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ADB Supports Western Development Drive, But Not in Tibet

[WTN-L World Tibet Network News. Published by The Canada Tibet Committee. Issue ID: 05/03/30; March 30, 2005.]

TIN News Update
30 March 2005

During 2005-2007, China's Western Development Drive policy (Chin: Xibu Dakaifa) will receive substantial financial support from the Asian Development Bank (ADB), with the bank allocating 80% of their Chinese loan resources to the central and western regions of the People's Republic of China (PRC). Although the bank identifies ethnic minorities as prime recipients of the aid provided, with a few possible exceptions, ADB loans will not reach Tibetan areas. Moreover, while the bank prioritises a range of social developments, of a total of $4.73 billion allocated to the PRC, $2.6 billion will be channelled into road and railway construction in central and western China, providing substantial support to Beijing's infrastructure construction schemes in the western regions. Financial inputs by foreign agencies, including ADB, the Japanese Bank for International Cooperation (JBIC) and the World Bank (WB), will facilitate the infrastructure scheme which links lowland China and the west, including Tibetan areas. Funding projects in uncontroversial areas peripheral to, rather than within, the politically sensitive Tibetan areas themselves, limits the banks' exposure to international criticism. However, a pattern is emerging where Chinese loans pay for road construction projects in Tibetan areas, while foreign development banks help fund connecting road construction in adjacent areas.

ADB Priorities and PRC Policies

In the PRC's western minority areas, including Tibet, there is a marked disparity between ADB's wider policies and their current projects, which effectively support Beijing's policy of rapid infrastructure construction. As a matter of principle, ADB prioritises investment in China's Millennium Development Goals (MDGs), but foreign loans for environmental, health and educational projects have been vetoed by the Chinese government due to current policies that in general do not encourage foreign loans for social development projects, and what are seen as low profit projects, such as poverty-reduction schemes, health and education programmes and effectively bar them from minority areas. However, the Chinese government continues to accept technical assistance grants from ADB in these low profit poverty-reduction projects. Typically, technical assistance projects are used to assess loan priority areas, providing the framework for loan strategies, including policy recommendations. By accepting technical assistance grants in social development areas, despite the restrictions on foreign loans, the Chinese government receives expert international guidance, without having to respond to project recommendations.

ADB's latest Country Strategic Programme outlines complex criteria that loan projects should fulfil; yet it also demonstrates the type of limitations that ADB will face in fulfilling their development agenda in the western region, particularly in ethnic minority areas. The bank's basic development rhetoric is dominated by "the four pillars of operation" which aim to "promote equitable and inclusive growth; make the markets work better; improve the environment and promote regional co-operation". The "four pillars" are expected to provide guidance for the banks' strategic objectives and priority areas within their Chinese programme. ADB prioritises loan investments that target combating urban and rural inequality, the social dimensions of poverty and integrated environmental management as loan targets, alongside supporting the more visible accelerated infrastructural development of the western region. From the principle of the four pillars, the bank declared that they will provide either loans or technical assistance grants in 12 sectors during 2005-07: road; rail; energy; water supply & waste management; agriculture & natural resources; education; health & social protection; environmental sustainability; finance; governance; private sector development and sustainable economic growth. Despite the breadth of this approach, ADB's immediate preference remains large-scale transport development in the central and western regions that will receive or $2.6 billion, or 54% of the total Chinese lending programme during 2005-2007, with a further $1.23 billion, or 26% of the total, designated for other development programmes in these under-developed regions.

Without justifying the exclusion of Tibetan areas from ADB's loan strategy, their analyses of economic growth do recognise the necessity of health and education aid in the region. However, the Chinese authorities do not acknowledge the urgency for foreign assistance and investment in these sectors. Funds for such projects tend to leak on the way down to local governments which might explain the authorities' reluctance to accept foreign loans in these sectors. In contrast, funds for infrastructure projects deliver fixed assets and achieve tangible development goals which both satisfy provincial and local governments (thus strengthening allegiance to the centre) and remain comparatively easy to control financially. However, it could just as well reflect the government's desire to attract international investment to, and thus indirect endorsement of, the controversial Western Development Drive.

The bank's recent criticisms over the ability of local governments to communicate with stakeholders and the public during preparatory project consultations and a need for "greater attention and strong commitment of the government and executing agencies" during the loan period is of particular significance to future ADB projects within ethnic minority areas. Although ADB has increased their access to relevant NGOs in efforts to improve transparency and accountability, their ability to hold uncensored and unmonitored public discussions in proposed project areas continues to be problematic, even more so in ethnic areas, already challenged by tight government security and surveillance. Apart from environmental impact assessments, which are made available in the public domain, social impact assessments, where public consultations do actually take place, circulate only between donors and the government.

As foreign loans concentrate on the rapid construction of a Chinese rail and road network, responsibility for health, education and environmental developments and investment in Tibetan areas rest in the hands of the Chinese authorities. This has raised concerns among aid workers and development practitioners with experience of the region. ADB has also identified the limited financial and management skills of local government across the PRC, noting "many local governments do not have the capacity to manage responsibilities delegated to them by the central government". This is compounded in minority areas, with further ADB criticism that "policies, institutions and human resources are weaker in the interior than along the coast". While this institutional weakness in the western areas has caused the shift in ADB policy, the actual structure of the loans for 2005-2007 does not appear to substantially target the weaknesses cited by the report. Having identified local government and institutional weakness in the interior areas, ADB continues to provide small technical assistance projects for regional officials. As part of the bank's policy-related investment, they have recommended that the PRC government establish a minimum standard protection system for the rural poor. It is yet to receive a response from the Chinese government despite the existence of an urban counterpart and the proposed protection system's congruity to the Chinese MDGs. Clearly, ADB's influence upon government policy in areas of social development has been very limited.

In the past, ADB has invested heavily in environmental and sanitation projects in eastern China, but their ability to transfer this investment strategy into the minority-populated areas in the west will be restricted to technical assistance projects, which either conduct viability assessments, or provide knowledge based assistance to local, provincial and national government officials. An 'Environmental Management Project' in the western region will run throughout 2005, directing high-level government officials on the relationship between environmental management and development. This does not include a specific ethnic strategy but it extends a previous environmental development assistance project in the western region begun in 2002, which according to Bill Murray, then Country Director to ADB, included a case study on ecological management at the headwater of the Yellow River (Tib: Machu, Chin: Huanghe) in Qinghai, the region known to Tibetans as Amdo. A further dryland farming assistance project has excluded Qinghai from its project remit, without citing any explanation, despite the benefits that could be gained from government and farming communities in the province. A separate assistance project will report on human development provided to the most disadvantaged people in China, with special emphasis upon women and ethnic minorities in the rural west. It aims at advising the Ministry of Education on improving basic education policy for disadvantaged groups. Government officials from the Tibet Autonomous Region (TAR) and other Tibetan prefectures and counties may be able to participate in two technical assistance projects aimed at advancing policy in basic education and environmental management.

Direct Contributions to the Western Development Drive

Although Tibet occupies a substantial area of the PRC's western territory, foreign investment does not appear to reach infrastructure projects there. Indeed, circles familiar with ADB mention that the bank, as well as other donors, are keen to avoid controversies and hence are unwilling to fund major projects in Tibetan regions, particularly in the Tibet Autonomous Region (TAR). However, ADB will lend US$2.6 billion to help construct 500 km of roads and 2,556 km of railways in the central and western regions of the PRC adjacent to Tibetan areas. The Japanese Bank for International Cooperation (JBIC) and the World Bank (WB) have also redirected their road construction loans to the same regions, resulting in a massive increase in foreign lending support for the Western Development Drive. The increase of foreign loans for intensive infrastructural developments in areas adjacent to Tibetan areas will complement Chinese-funded developments within the areas themselves, thus facilitating rapid construction of several express and highways linking Tibet to mainland China. Collectively, the three development banks will provide loans to fund at least 60% of land-based transport development and research for the Western Development Drive.

The pattern created by the ADB-financed roads is a detailed national network skirting some Tibetan areas, but not penetrating them. Chinese road construction in eastern Tibet appears to extend these networks into Tibetan areas, but with little inter-Tibetan construction connecting smaller towns together and to the larger cities. In December 2003, Chinese media reported the completion of over 4000km of state-funded roads, connecting Karze (Chin: Ganzi), Aba Tibetan Autonomous Prefectures and Liangshan Yi Autonomous Prefecture in Sichuan Province to national highways now being constructed in the east and south by the foreign development banks. ADB recently approved loans in excess of US$2.3 billion to fund more than 650km of highway and expressway along Highway 108 in Sichuan and Highway 109 in Gansu Province, with construction set to begin in 2005. These roads will provide a connection between the main Chinese transport systems in the east and road originating in areas of rich natural resources such as the Tsaidam Basin (Chin. Qaidam), in Qinghai, and the Yulong Copper Belt (in eastern TAR/Sichuan).

ADB will also finance the construction of 452 km of Highway 109, connecting Luohandong in Gansu, to Dingxi, further east. It will enable increasing eastern access to the Chinese constructed roads in the Kardze (Chin: Ganzi) and Aba Tibetan Autonomous Areas. Highway 109 is currently the only major road portal to the Tibetan and Uyghur autonomous regions and connects Beijing to Lhasa via Xining and Golmud. The second ADB-sponsored road construction project is in Sichuan along Highway 108, running approximately 50km parallel to the border of the Kardze (Chin: Ganzi) Tibetan Autonomous Prefecture; a 244km trunk road will be built, joining Ya'an, a Chinese-populated city, to Lugu in the Liangshian Yi Autonomous Prefecture via Shimian.

Since 2001, ADB have financed significant proportions of Sichuan's highways and expressways, connecting Chengdu to Lanzhou, Chonquing, Nangchong and Kumning. Their investments in Highway 108, which runs north to south, parallel to borders of Tibetan areas, will connect Lanzhou, the capital of Gansu Province, to Chengdu, in Sichuan Province and then to Kunming, the capital of Yunnan Province, in the south, thus increasing inter-provincial transport infrastructures. The highway is a crucial component of the Western Development Drive, providing the spine for many radial roads into Tibetan areas currently being constructed by Chinese loans, and also providing access to regional transport networks into Burma, also funded by ADB. In December 2004, ADB announced the completion of 240 km of the Chengdu-Shanghai Expressway, connecting Chengdu to Nanchong in eastern Sichuan Province. This increases access to Highway 214, which currently connects Chengdu to the Tibetan towns of Chamdo, passing through Dawu, Garze and Dege, and onto Highway 318, connecting Chamdo to Lhasa, via Bangda and Nyingtri [Chin: Lingzhi].

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