Technical Assistance Report Project Number: 42017 August 2008 People’s Republic of China: Preparing the Heilongjiang Road Development II Project (Yichun–Nenjiang) The views expressed herein are those of the consultant and do not necessarily represent those of ADB’s members, Board of Directors, Management, or staff, and may be preliminary in nature. CURRENCY EQUIVALENTS (as of 1 July 2008) Currency Unit – yuan (CNY) CNY1.00 = $0.1459 $1.00 = CNY6.8543 ABBREVIATIONS ADB – Asian Development Bank C&P – consultation and participatory EIA – environmental impact assessment GDP – gross domestic product HPCD – Heilongjiang Provincial Communications Department IPSA – initial poverty and social analysis PRC – People’s Republic of China TA – technical assistance TECHNICAL ASSISTANCE CLASSIFICATION Targeting Classification – General intervention Sector – Transport and communications Subsector – Roads and highways Themes – Sustainable economic growth, capacity development Subthemes – Fostering physical infrastructure development, institutional development NOTE In this report, "$" refers to US dollars. Vice-President C. Lawrence Greenwood, Jr., Operations 2 Director General K. Gerhaeusser, East Asia Department (EARD) Director C.S. Chin, Officer-in-Charge, Transport Division, EARD Team leader E. Oyunchimeg, Transport Specialist (Roads), EARD Team members S. Ferguson, Senior Social Development Specialist (Resettlement), EARD T. Yokota, Transport Specialist, EARD 121o 00'E 132o 00'E HEILONGJIANG ROAD DEVELOPMENT II PROJECT (YICHUN--NENJIANG) IN THE PEOPLE'S REPUBLIC OF CHINA RUSSIAN FEDERATION Provincial Capital City/Town Mohe County Highway Port National Key Tourism Scenic Spot H eilong River Proposed Project Road Tahe ADB--Financed Road Loop Line Radial Line Huma Vertical Line Horizontal Line River Provincial Boundary 52 o 00'N 52 o 00'N International Boundary Woduhe Jiagdaqi Boundaries are not necessarily authoritative. Heihe Loan 2247-PRC Nen River I N N E R M O N G O L I A Heilongjiang Road Network Sunwu Development Project Xunke Sunwu PROJECT ROAD Nenjiang (Yichun--Nenjiang) Jiayin Fuyuan Heilong River Nehe HEILONGJIANG Bei'an Wudalianchi Qiangfeng Farm Geo Park Tongjiang Gannan Yi'an Kedong Yichun Fuyu Suibin Hegang Luobei Baiquan Fujin Raohe Nianzishan Hailun Mingshui Qiqidar Suiling Tieli Jiamusi Lindian Qing'an Shuangyashan Qinggang Tangyuan Baoqing Daqing Suihua Tailai Zhaodong Yilan Tonghe Songhua R. Daluomi Qitaihe Datong Mishan Hulin HARBIN Fangzheng Binxian Jiantang Zhaoyuan Jixi Linkou Shangzhi Mudan R. Xingkai Lake Loan 1641-PRC Changchun-Harbin Hailang R. Expressway Project Suifenhe Hailin Mudanjiang RUSSIAN 44 o 00'N FEDERATION 44 o 00'N Loan 1324-PRC Dongning Heilongjiang Expressway Project N J I L I N 0 100 200 300 Kilometers DEMOCRATIC PEOPLE'S REPUBLIC OF KOREA 121o 00'E 132o 00'E 08-2145 HR I. INTRODUCTION 1. During the 2007 Country Programming Mission of the Asian Development Bank (ADB), the Government of the People’s Republic of China (PRC) requested technical assistance (TA) to prepare a road development project in Heilongjiang Province.1 ADB’s Fact-Finding Mission visited the project site in June 2008. It (i) carried out an initial poverty and social analysis (IPSA) and rapid environmental assessment, (ii) held consultation meetings, and (iii) collected necessary data and information. This report is based on the understanding reached with the Government on the objective, scope, costs, financing, terms of reference, and implementation arrangements for the TA, and the Mission’s observations in the field. II. ISSUES 2. Recognizing the need for rapid development of the transport sector to meet the demands of high economic growth, the Government of the PRC has been investing heavily in transport infrastructure and services over the last 2 decades. Since 1990, the demand for passenger transport has grown at an annual average rate of 7.8%, and that for freight transport at 7.6%. This growth led to an increase in the modal share of roads, particularly for passenger traffic. By 2006, road transport carried 52.8% of passenger traffic and 11.1% of freight traffic. 3. To address the major road infrastructure needs, the Government has launched several initiatives—the national trunk highway system (1992), the western region development plan (1998), and the grand plan for revitalizing the northeast region (2003). A renewed national expressway development plan—the 7918 national expressway network—consists of constructing seven links to Beijing, nine north–south corridors, and 18 east–west corridors totaling 85,000 kilometers (km) of expressways and high-class highways by 2020. The national expressway network is expected to reach more than 1 billion people by connecting all provincial capitals and large urban centers of more than 500,000 people with cities of more than 200,000 people. In addition, in 2005, the Rural Roads Construction Program2 under the 11th Five-Year Plan 2006–2010 was approved to address the issues of lagging rural development and widening rural–urban income disparities by investing CNY800 billion. The 11th Five-Year Plan aims to connect all townships and villages by all-weather roads, and 90% of townships and 80% of villages by paved roads. The regional targets for paved roads are to connect all townships and villages in the east; 88% in central provinces; and 90% of townships and 50% of villages in the west. 4. By the end of 2006, the total road network in the PRC had grown to 3.46 million km, consisting of 45,300 km of expressways, 45,300 km of class I roads, 262,700 km of class II roads, 354,700 km of class III roads, 1,574,800 km of class IV roads, and 1,174,100 km of unclassified roads. At present, 100% of counties, 98.3% of townships, and 86.4% of administrative villages are accessible by road. In 2006, Heilongjiang had a road network of 139,335 km, of which 6.8% comprised high-class highways: 958 km of expressways, 1,325 km of class I highways, and 7,279 km of class II highways. Heilongjiang’s road density in 2006 was 30.7 km per 100 km2. 5. Heilongjiang is a landlocked province and has no direct access to ocean ports except by long routes through other provinces or the Russian Federation. It is in the extreme north of the PRC and is bordered by the Inner Mongolia Autonomous Region (Inner Mongolia) on the west, the Russian Federation on the north and east, and Jilin Province on the south. Its area of 1 The TA first appeared in the business opportunities section of ADB’s website on 19 June 2008. 2 The Rural Roads Construction Program includes county roads, township roads, and village roads. 2 454,000 km2 makes it the 6th largest province in the country. It has fertile land and abundant natural resources. About 42% of its land is forestland, and cultivated land covers 9.2 million hectares, which is the largest in the country. Its population was 38.2 million in 2006 and per capita gross domestic product (GDP) was CNY16,195. The province was an industrial base before the 1980s; its main sectors are petroleum, coal, power plant equipment, heavy machinery, steel, timber, and woodworking. The industry share of GDP is 12% for primary, 54% for secondary, and 34% for tertiary industries. Foreign trade is vital to Heilongjiang’s economy; international and domestic demand for its products has consistently risen. The common boundary of Heilongjiang and the Russian Federation is 3,400 km long with 14 class I ports. In 2007, total trade with the Russian Federation was 20% of that of the whole PRC, and the total value of goods traded comprised about 16.6% of the province’s GDP. Foreign trade has grown by more than 15% per annum over the last 5 years. 6. Despite its economic potential, however, Heilongjiang has been left behind by the fast- developing coastal provinces since the 1980s. In support of the grand plan to revitalize the northeast region as an industrial hub, the Ministry of Transport3 approved in 2006 the northeast regional transport network development plan involving three provinces.4 In line with the plan, the Heilongjiang Road Network Plan for 2006–2020 was developed by the Heilongjiang Provincial Communications Department (HPCD) in 2006, with the aim of building the 2763 network comprising two rings, seven radial, six north–south, and three west–east high-class highways totaling 13,000 km. As of the end of 2007, 16% of this plan had been achieved. 7. The 824 km Qiangfeng Farm–Nenjiang (WE2) road is one of the three key west–east corridors of the 2763 network and is a major route connecting the Sanjiang Plain agricultural area, and coal mines and wood industry in the northeast and Songnen Plain farm, pastoral area, and Wudalianchi GeoPark5 in the northwest. Along WE2 are five road sections totaling 377.6 km, which either are in poor condition or need to be constructed. Xing’an Mountain prevents direct travel between the northeastern and northwestern parts of the province and between Yichun and Bei’an counties. To go to the northeast, goods and passengers from counties in the northwest travel on the existing north–south roads to Harbin or Suihua before moving northeast. The long detour or lengthy travel time significantly hinders the province’s economic development. The remaining part of WE2 is class II concrete road in good condition. An improved Qiangfeng Farm–Nenjiang corridor—which eventually reaches Mongolia, an ADB CAREC country6—will provide the shortest and important trade link between Inner Mongolia on the northwest and Fuyuan port on the border with the Russian Federation in the northeast via an existing 86 km class II concrete road. Fuyuan is a national land port opened in 1993 and is only 63 km away from Khabarovsk City in the Russian Far East. Fuyuan had a trade volume of 385,000 tons valued at CNY2.4 billion in 2006, and has potential to grow in the foreseeable future.