Infrastructure, Growth and Poverty Reduction in China

1
Infrastructure, Growth and Poverty Reduction in
China
Dong Yan
Institute of Comprehensive Transportation of
National Development and Reform Commission
April 1, 2004
2
Contents

• 1. Institutional and Policy Framework
• 2. Driving Factors
• 3. Case Study Impact of Transportation
• Infrastructure on Regional Economy and
• Poverty Reduction
• 4. Lessons Learned
• 5. Problems and Prospects

3
1. Institutional and Policy Framework
4
Institutions involved in rural
transportation and poverty reduction

• The transportation administration sector

Administration sectors for the Food for
Work Program
Poverty reduction institutes
5
Administration sectors for the Food for Work
Program
The transportation administration sector
Poverty reduction institutes
Ministry of Communication
Office of the State Council for
Development-oriented Poverty Relief
National Development and Reform Commission
Provincial Communication Department
Provincial Development Planning Commission
Provincial Development-oriented Poverty Relief
Office
Prefectural Communication Bureau
Prefectural Development Planning Commission
Prefectural Development-oriented Poverty Relief
Office
County Communication Bureau
County Development-oriented Poverty Relief Office 
County Development Planning Commission
Township government
Rural Highways
Village committee
6
Transportation policies for poverty reduction

• Increased investment in transportation
  infrastructure by Food for Work programs
• Increased investment in transportation
  infrastructure by financial transfers
• Poverty reduction work implemented by the
  transportation sector

7
2. Driving Factors
8

• Commitment and Political Economy for Change

• The first factor is the great
  attention the Chinese government pays to
  development-oriented poverty alleviation,
  transportation programs aimed at reducing poverty
  and development of rural roads.

9

• Development-oriented poverty alleviation
• 8-7 National Poverty Reduction Program
  (1994-2000)
• Outline for Poverty Alleviation and
  Development of
• Chinas Rural Areas (20012010)
• Transportation programs aimed at reducing
  poverty and development of rural roads
• Western development campaign
• Increased investment on highway construction
  and rural
• highways are one of main concerns

10
Table 1 The development targets of Chinese
rural highways
11

• Institutional Innovation

Lack of funds is the key factor
restricting the development of rural
transportation. Since economic reform in the late
1970s the diversification of funds resource
(including investments from governments of all
levels, funds collected by the local governments,
voluntary works of the farmers, domestic loans,
foreign investments ) has greatly promoted the
development of rural highways.
12
Example Fund structure of Poverty-alleviation
Road Improvement Component of the Third Henan
Provincial Highway Project Loaned by the World
Bank (RIPA?)
13

• Learning and Experimentation

Since 1998 Law of Highways, Law of
Contract, Law of Bidding, Law of Engineering
Administration and Regulations on Highway
Construction Market are issued by the Chinese
government. The implementation of these laws and
regulations has created significant effects on
protecting property right of the roads, ensuring
smooth operation of the roads, strengthen
administration on highway construction and
promoted the development of rural highways.
14

• External Catalysts

The Chinese government has been actively
working with international organizations in
development-oriented poverty reduction and
transportation infrastructure construction.
In rural transportation construction, the
international organizations play a special role
both in supplying funds and in management.
15
3. Case Study Impact of Transportation
Infrastructure on Regional Economy and
Poverty Reduction
16

• General introduction of RIPA?

• The Poverty-alleviation Road
  Improvement Component of the Third Henan
  Provincial Highway Project Loaned by World Bank
  (RIPA?), started in May 2001 and ended in Dec
  2002, is a subsidiary of Zhumadian-Xinyang
  Expressway. It consists of 10 road sections,
  372KM. Total expenses were RMB 333.82 million
  yuan, in it WB loan RMB 106.19 million yuan.

17

• Methodology

Chose 6 townships as Control Zone
Collect socio-economic statistics
Structured interview
Rural household survey
Comparison analysis of Impact Zone and Control
Zone
18

• Socio-economic background of Impact Zone (IZ)
  and Control Zone (CZ)

The Impact Zone of RIPA? includes 8
counties, 40 townships and 546 villages in
Zhumadian City and Xinyang City, impoverished
areas in Henan province, total population 1.809
million, total area 3508 km2. Control Zone
consists of 6 townships, 2 of them in Zhumadian
City and 4 in Xinyang City, total population
0.224 million , total area 561 km2. Before
the implementation of RIPA? , IZ and CZ are
similar in economic development level, culture,
natural and geographic situations and
transportation conditions. Both areas are
impoverished areas with a large poor population
and poor transportation conditions . After
the implementation of RIPA?, the road networks of
IZ are upgraded and better structured, promoting
economic development of local areas.
19

• Socio-economic impact of RIPA?

• The development of economy

Table 2 Comparison of GDP per capita between
IZ and CZ Unit RMB yuan
20

• The farmers income and poverty reduction

Unit RMB yuan
Figure 1 Comparison of income per capita
between IZ and CZ
21
Table 3 Comparison of poor population between
IZ and CZ
22

• Market construction and urbanization

Table 4 Comparison of rural markets and
urbanization between IZ and CZ
23

• Rural industrialization

Table 5 Comparison of rural industry between
IZ and CZ
24

• Transportation industry

Table 6 Comparison of transportation industry
between IZ and CZ
25

• Tourism

There are abundant tourism resources in the
IZ, but the poor transportation restricted the
exploitation of tourism resources in the past.
After the implementation of RIPA?, the
improvement of transportation greatly promoted
the development of tourism, creating favorable
conditions for the growth of the farmers
income. Last year RIPA? reached my village.
Many tourists come to visit General Xu Shiyous
museum and tomb daily. We can sell souvenirs and
food to them. The villagers become rich. We built
new house outside the museum. A remote mountain
village became a nice sightseeing.
Xu Yimin, a relative of
General Xu Shiyou
26

• Agriculture

The improvement of transportation promoted
the adjustment of agricultural structure.
Agricultural products planted by farmers in
mountain villages can be transported to cities
easily and fast. The farmers income increased
fast by planting profitable products. In IZ
we planted wheat and rice in the past. The
farmers were poor. RIPA? improved the rural
roads. Farmers built greenhouses and plastic
sheds along both sides of roads. They planted
vegetables and fruits in off-seasons. They
planted flowers and precious plants to sell in
the cities. They planted medical herbs to sell to
the pharmacy factories. The trucks can drive into
their gardens to carry the loading. The income
from one mu is equal to that of 10 mu grain.
Sun Xiaofeng, technician of Zhumadian
Agriculture Bureau
27

• Changes in the farmers ideology

The improvement of transportation facilitated
the travel for poor populations and their
connections with outer world, therefore brought
great changes in the living styles and ideology
of the farmers. Now the roads are better,
more people went to work in cities. They saw the
citizens living style. Now in modern city, woman
is equal to man. In the city people like girls
more because girls are dearer to their parents.
Going out to work in cities, girls have more
chances than boys. After young people returned
home village, they prefer less children and
regard baby girls as good as baby boys. Now one
family has at most two babies. While in the past,
people born child one by one until they born a
baby boy Zhang
Hua, Cadre in Xinyangs Women Federation
28

• Better access to healthcare facilities

The improvement of transportation has raised
the accessibility of healthcare service and
increased utilization of healthcare service of
rural populations. When natural disaster happens,
good transportation supplies a fast thoroughfare
for the relief work, decreasing the loss to the
largest extent and keeping the stability of the
society. I opened a clinic at the roadside.
RIPA? improved the transportation conditions,
more people can come to my clinic. If the patient
is serious, I can give him first aid treatment
and sent him to the better hospital. Now it takes
only 20 minutes for us to go reach the county
seatIn 2003, there was a big flood in Shangcai.
The RIPA? displays its power, the medical teams
and medical vehicles from the province came at
once. They disinfected the disaster areas and
cured the patients. So no one died of epidemic
diseases that year. Liu Zhentang, a private
rural doctor in Taqiao township, Shangcai county
29

• Conclusions

After the implementation of RIPA? the
general economy, the farmers income, rural
markets and small town construction, rural
industrialization, transportation industry in
Impact Zone developed or increased faster than
Control Zone. The implementation of RIPA? also
boosted the development of tourism and
agriculture, raised accessibility of healthcare
service and brought changes in the farmers
ideology in IZ. The implementation of RIPA? has
created positive impacts both on economic growth
and social progress, done benefit directly to the
poor population and accelerated the pace of
poverty reduction in IZ.
30
4. Lessons Learned
31

• The governments role is central in
  Poverty-Targeted Interventions (PTI)

Investment of the governments of all levels is
the most important fund source of RIPA The
local governments formulate preferential policies
and create favorable conditions for RIPA The
local governments pay attentions to, support and
effectively organize the projects
32

• Professional management guarantees successful
  implementation and sustainability of PTI

Vigorous management according to related
regulations and international principles is one
of key reasons for the successful implementation
and of RIPA. Although the investment
scale of every RIPA? project is small and the
construction period is short, every project, from
application to completion, was implemented
according to the requirement of projects loaned
by the World Bank. That increased the investment
benefit and ensured the sustainability of RIPA.
33

• Funds from diversified sources ensured
  successful implementation of PTI

The government, though the most important
source of funds, is not able to afford the total
investment of rural highways alone. Collecting
funds from diversified sources such as loans from
international financial organizations and
voluntary works of the farmers is a good
solution.
34
5. Problems and Prospects
35

• Remaining problems

Main problem is how to establish a
sustainable mechanism to collect funds for the
construction and maintenance of rural highways.
Limited support from the central and
provincial governments
Most local governments have not enough
financial resources to develop
rural highways In the recent rural fees
and taxes reform the farmers
voluntary works are prohibited to be used at
large scale
36

• Prospects

China still has a long way to go to reduce
poverty. It has been fully proved that
transportation infrastructure, especially highway
infrastructure, is a fundamental factor affecting
the socio-economic development of poor areas. The
Chinese government is taking active steps to
accelerate the construction of rural
transportation infrastructure. Transportation
infrastructure will continue to play an important
role in economic development and poverty
reduction in the future.
37
The end, Thanks!