the Asian Development Fund (ADF)175

with an additional $35 million
in 2008. The PRC also established the $20 million PRC Regional Cooperation and
Poverty Reduction Fund, becoming the first developing member country (DMC) to set
up such a fund with an international development agency.

ADB’s Country Partnership Strategy (CPS) covered the period 2008–2010, and is being
replaced by the new CPS (2011–2015). The CPS (2011−2015) recognizes the PRC’s
transformation, through 3 decades of successful reforms, into the world’s second largest
economy, the country’s swift transition from a low-income to middle-income country,
and its growing economic strength and international status. It also reflects the PRC’s
increasing role in reforming the international financial architecture, promoting regional
and global public goods, sharing knowledge, and providing development assistance both
bilaterally as well as through multilateral finance institutions. In the pursuit to reach the
high-income status, the PRC needs a more determined stance toward inclusive growth
and environmental sustainability to secure long-term growth and facilitate the middle-
income transition.

The current CPS is based on a number of key principles: (i) aligning with the priorities
of the 12th Five-Year Plan that intersect with those of the ADB Strategy 2020;

175

Established in 1973, the ADF is a multilateral source of concessional assistance dedicated exclusively to the needs of
the region. The ADF is designed to provide loans on concessional terms and grants to ADB's DMCs that have low
incomes per capita and limited debt-repayment capacity. Activities supported by the ADF promote poverty reduction
and improvements in the quality of life in the poorer countries of Asia and the Pacific.

150 Toward an Environmentally Sustainable Future

(ii) focusing on value addition through knowledge sharing, innovation, and capacity
development to enhance demonstration effects and be responsive to the needs of a large
and dynamic middle-income country; (iii) incorporating lessons from ADB’s operational
experiences; and (iv) focusing on ADB’s core areas of competence and country-specific
comparative advantages.

In line with the above principles, ADB programming for the current CPS focuses
on three pillars: (i) inclusive growth; (ii) environmentally sustainable growth; and
(iii) regional cooperation and integration. Inclusive growth to foster balanced and
equitable development will be supported by promoting integrated rural and urban
development in ways that expand livelihood opportunities for the poor. Improving
access to microfinance and small- and medium-sized enterprise (SME) finance, and
management of natural resources that also helps to boost rural livelihoods, will be
the main goal of rural development support. In urban areas, ADB will assist the
development of small- and medium-sized cities in less developed regions through
promotion of low-carbon development, integrated urban planning, and comprehensive
provision of municipal and social services. Improved transport connectivity will help
boost access to employment and essential services. Support for the PRC’s twinning
initiatives (whereby more prosperous provinces and municipalities provide assistance
to less developed interior regions), fiscal reform, and municipal bond market
development are also integral parts of the inclusive growth strategy. Further, regionally
balanced development will be promoted by continuing to focus operations on the
interior regions.

Support to environmentally sustainable growth will be achieved by further greening
the portfolio and mainstreaming climate change considerations into future operations.
ADB will, in particular, support the government’s efforts to foster a cleaner and more
sustainable growth process by (i) strengthening capacity of environmental management,
and pilot testing cutting-edge clean energy and energy efficiency technologies;
(ii) supporting the development of low-carbon transport systems, particularly in public
transport; (iii) strengthening protection and sustainable use of land, water, and forest
resources; (iv) helping to develop model livable and low-carbon cities; and (v) promoting
the development and institutionalization of green financing instruments.

The regional orientation of the country program will be further strengthened to
complement ADB’s support for regional cooperation programs, particularly the Central
Asia Regional Economic Cooperation (CAREC) and the Greater Mekong Subregion
(GMS) programs. ADB, in this context, will continue to work closely with the government
to support regional cooperation and integration through country projects and TA, with
a focus on transport connectivity and trade facilitation to promote economic corridors
and development of corridor cities to foster regionally inclusive development. ADB will
also strengthen capacity and strategy development support for government agencies
and provinces and autonomous regions involved in the CAREC and GMS programs.
Support for regional cooperation and integration will in turn continue to reinforce the
country program, particularly in its efforts to address regional disparities in the PRC
and provide regional perspectives on national development issues. Further, ADB will

Implications for the Country Partnership Strategy 151

strengthen efforts to promote knowledge sharing between the PRC and other DMCs for
expanded South-South cooperation.

The preparation of the CPS and the country environmental analysis (CEA) has been an
interactive process. The CEA has provided useful inputs into the development of the CPS,
while the analysis for the CPS has served to guide the development of the CEA. Following
this introductory section, this chapter proceeds with the analysis of ADB’s lending and
non-lending programs in the PRC from an environmental perspective. It then examines
the opportunities and challenges of private sector participation in ADB’s environmental
projects, followed by a discussion of the environmental assistance programs of other
major donors active in the PRC, with the view of building synergy and complementarity.
The ensuing section provides a comparison of ADB and PRC environmental safeguard
systems to guide the application of the Safeguard Policy Statement (2009) in the
PRC and promote the use of international best practices. The chapter concludes with
a comprehensive package of recommendations on ADB interventions in the PRC to
achieve the CPS objective of environmentally sustainable growth.

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