Document of The WorldBank FOR OFFICIAL USE ONLY CiI) -ZZE / O - C Report No. P-5192-CHA MEMORANDUM ANDRECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENTASSOCIATION TO THE EXECUTIVEDIRECTORS ON A PROPOSED CREDIT OF SDR 92.9 MILLION (US$131.2MILLION EQUIVALENT) TO THE PEOPLE'S REPUBLIC OF CHINA FOR A KEY STUDIES DEVELOPMENTPROJECT JANUARY 29, 1991 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 authorization. Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
Transcript
Document of
The World Bank
FOR OFFICIAL USE ONLY
CiI) -ZZE / O - CReport No. P-5192-CHA
MEMORANDUM AND RECOMMENDATION
OF THE
PRESIDENT OF THE
INTERNATIONAL DEVELOPMENT ASSOCIATION
TO THE
EXECUTIVE DIRECTORS
ON A
PROPOSED CREDIT
OF SDR 92.9 MILLION
(US$131.2 MILLION EQUIVALENT)
TO THE
PEOPLE'S REPUBLIC OF CHINA
FOR A
KEY STUDIES DEVELOPMENT PROJECT
JANUARY 29, 1991
This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.
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CURRENCY EQUIVALENTS
(as of November 1990)
Currency name - Renminbi (RMB)Currency unit Yuan (Y) 100 Fen
Y1.00 US$0.19US$1.00 Y5.22
ABBREVIATIONS
CAS - Chinese Academy of SciencesNCFC - National Computer and Network FacilityNSFC - National Natural Science Foundation of ChinaPAG - Program Advisory GroupPhD - Doctor of PhilosophyPLMP - Pilot Laboratory Management ProgramR&D - Research and DevelopmentSEdC - State Education CommissionSKL - State Key LaboratorySL - Special LaboratorySOE - Statement of ExpensesSPC - State Planning CommissionS&T - Science and TechnologyUNDP - United Nations Development Programme
FISCAL YEAR
January 1 - December 31
ACADEMIC YEAR
September 1 - August 31
FOR OFFICIAL USE ONLY
CHINA
KEY STUDIES DEVELOPMENT PROJECT
Credit and Project Summary
Borrower: People's Republic of China
Beneficiaries: Universities, Chinese Academy of Sciences
Credit Amount: SDR 92.9 million (US$131.2 million equivalent)
Terms: Standard, with 35 years maturity
Onlending Terms: Credit proceeds will be onlent to universitiesand research institutes at an annual interestrate of 1.5%, repayable over a period of 15years, including 5 years of grace. The foreignexchange risk would be borne by the repayinginstitutions.
Financing Plan: Government US$105.8 millionIDA US$131.2 millionUNDP US$ 1.6 million
Total USS238.6 million
Economic Rate of Return: Not applicable
Staff Appraisal Report: Report No. 8206-CHA
IBRD No. 21935
This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
MEMORANDUM AND RECOMMENDATION OF THE PRESIDENTOF THE INTERNATIONAL DEVELOPMENT ASSOCIATION
TO THE EXECUTIVE DIRECTORSON A PROPOSED CREDIT OF SDR 92.9 MILLION
TO THE PEOPLE'S REPUBLIC OF CHINAFOR A KEY STUDIES DEVELOPMENT PROJECT
1. The fo?lowing memorandum and recommendation on a proposeddevelopment credit to the People's Republic of China for SDR 92.9 million(US$131.2 million equivalent) is submitted for approval. The proposedproject would be on standard IDA terms with 35 years maturity and wouldhelp finance a key studies development project. The project is expected tobe cofinanced by the United Nations Development Programme (UNDP) with agrant of US$1.6 million.
2. Background. Racognizing the importance of science andtechnology (S&T) to economic development, and the concomitant requirementto strengthen the pool of skilled S&T personnel, China in ;985 issued adecision on Reform of the Science and Technology Management System, whichcalls for vigorously promoting technology development; redoubling effortsin applied research; ensuring steady, continuous progress in basicresearch; strengthening programs to train scientific researchers; andreforming S&T personnel administration. The decision grants increaseddecision-making power and financial responsibility to research units andtheir directors; announces the formation of Science Foundations to supportbasic and some applied research and the awarding of research, grants throughpeer review; advocates promoting S&T personnel on the basis of performance;encourages labor mobility of scientists and engineers; and strengthenslinks between researchers and production units. In short, the decisionlays the groundwork for a reformed and revitalized S&T sector in China,thus providing a strong base for the research-to-technology-to-productioncontinuum necessary for accelerated economic growth.
3. In the early 1980s the State Planning Commission initiated theState Key Laboratories (SKL) program, which concentrates scarce resourceson existing laboratories affiliated with universities and institutes of theChinese Academy of Sciences (CAS) that: (a) work on priority specialties ofeconomic and social relevance; (b) excel in research output, staff andfacilities; (c) demonstrate links with industry; (d) play a significantrole in educating graduate students; and (e) as open laboratories, provideopportunities for Chinese researchers from other labs as well as foreignresearchers to work collaboratively on projects of national andinternational importance. China has now begun to bring to bear on SKLs thedirectives announced in the 1985 decision, a process which is the centralfocus of the proposed project.
4. Rationale for IBRD/IDA Involvement. The changing economy ofChina requires a corresponding strengthening in the country's science andtechnology capacity. The proposed project contributes towards thispurpose. A key to this effort is strengthening the institutionalmechanisms through which scientific research and training of futurescientists are conducted. The Bank has been involved in projects in suchcountries as China, Brazil and Korea, assisting governments in improving
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their higher education subsectors, :n particular the science andengineering disciplines. This is particularly the case in China where theproposed project would continue the support for development in scienceeducation begun under several previous projects. More than half of thelaboratories to be strengthened by the present project are in universitiesthat were earlier recipients of support through two Bank/IDA-financedhigher education projects. There are now large ntumbers of Chinese scienceand engineering graduates who are well qualified to undertake postgraduateeducation, and significant numbers of young PhDs trained overseas, ready topropel scientific R&D in China to a worldwide level.
5. Project Objectives: The objectives of the project are: (i) toimprove the output of scientific researchers trained to internationalstandards through master, doctoral and post-doctoral programs; (ii) toenhance the quality and productivity of research in selected areas relevantto long-term economic and social development; (iii) to strengthen themanagement of scientific research at both the national and laboratorylevel; (iv) to provide a modern scientific infrastructure for scientiststrained at home and abroad; and (v) to encourage scientific cooperationacross institutional and national boundaries.
6. Project Description: To achieve its objectives, the projectwould support the following components:
(a) Research and Training in State Key Laboratories (,KL) andSpecial Laboratories (SL).
(i) Establishment or expansion of about 133 SKLs and SLs, allwith appropriate management structures and equipment.
(ii) Provision of facilities, equipment, books and educationalmaterials, training and specialist services and funding forother direct costs of research and graduate education toSKLs and SLs.
(b) Pilot Laboratory Management Program.
(i) Provision of support to seven SKLs and SLs in undertakingexperimental initiatives in the management andadministration of scientific research and graduateeducation, including technology transfer, internal andexternal communications, personnel management as well asfinancial and laboratory safety management.
(ii) Provision of technical assistance and training by means ofworkshops, study tours, specialist services and equipmentfor laboratory management.
(c) National Scientific Computer and Network Facility NCFC).Establishment of a national educational and scientific computercenter located at Zhongguancun, Beijing, and a network facility
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equipped with a communications system linking said center to CASinstitutes, Qinghua and Beijing Universities.
(d) rrogram Advisory Mechanism. Provision of assistance in Projectadvisory activities through support to a Project Advisory Groupand other technical assistance.
7. The proposed project would be carried out over five years. Thetotal project cost is estimated at US$238.5 million equivalent, with aforeign exchan:ge cumponent of US$132.8 million (56%). A breakdown of costsand financing plan are shown in Schedule A. There is a provision forretroaccive financing. Amounts and methods of procurement and adisbursement schedule are shown in Schedule B. A timetable of key projectprocessing events and the status of Bank Group operations in China aregiven in Schedules C and D, respectively. A map (IBRD No. 21935) showingthe location of project laboratories is attached. The Staff AppraisalReport, dated January 29, 1991, is being distributed separately.
8. Agreed Actions. The Government has agreed on the following:(a) proceeds of the credit would be made available to project laboratoriesthrough the State Education Commission (SEdC) or CAS on terms andconditions satisfactory to the Association; (b) the availability ofresearch funds would be monitored throughout the life of the project and,in the case of shortfalls, the causes would be identified and remedied bythe implementing agencies; (c) the Foreign Investment Loan Office of SEdCand the External Financing Office of CAS will be designated and maintainedas the project implementation units throughout project implementation;(d) the PAG will be established and ma:ntained throughout projectimplementation according to selection procedures and terms of referenceagreed with the Association; (e) a mid-term review of implementationprogress will be conducted in mid-1993 with representatives of theAssociation, UNDP, SPC, SEdC, CAS, NSFC, PAG and NCFC; and (f) an annualaudit report, including separate opinions on the SOEs, will be furnished tothe Association within eight months of the end of each fiscal year.
9. Benefits. By the end of the project completion in 1995, it isexpected that: (a) the physical infrastructure of 133 major scientificlaboratories around China will have been significantly upgraded through thpacquisition of state-of-the-art scientific equipment, updated lib,aries andother infrastructure improvements; (b) practical low-cost approaches to theimprovement of research management and laboratory administrition will havebeen developed and tested in seven key laboratories and a significant startmade in introducing similar measures in other SKL and SI laboratories;(c) an advanced scientific computing facility will be functioning and aprototype computer network will connect leading scientific research centersin Beijing, providing greatly enhanced computational capacity and expandedopportunities for cooperative research and exchange of data among the threeinstitutions; and (d) a large number of Chinese scientists will have beenprovided with additional education and research experience in China andabroad, and international contacts will have expanded through study toursand international exchange programs. The beneficiaries of the project will
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be Chinese science students and researchers at the masters, doctoral andpost-doctoral levels, who will be provided with the necessary inputs toutilize their talents fully and upgrade the quality of their research. Theresearch laboratories included in the project will benefit through betterequipment and better managed research programs.
10. Risks. The project faces two risks. First, difficulties ir.managing the project may arise, given its complexity. The project includesa large number of laboratories which conduct research in many diversefields, and several different implementing agencies. However, this riskcan be mitigated by means of strong leadership and coordination, which theGovernment recognizes and has agreed to furnish. Staffing and structure ofthe major implementing agencies have been greed and a project steeringco;nmittee has been appointed to provide oversight. The second risk arisesbecause the competitive mechanisms that will be used to allocate researchfunds to individu-Al laboratories is newly established, and may not functionas expected to provide sufficient research funds to project laboratories.This risk would be mitigated by the project's proposed improvement of themechanism for monitoring the availability of research funds, and by theagreement of the Government to take appropriate action when necessary.
11. Recommendation. I am satisfied that the proposed credit wouldcomply with the Articles of Agreement of the Asscciation and recommend thatthe Executive Directors approve the proposed ced&.t.
Barber B. ConablePresident
Attachments
Washington, D.C.January 29, 1991
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Schedule A
CHINA
KEY STUDIES DEVELOPMENT PROJECT
Estimated Costs and Financing Plan
Estimated Cost:'1 Local Foreign Total------ (US$ million) ------
Research and Training in SKLs and SLs 81.8 106.4 188.2Pilot Laboratory Management Program 0.1 0.8 0.9National Computer and Network 1.0 4.3 5.3
b/ Other includeF direct purchase for proprietary items, or wherejustified by need of standardization, and international and localshopping for goods and services.
C/ Totals represent total estimated costs per category including priceand physical contingencies.
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Schedule BPage 2 of 2
Disbursements
Amount % of ExpendituresCategory (US$ million) to be financed
SEdCGoods 83.5 100% of foreign expenditures
and 100% of local expenditures(ex-factory) and 75% of localexpenditures for other itemsprocured locally
Training, consultants'services and fellowships 7.8 100% of total expenditures
Goods 19.9 100% of foreig,: exp%rd taresand 100% of local expenditures(ex-factory) and 75% of localexpenditures for other itemsprocured locally
Training, consultants'services and fellowships 2.4 100% of total expenditures
Unallocated 17.6
Total 131.2
Estimated IDA Disbursements
IDA FY 1991 1992 1993 1994 1995----------- (US$ million) ---------
2252 83 PRC Petroleum ItZhongyuan-Wenliu) 100.8 - 5.5M IjW Un ivrsity 85.0 17.81411 84 PRC Pol technic/TV University - 10.0 0.8
1417 84 PRC RuEber Deve opment - 100.0 0.82382 84 PRC Lubuge Hydroelectric 145.4 - 24.32394 84 PRC Railway 220.0 - 1.01472 84 PRC Rural Health & Medical Educ. - 85.0 11.12426 84 PRC Petroleum iII (Karamay) 92.5 5.6
244411500 84 PRC Agricultural Education II 45.3 (23.5)(b) 6.11516 85 PRC Agricultural Research II - 5 5.11551 85 PRC University Development II - 145.0 19.12493 85 PRC Power II 117.0 - 15.92501 85 PRC Chan cun (Luan) Coal Mining 79.5 - 51.21578 85 PRC Rural Water Supply - 80.0 2.8
Amount sold: Of which repaid - - -Total Undisbursed 2451.3 1954.2 4405.5
(al As credits are denominaled in SDRs (since IDA Replenishment VI), undisbursed SDR creditbalances are converted to dollars at the current exchan e rate between the dollar and the SDR.In some cases, therefore, the undisbursed balance indicates a dollar amount greater than theoriginal principal credit amount expressed in dollars.
(b) Credit fully disbursed.
(c) Not yet effective.
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Page 3 of
B. STATEMENT OF IFC INVESTMENTS(As of December 31, 1990)
Invest- Typeof Loan E ultx Totalment No. FY Obligor Business ------ (US$ Mil Uo.) -------
813 85 Guangzhou and Peugeot Automobile 15.0 3.2 1862
974 87 China Investment Co. Investment 3 .0 0.0 3.G
