Completion Report

Project Number: 48012-001 Technical Assistance Number: 9036 June 2020

People’s Republic of : Strategy for North Regional Cooperation and Development

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TECHNICAL ASSISTANCE COMPLETION REPORT

TA Number, Country, and Name: Amount Approved: $400,000.00 TA 9036-PRC: Strategy for Liaoning North Yellow Sea Regional Revised Amount: Not applicable Cooperation and Development Executing Agency: Source of Funding: Amount Undisbursed: Amount Used: Liaoning Provincial Department of TASF-other sources $3,862.88 $396,137.12 Finance TA Approval Date: TA Signing Date: TA Completion Date 14 December 2015 5 January 2016 Original Date: Latest Revised Date: 30 July 2017 28 February 2018

Financial Closing Number of Date: 21 May 2018 Extensions: 1 TA Type: Policy and advisory

Description The Government of the People’s Republic of China (PRC) requested the Asian Development Bank (ADB) to provide a policy and advisory technical assistance (TA) to support its regional cooperation and integration (RCI) efforts and overall globalization strategy in the Northeast, PRC which was also a focus of central government revitalization measures.a,b RCI between provinces in the Northeast and neighboring regions of the Republic of Korea, Mongolia, and the Russian Federation on common development issues and policy coordination was also being facilitated by the Greater Tumen Initiative’s Northeast Asia Local Cooperation Committee.c Liaoning was one of three northeastern PRC provinces participating in the initiative and particularly well-placed to take part in and benefit from RCI and globalization. As the region’s only coastal province, it served as both an internal transport hub between the northeastern and central regions and a key portal of the Eurasian Continental Bridge moving freight and passengers by rail between seaports on the Pacific and in Europe. Its overland connection with Europe had recently been strengthened by the opening of a new rail link between its major North Yellow Sea of and the Russian Federation’s railway system. The newly established Dalian Jinpu New Zone along the same coast was intended to be a focus of foreign investment, two- way international trade, and RCI in Northeast Asia. Overall, the TA project aimed to provide a road map for the province to maximize RCI benefits as it implemented its obligations under the PRC’s globalization strategy and help highlight measures the Liaoning Provincial Department of Finance could take to reduce barriers to interprovincial trade and commerce within the PRC and to trade and commerce within Northeast Asia. Research was to be undertaken on the key obstacles to deeper RCI, and domestic and international experience in designing and implementing regional cooperation programs was to be studied. The TA was also intended to help Liaoning better position itself to benefit from a recently concluded economic partnership agreement between Mongolia and Japan by exploring ways to make the province a more attractive transit corridor for the growth in Japan–Mongolia trade expected to follow.

Expected Impact, Outcome, and Outputs The expected impacts were augmenting the cooperation of internal subregions of the Northeast and promoting regional cooperation in Northeast Asia. The expected outcome was for Liaoning Province to adopt an RCI development strategy and implementation action plan. The outcome was to be achieved through delivery of three outputs: Output 1: Status report and impact assessment produced on implementation of earlier regional development programs produced. The TA was to support analysis of the extent to which previous initiatives had made Liaoning’s economy more competitive, expanded trade (including transit traffic), and attracted investment. Output 2: Regional cooperation and integration priorities and models for Liaoning Province developed. Five technical studies were to be undertaken with the results published as knowledge projects targeting such key stakeholders as potential investors, trading partners, and infrastructure development managers. The studies would cover Liaoning’s infrastructure, industrial structure and capacity, financial resource requirements, likely sources of investment capital, and domestic and international experience designing and implementing regional cooperation programs. Output 3: Regional cooperation and integration needs assessment, development strategy, and implementation action plan prepared. The basis and status of Liaoning’s participation in the PRC’s globalization strategy was to be analyzed, linking it to efforts to revitalize the northeastern PRC. The resulting report was to present the framework, pathways, and policy system needed to guide the province’s implementation of the PRC’s globalization strategy, and to identify ways ADB could support this effort in line with the four pillars of ADB’s own RCI strategy.

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Implementation Arrangements Liaoning Province Department of Finance served as the executing and implementing agency. The Provincial Financial Research Institute in Liaoning supported TA implementation and supervised the day-to-day work of the consultants, workshops, and other stakeholder consultations. The Public Management, Financial Sector, and Regional Cooperation Division of ADB’s East Asia Department administered and supervised TA implementation and to engage actively in sharing knowledge and good practices in the region. All the expected project outputs were delivered while all but two of the planned activities were completed later than planned. A consulting firm was recruited to provide a team of international and national experts to carry out the technical studies. Three international consultants were to be engaged for a total of 10 person-months: a team leader (and trade and development specialist), an economic policy analyst, and an infrastructure finance specialist. The three national consultants were engaged for a total of 24 person-months, including a legal and regulatory expert, an institutional development specialist with expertise on regional cooperation initiatives in which the PRC was participating, and an expert in monitoring and evaluation of policy implementation. The consultants were mobilized on 23 September 2016. The consultancy services were full lump-sum contracts, and remuneration was paid based on progress on milestones. All deliverables were received, no variations were required to the consultants' contracted inputs, and the originally planned input days were fully used. The recruitment process for the consulting firm (from advertisement through selection to contract signing) took 8 months instead of the originally planned 3 months due to the need to accommodate extra requirements by the executing agency. Additional time was needed afterward for the contracted consulting firm to provide acceptable replacements for national consultant positions. As a result, the TA was extended by 8 months from the original completion date of 30 June 2017 to 28 February 2018. The project closed on 28 February 2018. Disbursements were at 99.03% of the planned budget and were used mainly for consultancy, knowledge sharing, and workshop expenditures.

Conduct of Activities The TA consultants presented the outline of the five proposed technical reports to the executing and implementing agencies at an inception workshop in Shenyang, Liaoning Province in May 2017 to determine the relevant issues and knowledge gaps. The TA’s knowledge solutions have largely contributed to Liaoning’s better positioning as anchor of RCI with Korea, Mongolia and Russia through: conducting the RCI needs assessment; developing RCI priorities and models for Liaoning Province; and preparing its development strategy and implementation action plan. Firm implementation and communication strategies were established. Based on reviews of evidence, local and regional economic and policy assessments, and strategic analysis, five technical studies and one overall assessment were produced. TA research and stakeholders’ consultations were summarized in the TA concept note and inception and final reports, which included an overview of project activities, recommendations, achievements, and lessons learned. These were shared with the government and key stakeholders. A dissemination workshop in Shenyang conveyed the policy research findings and recommendations in five technical reports and the RCI development strategy synthesis to representatives of the executing and implementing agencies. TA consultants received valuable feedback on local perspectives and priorities. Technical study 1. One report identified infrastructure investment problems in Liaoning and recommended alternative ways of managing and financing infrastructure investments in the province. This included a detailed guideline of steps and measures to follow in developing successful public-private partnership projects. Technical study 2. A second report identified policy opportunities for supporting the international expansion of Liaoning’s equipment manufacturing industry. This study focused on the establishment of the Liaoning provincial free trade experimental zone to accelerate expansion and undertook a comprehensive analysis of the status of current development and the related problems, obstacles, and favorable opportunities. The report recommended steps and policies to move forward on this objective. Technical study 3. The future potential, benefits, and fiscal implications of Liaoning’s further development as a sea–rail multimodal transportation province were the focus of the third study and technical report. This included an overview of the Northeast’s economy and its root issues and challenges. The study also looked at the potential influence on the province of sea–rail model development, given the wide policy support at national and local levels, as well as at comparative studies on operation models and the active role that Liaoning is playing in promoting RCI in Northeast Asia. Technical study 4. The fourth study came up with a series of proposals for managing Liaoning’s port resources. The report provided recommendations on integrating RCI into the PRC’s strategic policies, the development of innovative mechanisms, enhancing operational and service efficiency (including scaled operation and technological efficiency), learning from advanced international experience, and speeding up industrial transformation and enhancing informatization. Technical study 5. The fifth report summarized the findings of a study of domestic and international experience in designing and implementing regional cooperation programs that could potentially benefit Liaoning. The report’s recommendations included fully leveraging RCI for the province’s economic revitalization at all levels through restructuring, diversification, and commitments to higher productivity and human capital development. The findings of the technical studies were presented at a dissemination workshop in February 2018 in Beijing, along with the RCI needs assessment, development strategy, and implementation action plan for Liaoning Province. Related knowledge products were disseminated through workshops and online to reach a larger audience of interested counterparts.

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Technical Assistance Assessment Ratings Criterion Assessment Rating Relevance The TA was fully aligned with the strategic priorities of the PRC in general, Relevant and Liaoning province in particular, in supporting strategic agenda for the economic renewal of Liaoning through detailed assessment of past, present, and future experience, challenges, and possibilities for RCI to contribute to the Liaoning province’s inclusive and sustainable economic growth and to leverage RCI for its economic revitalization. The TA scope was also fully aligned with ADB’s Strategy 2020 and the four pillars of ADB’s RCI strategy and the deliverables. The TA design was technically sound and appropriate to facilitate the development of the actionable recommendations based on an extensive review of policy experience, evidence, and research on the RCI potential for the province. Effectiveness The delivery of the expected TA outputs were considered effective because Effective these supported the development of an RCI development strategy and action plan for Liaoning province. Efficiency The TA outputs that were crucial in achieving the envisaged outcome were Efficient realized hence the TA outcome was to the high extent achieved and all key activities implemented with overall disbursements at 99.03% of the project budget. Despite the slight delay in TA implementation which resulted in a one time extension, the TA is rated efficient. Overall The TA was relevant, effective, and efficient. It is rated successful overall. The Successful Assessment project-supported policy research activities, analytical work, and the ensuing reports, assessment, strategy, and action plan were regarded highly by the Liaoning provincial government and relevant decision-making stakeholders. Sustainability The results of the TA research and policy actionable recommendations were Likely seriously considered by the Liaoning provincial government for adoption and sustainable translation into the targeted interventions. The policy level TA recommendations were constructively assessed and highly appreciated by the government counterparts. There is a high likelihood that the practical, evidence-based technical advice and relevant recommendations will be incorporated into the provincial government’s policies and RCI measures. Hence, TA outputs and results are rated likely sustainable.

Lessons Learned and Recommendations Design and/or planning The TA design was technically sound and requisite outputs and activities well planned. Potential risks were mitigated. The TA design followed adequate process and was fully aligned and consistent with ADB’s country partnership strategy in PRC 2017–2020, where RCI is a key development pillar. Implementation and/or The TA demonstrated the importance of timely processing of changes during delivery implementation as a prompt extension of the project completion date necessary to ensure quality delivery of the key TA deliverables. This should be considered as an essential lesson for future interventions to ensure their effective and smooth implementation. Management of staff and Despite a change in the project officer due to a staff departure during implementation, consultants no major disruption resulted, and the ADB TA team, government counterparts, and consultants collaborated well. The key lesson learned is to ensure a proper hand-over process and smooth transition of the TA administration through diligent record keeping and prompt communication with the key stakeholders of the project. Knowledge building To sustain online dissemination in English and Chinese of the critical knowledge products, the TA established a global service on BAIDU.COM and SINA.COM, and BOX.COM, as well as on such start-ups as NiHaoCloud.com and NutStore (jianguoyun.com). Stakeholder participation The important consideration given to the need for proper and inclusive stakeholders participation through the TA design and implementation processes was an important contribution to the project’s successful implementation and is likely linked to the sustainability of support for post-TA activities in Liaoning Province.

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Follow-up Actions Potential follow-up actions to consider include (i) highlighting the TA achievements in the country partnership strategy final review, and (ii) conducting a post-performance evaluation. a Government of the PRC, National Development and Reform Commission, Ministry of Foreign Affairs, and Ministry of Commerce. 2015. Vision and Actions on Jointly Building Economic Belt and 21st-Century Maritime Silk Road. Beijing. b Government of the PRC, State Council. 2014. Opinions on Several Important Policies and Measures for Supporting Revitalization of Northeast PRC. Beijing. c The northeastern provinces of Liaoning, Jilin, and Heilongjiang are participants in the Greater Tumen Initiative. Further information on the initiative is available at http://www.tumenprogramme.org/?list-1607.html

Prepared by: Designation and Division: Zulfia Karimova Principal Regional Cooperation Specialist, EAPF

Appendix 1 5

DESIGN AND MONITORING FRAMEWORK

Impacts the TA is Aligned with Cooperation of internal subregions of Northeast PRC augmented (Policies and Measures for Supporting Revitalization of Northeast PRC)a Regional cooperation in Northeast Asia promoted (Visions and Actions for Boosting Joint Construction of Silk Road Economic Belt and Maritime Silk Road in the 21st Century)b Performance Indicators Results Chain with Targets and Baselines Achievements Outcome RCI development Submission for approval by Completed. The proposed RCI development strategy and strategy and the Liaoning provincial action plan for Liaoning province were submitted for implementation action government of an RCI approval in February 2018. plan for Liaoning development strategy and Province adopted action plan (2015 baseline: NA) Outputs 1. Status report and 1a. Knowledge products Completed. The technical reports were submitted in impact assessment on delivered February 2018. implementation of earlier (2015 baseline: NA) regional development programs producedc 1b. Awareness of gaps in Achieved. Awareness of the existing gaps in regional existing regional cooperation cooperation mechanisms was established during the mechanisms increased inception stage. There were 30 (out of whom over 30% among at least 30 female) key stakeholders participated. The progress was stakeholders, including assessed throughout TA implementation and monitored at representatives of other TA inception, interim and final report stages. provinces in Northeast PRCd (Baseline data will be established during implementation through pre- workshop evaluations)

2. RCI priorities and 2a. Awareness of RCI Achieved. The various focus areas of RCI priorities and models for Liaoning priorities and models models were presented and discussed extensively during Province developed increased among at least 30 the inception workshop and capacity-building stakeholders, including workshops.There were 30 stakeholders during the representatives of other inception and capacity building workshops (sex- provinces in the Northeast disaggregated data is not available). PRCe (Baseline data will be established during implementation through pre- workshop evaluations)

2b. Five background studies Completed. Five technical reports were submitted in completed examining December 2017 and finalized in February 2018. The Liaoning’s infrastructure, technical studies were submitted to the Liaoning industrial structure and government for consideration. capacity, financial resource requirements and likely sources of investment capital, and domestic and international experience designing and implementing regional cooperation programs (2015 baseline: NA)

2c. At least five knowledge Partially achieved. The technical reports were completed, products published shared with the relevant stakeholders and disseminated (2015 baseline: NA) at the workshop. The reports were not published.

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3. RCI needs 3a. Knowledge products Completed. The RCI needs assessment, strategy, and assessment, delivered implementation action plan were submitted in March development strategy, (2015 baseline: NA) 2018. and implementation action plan prepared

Actual Key Activities with Milestones 1. Status report and impact assessment of Liaoning RCI initiatives 1.1 Conduct baseline assessment of implementation and impact of earlier regional development programs such as the 5+1 Program and the Liaoning Coastal Economic Belt development plan (3 months following issuance of the NTP). (Completed during the Inception Workshop, May 2017) 1.2 Examine previous ADB support for Liaoning Province, with a focus on the contribution to RCI initiatives (3 months following issuance of the NTP). (Completed during the Inception Workshop, May 2017) 1.3 Organize and conduct a TA inception workshop (to take stock of prior RCI initiatives and introduce the proposed TA) (4 months following issuance of the NTP). (Completed in May 2017) 2. RCI needs assessment, development strategy, and implementation action plan for Liaoning Province 2.1 Prepare compilation of five discrete studies to inform the preparation of a comprehensive RCI needs assessment, regional development strategy, and implementation action plan for Liaoning Province (14 months following issuance of the NTP). (Completed. Submitted in December 2017 and finalized in February 2018) 2.2 Organize and conduct stakeholder consultation and outreach seminar on prospects for Liaoning Province, to benefit from (i) robust implementation of the WTO’s Trade Facilitation Agreement; (ii) support for Japan’s Economic Partnership Agreement with Mongolia; and (iii) PRC accession to the TIR Convention (8 months following issuance of the NTP). (Not achieved. During the inception workshop, the stakeholders expressed interest in having a study tour instead. However, the study tour was not conducted, and the respective budget was reallocated to other TA activities). 2.3 Organize and conduct strategy dissemination and discussion workshop (14 months following issuance of the NTP). (Completed in February 2018) 2.4 Publish knowledge products (15 months following issuance of the NTP). (Completed. Final report was submitted in February 2018) 3. Finalize and deliver final consultant report and RCI development strategy for Liaoning Province (15 months following issuance of the NTP). (Completed in February 2018). Actual Inputs ADB: $396,137.12 ADB = Asian Development Bank, NA = not applicable, NTP = notice to proceed, PRC = People’s Republic of China, RCI = regional cooperation and integration, TA = technical assistance, TIR = Transports Internationaux Routiers, WTO = World Trade Organization. a Government of the PRC, State Council. 2014. Policies and Measures for Supporting Revitalization of Northeast PRC. Beijing. b Government of the PRC, National Development and Reform Commission, Ministry of Foreign Affairs, and Ministry of Commerce. 2015. Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road. Beijing. http://www.china-un.org/eng/hyyfy/t1249669.htm c These include the 5+1 Program and the Liaoning Coastal Economic Belt development plan. d Data will be collected during the TA inception workshop. e Data will be collected during the stakeholder outreach seminar and strategy dissemination workshop. Source: Asian Development Bank.

Appendix 2 7

TECHNICAL ASSISTANCE COST

Table A2.1: Technical Assistance Cost by Activity ($’000)

Amount Item Original Actual 1. Consultants 350.0 345.2 2. Training, seminars, and/or conferences 30.0 44.3 3. Studies 0.0 6.6 4. Miscellaneous TA administration 5.0 0.0 5. Contingency 15.0 0.0 Total 400.0 396.1 Source: Asian Development Bank.

Table A2.2: Technical Assistance Cost by Fund ($’000)

TASF 1. Original 400.0 2. Actual 396.1 3. Unused 3.9 TASF = Technical Assistance Special Fund. Source: Asian Development Bank.