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Home , Autonomous county, Autonomous prefecture, Dzungaria, Hami, Hejing County, Manas County

Ethnic Minority Development Plan: ______

Project Number: 40684 August 2009

Proposed Loan People's Republic of : Forestry and Ecological Restoration Project in Three Northwest

People's Republic of China: Forestry and Ecological Restoration Project ______

Ethnic Minority Development Plan for the Xinjiang Component

Xinjiang Forestry Department

August 2009

Draft EMDP

CURRENCY EQUIVALENTS (as of 1 May 2009)

Currency Unit – Yuan (CNY) CNY1.00 = $0.1460 $1.00 = CNY6.85

ABBREVIATIONS

ADB – Asian Development Bank CCDS – Community Consultation and Disclosure Strategy CPMO – Project Management Office EA – Executing Agency EIRR – Economic Internal Rate Of Return EMDP – Ethnic Minority Development Plan FIRR – Financial Internal Rate Of Return FYP – Five-Year Plan GAP – Good Agricultural Practice GDP – Gross Domestic Product GEF – Global Environment Fund GRP – Gross Regional Product IA – Implementing Agency ICB – International Competitive Bidding IEE – Initial Environmental Examination IM – Independent Monitor IVDP – Integrated Development Program MLSA – Minimum Living Standard Allowance NPMO – National Project Management Office OCR – Ordinary Capital Resources PCR – Project Completion Report XPMO – Xinjiang Project Management Office PPMS – Project Performance Management System PRC – People’s Republic Of China SFA – State Forestry Administration SOE – State Owned Enterprises TA – Technical Assistance

WEIGHTS AND MEASURES

ha – hectare (1 mu = 0.067 ha) kg – kilogram m2 – square meter m3 – cubic meter mu – traditional land measure t – tons

NOTES

(i) The fiscal year (FY) of the Government and its agencies ends on 31 December.

(ii) In this report, "$" refers to US dollars.

Draft EMDP

Table of Contents

1. The Project ...... 1 1.1 Rationale ...... 1 1.2 Project Description ...... 1 1.3 Project Investment Plan ...... 2 1.4 Ethnic Minority Development Plan ...... 2 1.4.1 EMDP: Community Consultation and Disclosure Strategy Rational ...... 3 1.4.2 ADB Policy related to Ethnic Minorities ...... 4 2. Project Implementation in Xinjiang ...... 6 2.1 Household model ...... 6 2.2 Enterprise Model ...... 7 3. Poverty...... 9 3.1 Poverty in China...... 9 3.2 Poverty in Western China and the Project Area...... 10 3.2.1 Rural Poverty...... 12 3.2.2 Poverty in Mountain and Minority Areas...... 14 4. Socio-Economic Overview of the Xinjiang Project Area ...... 16 4.1 Overview of the Project ...... 16 4.1.1 Project Area Population...... 17 4.1.2 Economic Indicators ...... 17 4.2 Ethnic Minority People in Xinjiang...... 18 4.2.1 Ethnic Minority Population in the Project Area ...... 20 4.2.2 Overview of ...... 21 4.2.3 Overview of City ...... 22 4.2.4 Overview of City, and Yanqi County...... 22 4.3 Incomes in the Project Area ...... 23 4.4 Households ...... 25 4.4.1 Household Size and Composition ...... 25 4.4.2 Household Facilities ...... 28 4.5 Education ...... 32 4.5.1 Literacy...... 32 4.5.2 Completed Education ...... 34 4.5.3 Employment ...... 36 4.6 Health...... 38 4.6.1 HIV/AIDS ...... 40 5. Gendered and Development...... 42 5.1 Poverty ...... 42 5.2 Trends in Sex Ratios...... 43 5.2.1 Sex Ratios in the Project Area ...... 44 5.3 Gender and Land Rights ...... 46 5.4 Gender and Employment ...... 47 5.4.1 Feminization of Agriculture...... 49 5.4.2 Female Unemployment ...... 50 5.5 Gender and Education ...... 50 5.5.1 Literacy...... 51 5.5.2 School Attendance ...... 51 5.6 Women's Health ...... 52 5.7 Women and the Rural Environment ...... 55 5.8 Ethnic Minorities and Gender in the Project Area ...... 55 5.9 Gender and the Project ...... 56 6. Farming in the Project Area ...... 57 6.1 Rural Agricultural Income...... 57 6.2 Household Production...... 58

Draft EMDP

6.3 Agricultural Output of the Project Area...... 58 6.4 Shifting to Higher Valued Products ...... 59 6.5 Type of Cultivated Lands...... 60 6.5.1 Access to Cultivated Land...... 61 6.5.2 Average Size of Household Cultivated Land...... 62 6.5.3 Land Left Uncultivated...... 64 6.6 Agricultural Inputs...... 65 6.6.1 Fertilizers and Pesticides ...... 65 6.6.2 Use of Agricultural Tools ...... 65 6.6.3 Source of Seeds...... 66 6.6.4 Irrigation ...... 67 6.7 Analysis of Household Economic Tree Planting Model...... 68 7. Project Benefits...... 71 7.1 Project Benefits in Xinjiang...... 71 7.1.1 Benefits to Framing Households From Economic Tree Planting...... 71 7.1.2 Benefit to Households From the Enterprise Model...... 72 7.1.3 Benefits From Ecological Planting...... 73 7.2 Risks and Mitigation Measures ...... 73 7.2.1 Ethnic Minority Development Plan ...... 73 7.2.2 Assurances to Household Labor ...... 75 7.2.3 Assurance to Local Labor...... 75 7.2.4 Gender Strategy ...... 75

Appendix 1: Monitoring Framework For Ethnic Minority Development Plan Appendix 2: Xinjiang Community Consultation and Disclosure Strategy Appendix 3: Sample Village Descriptions

List of Tables Table 1: Project Investment Plan ...... 2 Table 2: Financing Plan ...... 2 Table 3: Total Project Cost for Xinjiang ...... 6 Table 4: Xinjiang Project Planting Program ...... 8 Table 5: Population and Poverty Indicators in the Project Provinces (2007) ...... 11 Table 6: Ranking of Provincial Rural Incomes ...... 12 Table 7: Comparison of Urban, Rural and Agricultural Income ...... 13 Table 8: Share of Rural Population Poor Over Three Years...... 14 Table 9: Poverty by Topography and Minority Categories...... 15 Table 10: Breakdown of and Autonomous Areas by County...... 16 Table 11: Project Administrative Areas...... 17 Table 12: Population of Xinjiang Project Areas...... 17 Table 13: Xinjiang Regional Gross Product ...... 18 Table 14: Xinjiang Regional Gross Value of Agricultural Output ...... 18 Table 15: Ethnic Minority Populations in Xinjiang ...... 19 Table 16: Ethnic Minority Populations in the Project Area ...... 20 Table 17: Ethnic Minority Populations as Percentage of Total Population ...... 21 Table 18: Comparison of Urban and Rural Per Capita Incomes...... 23 Table 19: Percentage of Rural Households Grouped by Per Capita Annual Net Income.24 Table 20: Population of the Project Area ...... 25 Table 21: Population Growth Rates in Project Area ...... 26 Table 22: Household Members Usually in the Dwelling...... 26 Table 23: Household Composition...... 27 Table 24: Age Distribution...... 27 Table 25: Facilities Used For Cooking ...... 28 Table 26: Source of Drinking Water...... 29

Draft EMDP

Table 27: Percentage of Population Reporting Lack of Access to Safe Drinking Water...29 Table 28: Time and Distance to Drinking Water ...... 30 Table 29: Type of Heating in Winter - Urban Areas ...... 30 Table 30: Type of Heating in Winter - Rural Areas ...... 31 Table 31: Type of Toilet ...... 31 Table 32: Access to Roads ...... 32 Table 33: Literacy by Province...... 33 Table 34: Percentage of Population 15 + Literate - Western ...... 33 Table 35: Spoken Language and Access to Schools by Ethnic Group...... 34 Table 36: Completed Education...... 35 Table 37: Access to Schools...... 35 Table 38: Employment by Industry ...... 36 Table 39: Percentage Employment in Agriculture...... 37 Table 40: Rural Employment by Sector in Xinjiang Project Area...... 37 Table 41: Unemployment Rate in Project Areas...... 38 Table 42: Number of Doctors and Hospital Beds...... 38 Table 43: Self Assessment of Health Status...... 39 Table 44: Reason For Not Contacting Doctor When Ill...... 39 Table 45: Consumption Poverty of Children, Women and Elderly in China...... 42 Table 46: Male and Female Populations and Sex Ratio in Project Area ...... 44 Table 47: Gender Distribution in the Project Provinces ...... 45 Table 48: Marital Status for Population 16 and Above...... 46 Table 49: Village Policies in Relation to Women's Land Rights...... 47 Table 50: Female Employed in Urban Units at Year-end by Sectors in Xinjiang...... 49 Table 51: Gender Difference in Unemployment...... 50 Table 52: Literacy in Any Language ...... 51 Table 53: % of Male and Females by Age Groups Not Attending School ...... 52 Table 54: Help at Delivery...... 53 Table 55: Place of Giving Birth ...... 54 Table 56: Forms of Birth Control...... 54 Table 57: Agricultural Population in the Project Area ...... 57 Table 58: Per Capita Income of Rural Households by Income Source...... 57 Table 59: Households Crops ...... 58 Table 60: Output of Major Agricultural Products by Province ...... 58 Table 61: Xinjiang Project Area Gross Output Value...... 59 Table 62: Xinjiang Fruit Production in Project Area ...... 60 Table 63: Xinjiang Condition on Forest Products...... 60 Table 64: Households With Access to Cultivated Land ...... 61 Table 65: Average Size of Cultivated Land Per Household...... 62 Table 66: Cultivated Area by County by Agricultural Household ...... 63 Table 67: Cultivated Land by Land Type ...... 64 Table 68: Reasons for Land Left Uncultivated...... 65 Table 69: Households Using Agricultural Machinery ...... 66 Table 70: Source of Seeds ...... 67 Table 71: Households With Irrigated Land...... 67 Table 72: Chinese Dates-Household Cash Flow and Loan Payments ...... 68 Table 73: Walnuts-Household Cash Flow and Loan Payments...... 69 Table 74: Apples- Household Cash Flow and Loan Payments...... 69 Table 75: Proportion of Project Households Potentially Unable to Participate ...... 70

Draft EMDP

List of Figures Figure 1: Progress in Poverty Reduction 2005-2007 ...... 9 Figure 2: Regional Shares in Incidence, Depth and Severity of Consumption Poverty ....11 Figure 3: Relative Risk of Poverty for Children, Women and Elderly...... 42 Figure 4: Child Sex Ratio Amongst Poor and Non-Poor In China ...... 43

Draft EMDP

Endorsement Letter of Ethnic Minority Development Plan

1. The Ministry of Finance and the Xinjiang State Forestry Bureau plan to implement the "Forestry and Ecological Restoration Project" which also includes Province and Shaanxi Province. The Project will be partially financed by the Asian Development Bank (ADB) and is planned to commence in 2010 and finish in 2015. According to the requirements of ADB, an ethnic minority development plan (EMDP) for the Project should be prepared and implemented in accordance with ADB's Safeguard Policy Statement (2009). The State Forest Bureau of Xinjiang Uygur Autonomous Region, with the assistance of PPTA consultants, have prepared this EMDP, which has been agreed upon with ADB, and the implementation of this EMDP will be monitored by the ADB and the Xinjiang State Forest Bureau.

2. The Xinjiang State Forestry Bureau has consulted the views on the draft of this EMDP from relevant bureaus, departments, county governments, and beneficiary communities and incorporated those views into the EMDP. The Xinjiang State Forestry Bureau hereby confirms the content of this EMDP and will implement the principles, procedures and measures of the EMDP and guarantee the funds required for the implementation of all measures.

______

Director State Forestry Bureau of Xinjiang Uygur Autonomous Region

Date:______

Draft EMDP

1. The Project

1.1 Rationale

The Project will respond to policy failures related to forest land tenure that have resulted in resources being allocated to low value non-sustainable land uses - causing a loss of ecological services, disadvantaged socio-economic conditions including higher poverty, and non-viable organizations in terms of capacity and revenue being responsible for managing the high-priority ecological assets in natural forests and critical watersheds for urban water supplies. These policy failures have also created externalities in terms of under delivering public goods in the form of soil and water protection.

The poverty rates in Gansu, Shaanxi, and Xinjiang are ranked in the poorest categories in PRC. Based on the national rural poverty line, the poverty rate of rural households in Gansu is 16.5%, in Shaanxi 9.7% and Xinjiang 15.9%, all significantly above the national average rural poverty rate of 5.6%. As Project implementation is targeted at poverty counties the rural inhabitants in the project areas are even poorer than the provincial averages.

The expected impact of the Project will be reduced rural poverty and improved incomes and sustainable livelihoods from the use of forest land in the Project area of Gansu, Shaanxi and Xinjiang provinces. The outcome of the Project will be increased productivity and reduced vulnerability of forest land in the three provinces through appropriate and sustainable land use.

1.2 Project Description

A total of 13 species of fruits, nuts, and timber trees will be planted in the three provinces with the objective of moving forest land into more ecologically sustainable land use that generates sufficient profit to create incentives for the long term management of natural resources. In Xinjiang economic crops will be protected with by planting poplar trees serving as wind break or shelter belts. In addition, the Project will finance the expansion of 9 profitable enterprises in Gansu, largely in the cold storage industry, and 19 small enterprises (8 private and 6 public) in Xinjiang that have successfully worked with farmers.

Ecological forestry development will consist of (i) reforestation of about 3,680 hectares of hilly and degraded land in Gansu; and (ii) improvement of forest land and management (including financial sustainability) on 7 state forest farms (SFFs) in Shaanxi on about 126,000 hectares involving public-private partnerships with private ecotourism enterprises.

Global Environment Fund (GEF)-financed activities in the 3 provinces (about $1.7 million available for each province), will include (a) reforestation of about 1,100 hectares of barren and steeply-sloping land in Gansu; (b) sand fixing technologies of about 296 hectares in Hami county of Xinjiang; and (c) carbon forestry readiness and education coupled with ecological forestry and climate change capacity building in Shaanxi's SFFs. In addition, a grant from the ADB Climate Change Fund will finance climate change capacity-building in Gansu province. The GEF component will be a stand-alone set of activities and GEF approval will be sought separately from the ADB loan.

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1.3 Project Investment Plan

The investment cost of the Project is estimated at $177.2 million including taxes and duties.

Table 1: Project Investment Plan ($ million) Project Activity Gansu Shaanxi Xinjiang Project Component 1: Economic Planting: 289,815 219,173 300,423 809,411 Component 2: Ecological Planting 39,267 82,421 8,379 130,067 Component 3: Implementation 31,539 41,506 26,796 99,841 Total Baseline Costs (A) 360,621 343,100 335,598 1,039,319 Contingencies (B) 34,106 27,316 32,386 93,808 Total Project Costs (A + B) 394,727 370,416 367,984 1,133,127 Interest During Implementation C) 33,417 29,534 33,618 96,569 Total Project Costs to be Financed (CYN 000's) 428,144 399,950 401,603 1,229,697 Total Project Costs to be Financed ($ Millions) 61,767 57,590 57,876 177,233 Source: Forestry Ecological Development Project PPTA, June 2009

In addition to the above investment plan, the Project seeks potential grant funding of about US$10.1 million, including counterpart contributions, physical and price contingencies, and taxes. Grants are being sought from the Global Environment Facility, ADB Climate Change Fund, and ADB Gender in Development Cooperation Fund. The ADB loan is not contingent on any of these grants.

Table 2: Financing Plan Total Source ($ million) Asian Development Bank Loan 100.00 GEF 5.1 Provincial and County 31.9 Governments Enterprises 17.6 Households 22.5 Total 177.2

1.4 Ethnic Minority Development Plan

The Poverty and Social Assessment indicates that no ethnic groups are involved in the Project areas of Gansu and Shaanxi, but that ethnic minority groups live in all five Project counties of Xinjiang.

Xinjiang Autonomous Region has an ethnic minority population of 12.7 million or 60.7% of the total population. As percentage of the total provincial population the Uyghur comprise 46.1%, Kazak 7.1%, Hui 4.5%, Kyrgyz 0.9% and Mongolian 0.8%. The Project area in Xinjiang has a total population of 1.557 million with an ethnic minority population of 524 thousand or 33.7%, accounting for 4.1% of Xinjiang's total ethnic minority population.

Ethnic minorities will benefit along with the Han population and the social assessment showed that ethnic minority people supported the Project. However, ethnic minority people may face barriers to participation due to language and cultural differences, which may particularly impact women. Thus, a number of assurances and enhancements to the Project design are required to ensure the participation of ethnic minority people and improve the

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poverty reduction impacts. Furthermore, a consultation and disclosure strategy is also required to implement the household economic tree planting model in Xinjiang (See Section 1.4.1).

Therefore, an Ethnic Minority Development Plan (EMDP) has been prepared for the Project containing adequate provisions to ensure the full participation of ethnic minority people. The EMDP will be implemented through a Community Consultation and Disclosure Strategy (CCDS) adapted for Xinjiang's unique cultural environment. The CCDS is provided in Appendix 2 of this report.

The overall objectives of the EMDP is to ensure that Project does not cause adverse social and cultural impacts, and that it provides the opportunity for ethnic minority groups to reap project benefits that are equal to, or greater than, the mainstream cultural group. This approach recognizes that even programs that are aimed at improving quality of life do not necessarily equally reach all sectors of the community.

This EMDP has been prepared in accordance with ADB’s Safeguard Policy Statement (2009), particularly Appendix 3 on and Operations Manual Section F1, January 2010, and the relevant policies and programs of the Government of Xinjiang. Social risks that require mitigation measures under the loan agreement according to ADB policy, such as significant resettlement impacts or the risk of increasing the incidence of HIV/AIDS and human trafficking, and that often impact to a greater extent on ethnic minorities, have not been identified for the project.

The emphasis in the EMDP, therefore, is on ensuring that ethnic minority people are given the opportunity to fully participate in and benefit from the economic and ecological tree planting components and other project activities. The key vehicle through which the EMDP will be implemented is a Community Consultation and Disclosure Strategy (CCDS); the details are provided in Appendix 2 and a summary is provided below.

1.4.1 EMDP: Community Consultation and Disclosure Strategy Rational

The household economic tree planting model will be implemented in all three Project provinces. This component proposes to provide seedlings and other agricultural inputs in the form of in-kind loans to households and to pay households for planting trees on their own lands. In Xinjiang, it is estimated that 12,018 households will participate in this component. This is an enormous undertaking for state forestry bureaus. Each household will need:

• The Project implementation arrangements explained; • The potential benefits and risks disclosed; • Their role and obligations explained; • A planting site plan prepared, which will determine the loan amount, labor payment, and reduction in other crops; and, • A cash flow analysis undertaken to understand the net income impact from the reduction in other crops prior to economic trees bearing fruit.

Once these steps have been completed, households will be in a position to decide whether to participate in the Project. If that decision is positive, household loan agreements will need to be established.

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Given the scope and complexity of the household economic tree planting component, a participation strategy is required to achieve consistent, comprehensive and equitable implementation of the activities and to ensure the participation of ethnic minorities. Therefore, a CCDS has been prepared for the Project. The CCDS will be the process through which the Xinjiang Project Management Offices (XPMOs) and the Xinjiang County Project Management Offices (CPMOs) engage communities, prepare site plans and identify loan participants. The CCDS is, therefore, a core Project implementation activity of Xinjiang's PMOs.

The CCDS outlines community engagement activities that will be undertaken during the preparation of the Project and, in particular, the required dialogue and information exchange leading up to the identification households participating in the Project's loan activities. It sets out the Project’s rationale for consulting and involving communities, identifies who will be consulted, and lists consultation methods and techniques that will be used to ensure community awareness and participation in the Project.

The CCDS also provides a number of assurances and enhancements to the Project design. Household financial risk analysis is particularly crucial for poor and near poor households. The key issue from a social and poverty reduction perspective is the risk that poorer farmers may not be able to participate or will fall further into poverty because they will not be able to endure the loss of other crops prior to their economic trees bearing fruit. Ensuring the participation of women and consideration of women's work loads is also essential to the success of the Project. Therefore, the CCDS explicitly incorporates a gender strategy.

Of critical importance to the success of the Project will be how the CCDS can help create an enabling environment for ethnic minority and poor farmers through appropriate livelihood assessments, cash flow analysis and risk mitigation measures.

1.4.2 ADB Policy relating to Ethnic Minorities

ADB’s Safeguard Policy Statement recognizes the potential vulnerability of indigenous peoples1 in development processes. The policy aims to ensure that ethnic minority peoples have opportunities to participate in and benefit equally from development. Accordingly, project activities must ensure that development initiatives affecting ethnic minority peoples are positive, effective and sustainable. Initiatives should be compatible in substance and structure with the affected peoples' culture and social and economic institutions, and

1 ADB defines "indigenous peoples" as groups with social or cultural identities distinct from that of the dominant or mainstream society. "Indigenous peoples" is a generic concept that includes cultural minorities, ethnic minorities, indigenous cultural communities, tribal people, natives, and aboriginals. Two significant characteristics of indigenous peoples are (i) descent from population groups present in a given area before modern states or were created, and (ii) maintenance of cultural and social identities separate from mainstream or dominant societies or cultures. Additional characteristics include (i) self-identification and identification by others as being part of a distinct indigenous cultural group, and the display of the desire to preserve their cultural identity; (ii) a linguistic identity different from that of the mainstream or dominant society; (iii) social, economic, and political traditions and institutions distinct from the mainstream society; (iv) an economic system oriented more toward a traditional system of production than toward the mainstream production system; and/or (v) a unique tie with and attachment to traditional and ancestral and its natural resources. In the PRC, ADB adopts the officially defined ethnic minority nationalities.

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commensurate with the needs, aspirations, and demands of affected peoples. Initiatives should be conceived, planned, and implemented, to the maximum extent possible, with the informed consent of affected communities, and include respect for ethnic minority peoples' dignity, human rights, and cultural uniqueness. Projects must avoid negatively affecting ethnic minority peoples, and provide adequate and appropriate compensation when a negative impact is unavoidable. Project strategies and approaches to development that affect ethnic minority peoples must include clear mechanisms for accurate, objective analysis of their circumstances. Development processes must incorporate transparency and accountability.

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2. Project Implementation in Xinjiang

In Xinjiang, the project planting will be implemented through three components. • Household Economic Tree Planting • Enterprise Economic Tree Planting • Ecological Planting

Tables 3 and 4 show the Project planting program for Xinjiang where a total of 6,450 ha will be planted (6,014.9 ha of economic trees and 435.1 hectares of ecological planting). The total Xinjiang project cost, including contingencies and financing costs is 401,602,100 CNY or $57.9 million. This represents 33% of the total cost or the project.

For the entire Project, a total of 13 species of fruits, nuts, and timber trees will be planted. These trees are more ecologically sustainable and it is expected these crops will provide households with greater economic benefits in the medium-term than current cropping patterns. In Xinjiang, economic crops planted will be apples, apricot, Chinese dates and table and wine grapes.

Table 3: Total Project Cost for Xinjiang Totals Xinjiang Components (CNY'000) (US$'000) Component 1: Economic Planting: Tree Crop Inputs: 188,998.0 27,671.7 Infrastructure 111,425.0 16,314.1 Component 1 Base Cost 300,423.0 43,985.8 Component 2: Ecological Planting Tree Crop Inputs 8,379.2 1,226.8 Infrastructure 0.0 0.0 Component 2 Base Cost 8,379.2 1,226.8 Component 3: Implementation 26,795.9 3,923.3 Total Baseline Costs (A) 335,598.1 49,135.9 Contingencies (B) 32,386.4 4,288.5 Total Project Costs (A + B) 367,984.5 53,424.4 Interest During Implementation C) 33,618.1 4,451.6 Total Project Costs to be Financed 401,602.6 57,876.0 Source: Forestry Ecological Development Project PPTA, June 2009.

2.1 Household model

The Household model is a direct replication of previous forest sector programs where local households (including small private sector production companies composed of larger households) borrow funds from the Project and is also the modality that will be used in Gansu and Shaanxi.

The household economic tree planting component proposes to provide seedlings and other agricultural inputs in the form of in-kind loans to households and to pay households for planting trees on their own lands. The Project will fund the first three years of materials for crop establishment. The planting program will be spread evenly over three years in recognition that most planting blocks are small and also to minimize the impacts of inflation.

Xinjiang households will plant 6,015 ha of economic trees and approximately 12,018 households will participate in this component. The average size of loan per household will be

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about 4,800 CNY2. Borrowers will be paid a labor grant for planting during the first and second years of the project. In Xinjiang this labor grant will be paid at the rate of about two- thirds the normal daily labor wage (67% of 50 CNY/day)3. Over the first two years of the project total labor payments will amount to 22 million CNY or about 1,700 CNY per household.

Borrowers will also receive technical support through the Forest Bureau technical staff on an ongoing basis for at least the first five years. The support will ensure that fertilizer, pruning and tree shaping is completed to a high standard and technical weaknesses are rectified.

2.2 Enterprise Model

Unlike Gansu and Shaanxi, where economic planting will be implemented exclusively through the household model, in Xinjiang, where there are fewer local communities, the project will also be implemented through an enterprise model. In this modality enterprises will be the borrower. Enterprises and large farms will directly hire labor or contract land to households or collectives. Household will supply labor for orchard establishment and will provide labor and management inputs to the ongoing orchard operation for a specified area of orchard. The subcontracted managers will have a supply contract back to the enterprise to provide marketing inputs, technical support, planting and site layouts and overall project management for the respective sites.

A total of 2,413 ha will be planted by enterprises and it is estimated that 2,200 people (full time equivalent) will gain direct employment through this model during the first two years of establishment. At maturity, these will create about 490 full time jobs, the majority of which will go to poor unskilled laborers. All of the enterprises are in Xinjiang and it is expected that ethnic minorities will account for about 33% of the employment (their proportion in the project area population). It is expected that 40% of enterprise jobs will go to women and it is generally accepted that enterprises job opportunities are more suitable for women.

In addition, another 435 ha of ecological planting will be undertaken which should create about 15 full time equivalent jobs.

2 The average household loan size is considerably larger in Xinjiang than in Gansu and Shaanxi because the average planting area in Xinjiang is about twice that of the other two project provinces. 3 In Gansu and Shaanxi the labor grant will only be paid at a rate equal to 20% the normal wage (20% of 50CNY/day)

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Table 4: Xinjiang Project Planting Program Table Wine Shelter Sand- Total Xinjiang Province Apple Apricot Date Grapes Grapes belts Timber Fixing Hectares Enterprise Model Changji City Sangong 15 25 95 135.0 Daxiqu Town 55 35 23 30 143.0 Changji Technical Park 125 440 110 675.0 Bayangol Mongal AP - Hejing County (2) 210 210 40 460.0 Yanqi County 900 100 1,000.0 Sub-total Enterprise Model 2,413.0 Household Model Changji City Northern Desert Station 130 17 147.0 Hami City - West Gobi 2,140 181.3 2,321.3 South Gobi 525 45.3 570.3 Bayangol Mongal AP - Korla City 450 113.3 563.3 Sub-total Enterprise Model 3,601.9 Ecological Planting Changji City Changji Technical Park 139.1 139.1 Hami City Erbao Town 131.0 131.0 Taojiagong 75.0 75.0 Dawanquan Township 90.0 90.0 Sub-total Ecological Planting 435.1 Total Planting Program 6,450.0 Source: Forestry Ecological Development Project PPTA, June 2009.

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3. Poverty

3.1 Poverty in China

The total population of China at the end of 2008 was 1,328.02 million people, with 721.4 million or 53.4% living in rural areas4. People’s Republic of China (PRC) has made remarkable progress in reducing poverty. Economic reforms that led to continued high annual economic growth rates averaging around 9% during the post-1978 period enabled a significant reduction in rural poverty and contributed to rural development in numerous ways.

Measured in terms of the World Bank poverty standard (of 888 CNY per person per year at 2003 rural prices), between 1981 and 2004, the fraction of the population consuming below this poverty line fell from 65% to 10%, and the absolute number of poor fell from 652 million to 135 million, a decline of over half a billion people. Measured by the new international poverty standard of $1.25 per person per day (using 2005 Purchasing Power Parity for China), the levels of poverty are higher, but the decline since 1981 is no less impressive (from 85% in 1981 to 27% in 2004). The percentage of China’s population consuming less than the World Bank poverty line is estimated to have fallen from 10.3% in 2004 to 4.0% in 20075 (Figure1).

Figure 1: Progress in Poverty Reduction 2005-2007 (World Bank Poverty Line: 888 Yuan per person per year 2003 rural process)

Source: An Assessment of Poverty and Inequality In China, World Bank, 2009

By China’s official poverty standard, the poverty rate (headcount ratio) in rural China fell from 18.5% in 1981 to 2.8% in 2004 and the number of rural poor declined from 152 million to 26 million. According to some estimates, 72% of the reduction in the overall poverty incidence that occurred between 1981 and 2001 is attributable to rural poverty reduction. 6

4 Statistical Communiqué of the People's Republic of China on the 2008 National Economic and Social Development, National Bureau of Statistics of China, February 26, 2009 5 An Assessment of Poverty and Inequality In China, World Bank, March 2009. 6 Rural Development Outcomes and Drivers: An Overview and Some Lessons, Nimal A. Fernando, ADB 2008.

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In 2008, with a new national rural poverty line of annual per capita net income below 1,196 CNY, the population in poverty in rural areas numbered 40.1 million or 5.6% of China's total rural population of 721 million people.7 8

Rural poverty reduction has been greatly facilitated by the mobility of labor from agricultural occupations to other more productive economic activities in the urban sector and in the rural non-farm sector. The PRC has experienced the most dramatic off-farm migration following the relaxation of controls on labor migration since 1989. More than 100 million migrants now live and work outside their home . This migration flow has resulted in large-scale poverty reduction, and created less urban–rural dualism than otherwise would have been the case. The migration has generated a regular flow of remittances from urban to rural areas. The amount remitted from urban to rural areas is estimated to be in the range of $20 billion to $30 billion a year.

Despite this significant performance in reducing poverty, PRC continues to face many development challenges. Large numbers of people in China remain poor. ADB estimated that about 536 million people were living on less than $2 a day in the PRC in 20039. Rural poverty undoubtedly presents the most daunting problem and more than 90% of the poor people continue to live in rural areas.

3.2 Poverty in Western China and the Project Area

As poverty has fallen it has become increasingly difficult to eliminate the remaining poor who are mostly found in remote, mountainous and minority areas. As a result poverty has become concentrated in the western region where both the incidence and severity of poverty are the greatest.

Since the mid-1990s, poverty rates in the Western region have fallen but they fell by less, resulting in a pronounced increase in the share of the poor living in the Western region of the . The incidence of poverty is estimated to be 31% in the South West and 20% in the North West.10 In especially remote mountainous and minority areas, where because of geography and agro-climatic conditions the challenges of ensuring sustainable livelihoods are particularly severe, poverty has not declined significantly. Consequently, the Western provinces account for about half of China’s poor which is well above their 29% share in the country’s population.

7 Statistical Communiqué of the People's Republic of China on the 2008 National Economic and Social Development, National Bureau of Statistics of China, February 26, 2009. 8 Statistics on poverty population in rural areas are based on the newly revised rural poverty line, which is incomparable with historical data. In 2007, the population in absolute poverty in rural areas with annual per capita net income below 785 CNY numbered 14.8 million and the low-income population in rural areas with annual per capita net income between 786 - 1067 CNY numbered 28.4 million. Thus, 43.2 million rural people or 3.3% of the total population were below the poverty line. Statistical Communiqué of the People's Republic of China on the 2007 National Economic and Social Development, National Bureau of Statistics of China, February 28, 2008 9 Op cit, ADB 2008 10 An Assessment of Poverty and Inequality In China, World Bank, March 2009.

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The combined population of the three project provinces is 84.6 million; Gansu 26.2 million, Shaanxi 37.8 million, and Xinjiang 20.9 million. Estimates place current poverty rates11 at 16.5%, 9.7% and 15.9% for Gansu, Shaanxi and Xinjiang respectively, which means that 11.3 million people or 13.4% of the combined population of these provinces remain poor.12

Table 5: Population and Poverty Indicators in the Project Provinces (2007) Total Project Gansu Shaanxi Xinjiang Provinces Millions % Millions % Millions % Millions % Population at the Year-end 84.6 26.2 37.5 21.0 Urban 31.7 37.5 8.3 31.6 15.2 40.6 8.2 39.2 Rural 52.9 62.5 17.9 68.4 22.3 59.4 12.7 60.8 Agricultural Population 58.7 69.4 19.7 75.1 27.2 72.4 11.9 56.7 Non-Agricultural Population 25.9 30.6 6.5 24.9 10.3 27.6 9.1 43.3 Number of Poor 11.3 16.0 4.3 16.5 3.6 9.7 3.3 15.9 Rural Households with per 0.5 3.7 0.2 4.6 0.2 3.1 0.1 3.9 capita income < 800 Rural Households with per 1.7 11.8 0.8 16.5 0.5 6.5 0.5 17.5 capita income < 1200 Source: Gansu, Shaanxi and Xinjiang Provincial Poverty Alleviations Offices, Bureaus of Statistics and Project Social Assessment

Although though the Western provinces account for a disproportionate share of the poor as compared to their share in the country’s population, these provinces are even poorer in terms of the depth and severity of poverty. As measured by the poverty gap and the squared poverty gap indices, their share in the aggregate depth and severity of poverty are about 60 and 66 % respectively. In other words, if assessing poverty by a measure that is sensitive to how poor the poor are, then about two-thirds of China’s poverty is to be found in the North- and South-western provinces.

Figure 2: Regional Shares in Incidence, Depth and Severity of Consumption Poverty (2003 using World Bank poverty line)

Source: An Assessment of Poverty and Inequality In China, World Bank, March 2009

Nearly half of all poor villages are in Western China. The percentage of villages designated as poor is 41% in the North West, 32% in the South West, 26% in the North East, 22% in the Central region, and 8% in Coastal areas. Low village per capita income, low agricultural

11 Based on the national rural poverty line of 1,196 Yuan per net capita income 12 Gansu, Shaanxi and Xinjiang Provincial Statistical Yearbooks, 2008

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productivity, limited access of village groups to roads and clean water as well as villages being in a minority area all contribute significantly to the probability of its being designated as poor. Out of the total 32 provinces in China, Xinjiang, Shaanxi and Gansu rank 26, 29 and 31 respectively from the bottom in terms of per capita rural incomes.

Table 6: Ranking of Provincial Rural Incomes Average Per Ranking out of Ranking out of Capita Net 32 Provinces of 13 Western Income Rural China Provinces Households (Yuan) Gansu 2329 31 12 Shaanxi 2645 29 10 Xinjiang 3183 26 7 Western China Development Report, Chinese Statistics Press, 2008

However, within the Western , poor households are relatively scattered across villages rather than concentrated in poor counties. Since 2001, in order to improve targeting efficiency, rural poverty programs have shifted from focusing on 592 nationally designated poor counties to 150,000 poor villages under the Integrated Village Development Program (IVDP). The designation of both National and Provincial Poverty Counties is still used but the list of 592 national poor counties has been updated to focus more on the western regions.

There are 50 national level poverty counties and 27 province-level poverty counties in Shaanxi province, 43 national and 8 provincial poverty counties in Gansu and 27 national and 3 provincial poverty counties in Xinjiang. Of the total of 120 designated national poverty counties in the three project provinces, the Project will target of 55 of these (Gansu 20 counties, Shaanxi 30 counties and Xinjiang 5 counties).

All of the farming households participating directly in the project seedling loan component reside in one of these poverty counties. The social assessment found that, in poorer villages the poverty rate ranged from 28% to 42%13. Overall, about 15% of villages visited by the social assessment team had average household incomes at or below the income poverty line and about 12% had incomes below the absolute poverty line.

3.2.1 Rural Poverty

Poverty is a rural phenomenon and virtually all of the poor are in rural areas.14 This is true for both income and consumption poverty. Based on national samples of the Rural and Urban Household Surveys conducted by National Bureau of Statistics (NBS), absolute poverty in China is almost exclusively rural. According to these estimates:

• Virtually all (99%) of the poor are in rural areas. This is true for both income and consumption poverty.

13 Chahanwusu village, populated by resettled herdsmen from the Bayanbulak Grasslands, was found to be 100% poor. Annual average per capita income of only 390 Yuan in 2007 and 600 Yuan in 2008. 14 World Bank, op. cit.

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• The incidence of poverty (i.e. the proportion of the population who are poor) within rural areas is much higher (at 9.5 or 17.9% for two poverty measures) than the national average (of 6.9 or 13.1%). • At the same time, urban poverty incidence is negligibly low (0.2-0.3%).

Rural-urban income disparities are a significant development issue in China and even allowing for cost-of-living differences, the absolute gap between rural and urban incomes has increased appreciably. In 1984, the average rural income was 60% of urban income, but this has declined to 33% in 2002. During the 10th Five-Year Plan period, 2000–2005, rural per capita net income increased only by an average annual rate of 5.3%, while that of urban residents increased by 9.6%.

Poverty is strongly correlated with land and environmental degradation in the Project areas. Farm incomes are now under pressure, in part because of degradation of the resource base. Environmental problems include desertification, soil erosion, grassland degradation, salinity on irrigated land, organic matter and fertility loss, burning of crop residues, aquifer depletion, high levels of heavy metals, nitrates and pesticide residues in soils and water, animal waste and loss of biodiversity.

Communities and individual farmers faced with a lack of alternative livelihoods continue to apply unsustainable land-use practices which are accelerating widespread land and resource degradation. Combined with very harsh arid and semi-arid ecological condition this creates major challenges for the social and economic development of the Project provinces. Sustaining growth will not be possible without addressing environmental degradation, growing inequality, and the strain on resources.

Table 7: Comparison of Urban, Rural and Agricultural Income (2007) Average Across Income Indicators (Yuan) Gansu Shaanxi Xinjiang Project Provinces Per Capita Annual Disposable Income of 10,012 10,763 10,313 10,363 Urban Households Per Capita Net Income of Rural Residents 2,329 2,645 3,183 2,719 Net income from agriculture 1,661 923 1,944 1,509 Net Income Poor Lowest 25 Percentile 820 845 710 792 Net Income Average 75 Percentile 3,495 3,557 7,730 4,927 Average Overall 2,758 2,858 5,662 3,759 Median 1,872 1,940 2,984 2,265 Source: Gansu, Shaanxi and Xinjiang Provincial Statistical Yearbooks, 2008; Living in Western China, National Research Centre for Science and Technology for Development, China's Statistics Press, 2008

On average, rural incomes are only 26% of urban incomes in the project area. The gap is widest for Gansu where rural incomes are only 23% up urban incomes and lowest for Xinjiang where rural incomes are 31% of urban incomes. However, comparing net income from agriculture for the lowest 25 percentile shows that the poorest rural residents have only about 8% of the incomes of the average urban resident.

Poverty has traditionally meant a constant lack of adequate food and clothing. However, rural poverty is increasingly seen by villagers mainly in terms of economic vulnerability, poverty circulation of households and inconsistencies with social development. For poor households, the unstable balance of income and expenditure is easily broken by many events such as illness, disasters, accidents or business failure. Being in debt (in order to

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meet any of these contingencies) is widely reported to be an important indicator for identifying households in poverty.

Measures that estimate poverty one year at a time fail to capture the different sets of households that drop in and out of poverty in different years and understate the degree to which people are at risk of falling into poverty. To emphasize the unstable nature of rural incomes and the vulnerability of the poor, Table 8 displays in the share of the rural population that was in poverty over a three-year period. Between 2001 and 2004, nearly a third of China’s rural population was poor at least once but in the North West more than 50% of the rural population was poor for at least one of those three years. This cross-sectional series of poverty measures sheds light on the size of the population that faces a significant risk of poverty over a period of time and comparing the percentage of the rural population who were poor in at least one year (those that had a one-third or higher probability of falling into poverty) provides a better representation of those that are vulnerable. Thus, the population facing a significant risk of poverty in the North West is about two and half times as large as the population typically estimated to be in poverty.

Table 8: Share of Rural Population Poor Over Three Years (Between 2001 and 2004) Share of Rural Population (%) Income Poor In 1 Poor In At Not Poor Average Vulnerability Poor In All 3 Poor In 2 Poverty of the 3 Least One In Any Headcount To Poverty Years of 3 Years Years Year Year Index Ratio (4)= Region (1) (2) (3) (5) (6) (4)/(7) (1)+(2)+(3) Coastal 0.1 0.8 5.4 6.3 93.7 2.6 2.4 1.6% 13.2% 85.1% 100% North East 0.5 4.3 15.8 20.6 79.4 9.0 2.3 2.6% 20.6% 76.8% 100% Central 0.7 3.1 12.3 16.1 83.9 7.0 2.3 4.3% 19.2% 76.4% 100% South West 5.3 7.1 14.3 26.7 73.3 15.2 1.8 20.0% 26.7% 53.4% 100% North West 9.3 16.6 24.5 50.5 49.5 28.2 1.8 18.4% 33.1% 48.5% 100% Source: An Assessment of Poverty and Inequality In China, World Bank, March 2009

In the PRC, health indicators between rural and urban areas have diverged during the post- reform period. In most developing , quality of education and health in rural areas significantly lag quantity. The poor quality further increases urban–rural disparities in education and health. Public facilities providing these services in rural areas are generally poor. In addition, lack of qualified staff and a high rate of absenteeism among workers at these facilities aggravate the problems.

3.2.2 Poverty in Mountain and Minority Areas

Poverty is the most severe in mountainous and minority areas in the sparsely populated Western provinces. In the Western region, chronic poverty is relatively more prevalent and especially in mountainous, minority areas. Across regions, for instance, in the case of income poverty the ratio of persistently poor is less than 5% in Coastal, North East and Central regions, while it is around 20% in the Western region.

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The minority population itself is concentrated in the mountainous areas and it widely believed that the ethnic minorities and others living in these locations are relatively disadvantaged.15 Poverty incidence amongst minority communities is 2 to 3 times higher than for the Han majority and it is also 2 to 3 times higher in mountainous than in non-mountainous areas. It is thought that poverty rates in the remote mountainous areas of the project provinces are as high as 70% as compared with poverty levels in the rural flat lands that are estimated to be 28%.16

Table 9: Poverty by Topography and Minority Categories (2003) World Bank Poverty Line Share of Income Consumption Region Population (%) % Who are Share of the % Who are Share of the Poor Poor (%) Poor Poor (%) Minority 7.1 24.1 26.9 36.6 21.6 Non-Minority 64.8 7.7 72.3 15.7 77.7

Mountainous 18.5 18.8 50.2 27.9 39.4 Non- Mountainous 54.0 6.3 49.0 14.5 59.9

Non- Mountainous, Non-Minority 51.3 5.7 42.1 13.7 53.7 Non- Mountainous, Minority 2.7 17.6 6.9 30. 0 6.2 Mountain, Non- Minority 13.5 15.5 30.2 23. 3 24.1 Mountain, Minority 5.0 27.6 20.0 40.2 15.4 Source: An Assessment of Poverty and Inequality In China, World Bank, March 2009

It is also the case that within the minority category, those in mountainous locations have still higher poverty rates, and conversely, amongst those in mountainous locations the minority groups are poorer still. Those with the doubled advantage of minority status and mountainous location thus have the highest poverty rate of 40% (28%) in the case of consumption (income) poverty.

15Overall in China, minority populations account for only 7.7% of the population but they account for 21.6% of the poor. Similarly, 18.5% of China's population live in mountainous areas but they account for 39.4% of the poor. Overall, 36.6% of minority people are poor and 27.9% of people living in mountain areas or poor. World Bank, op cit. 16 Preparing the Shaanxi-Qinling Mountains Integrated Ecosystem Management Project, ADB, June 2008.

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4. Socio-Economic Overview of the Xinjiang Project Area

The population of Xinjiang is 20.9 million, 60.8% of people live in rural areas and 56.7% of households are engaged in agriculture as their primary income source.17 Xinjiang Uyghur Autonomous Region is a large, sparsely populated province, spanning over 1.6 million km2 that takes up about one sixth of China’s territory.

Xinjiang borders the Autonomous Region and India's Leh to the south and and Gansu provinces to the southeast, to the east, Russia to the north, and , , Tajikistan, Afghanistan and Pakistan to the west. It administers most of Aksai Chin, a territory formally part of Kashmir's Ladakh region. The east-west Tien Shan Mountains separate in the north from the in the south. Dzungaria is dry . The Tarim Basin is desert surrounded by oases. In the east is the Turfan Depression. In the west, the Tien Shan split, forming the River valley.

Xinjiang is divided into two prefecture-level , seven , and five autonomous prefectures (further divided into eleven , twenty county-level cities, sixty-two counties, and six autonomous counties). Four of the county-level cities do not belong to any prefecture, and are de facto administered by the Xinjiang Production and Construction Corps.

4.1 Overview of the Project Counties

Project activity in Xinjiang will be implemented in:

• Hami [Kumul] City • Changji City • Korla City, Hui and Hejing County, Bayangol Mongol

Table 10 lists the three major administrative areas in which these counties are located and the names of associated counties.

Table 10: Breakdown of Prefecture and Autonomous Areas by County Hami [Kumul] City, Barkol Kazak Autonomous County, Hami [Kumul] Administrative Offices Yiwu [Araturuk] County Changji City, City, , , Changji Hui Autonomous Prefecture , Jimsar County, Mori Kazak Autonomous County Korla City, Luntai [Bugur] County, Yuli [Lopnur] County, Ruoqiang [Qarkilik] County, Bayangol Mongol Autonomous Prefecture Qiemo [Qarqan] County, Yanqi Hui Autonomous County, Hejing County, Bohu [Bagrax] County Xinjiang Provincial Statistical Yearbooks 2008,

17 Gansu, Shaanxi and Xinjiang Provincial Statistical Yearbooks 2008, Provincial Bureau of Statistics in each province.

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Table 11: Project Administrative Areas Number of and Villages Town Governments (unit) Xinjiang 798 172 8,965 Hami [Kumul]Administrative Offices 31 5 171 Hami [Kumul]City 15 2 92 Changji Hui Autonomous Prefecture 67 32 728 Changji City 10 6 88 Bayangol Mongol Autonomous Prefecture 73 11 390 Korla City 10 1 56 Yanqi Hui Autonomous County 7 3 46 Hejing County 11 3 54 Source: Xinjiang Statistical Yearbook, 2008

4.1.1 Project Area Population

The project area has a total population of 1.557 million people with 60.7% of people engaged in agriculture as their main occupation. As project implementation is main located in administrative areas that are designated 'urban', the percentage of rural population appears to be particularly small (7.2%) but this is somewhat misleading as an indicator for the rural nature of the project areas. Many formerly rural areas that maintain an agricultural base have been reclassified as urban and many urban residents work in agriculture. Thus the percentage of rural population understates the true rural and agricultural characteristics of the Xinjiang Project areas.

Table 12: Population of Xinjiang Project Areas (2007) (10,000's persons) Non- % Province/District/County Total Urban Agriculture Agriculture Agriculture Xinjiang Province 2,095.2 820.3 907.7 1,187.5 56.7 Hami [Kumul] City 42.4 42.4 28.9 13.4 31.7 Changji City 34.8 34.8 22.3 12.5 36.0 Korla City 47.2 47.2 30.0 17.2 36.4 Yanji Hui Autonomous 13.0 9.0 5.6 7.4 57.2 County Hejing County 18.3 15.1 8.3 10.1 54.9 Xinjiang Project Counties 155.7 148.4 95.0 60.7 39.0 Source: Xinjiang Statistical Yearbook, 2008

4.1.2 Economic Indicators

The total provincial gross regional product was 3,523.2 100 million CNY in 2007 providing Xinjiang with a per capita gross regional product of 16,815 CNY, the highest among the three Project provinces and second highest across all 12 Western provinces.

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Table 13: Xinjiang Regional Gross Product (2007) (100 million Yuan) Per % Regional Capita Primary Primary Secondary Tertiary Gross Gross Industry Industry Industry Industry Product Regional to Total Product GRP Xinjiang Province 3,523.2 628.7 1,647.6 1,246.9 16,815 17.8 Hami [Kumul] City 78.0 9.4 28.1 40.4 18,469 12.1 Changji City 108.0 17.0 42.7 48.4 25,042 15.7 Korla City 353.9 18.6 287.8 47.5 72,074 5.3 Yanqi Hui Autonomous 17.2 6.2 5.3 5.7 13,496 36.0 County Hejing County 25.1 8.9 8.0 8.2 13,621 35.5 Xinjiang Project Area 582.1 60.1 371.9 150.1 37,393 10.3 Source: Gansu. Shaanxi and Xinjiang Statistical Yearbooks, 2008

Primary industry accounts for 17.8 % of gross regional product or 628.7 million CNY but in the Project area primary industry accounts for only 10.3% of gross regional product. The gross value of agricultural output amounted to 106.3 million CNY in 2007 with farming accounting for 76.7 million CNY or 72.1%.

Table 14: Xinjiang Regional Gross Value of Agricultural Output (2007) (10,000's CNY) Output Animal % Total Farming Forestry Fishery Value of Husbandry Farming Services Xinjiang 10,634,648 7,669,468 208,623 2,315,097 70,149 371,311 72.1 Hami [Kumul] 159,272 97,442 4,354 53,415 1,258 2,803 61.2 Administrative Offices Hami [Kumul] City 88,466 66,114 1,553 18,383 921 1,495 74.7 Changji Hui Autonomous 1,192,472 600,042 21,362 542,356 9,755 18,957 50.3 Prefecture Changji City 227,981 112,494 3,680 102,820 6,238 2,749 49.3 Bayangol Mongol Autonomous 912,405 656,675 11,050 204,652 6,802 33,226 72.0 Prefecture Korla City 250,116 179,718 917 62,205 426 6,850 71.9 Yanqi Hui 98,854 57,796 875 36,044 519 3,620 58.5 Autonomous County Hejing County 86,182 44,456 1,793 37,327 136 2,470 51.6 Source: Xinjiang Statistical Yearbook, 2008 http://en.wikipedia.org/wiki/File:Urumqi_panorama.jpgXinjiang is known for its fruit produce, including grapes, melons, pears, cotton, , silk, walnuts and . Xinjiang also has large deposits of minerals and oil. Oil and gas extraction industry in Aksu and is booming, with the West–East Gas Pipeline connecting to . The oil and petrochemical sector account for 60% of Xinjiang's local economy.

4.2 Ethnic Minority People in Xinjiang

Xinjiang Autonomous Region has an ethnic minority population of 12.7 million or 60.7% of the total population. As percentage of the total provincial population the Uyghur comprise 46.1%, Kazak 7.1%, Hui 4.5%, Kyrgyz 0.9% and Mongolian 0.8%. Although more than 30

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different ethnic groups live in Xinjiang, all other ethnic groups combined comprise less than 1.3% of Xinjiang's population and no other single ethnic groups is larger than 0.2%18.

The Uyghur people are by far the dominant group accounting for 76% of the ethnic minority population in Xinjiang. Essentially all Uyghur people (99.8% or 9.6 million people) reside in Xinjiang. This is also true for Kazak and the ; although their populations are significantly smaller at 1.5 million and 181,000 respectively, essentially 100% reside in Xinjiang. Overall, 82% of Uyghur people live in rural areas of Xinjiang, above the provincial average out 60.8%.

Of the ethnic minority groups, the Uyghur, Kazakh, Hui, Kyrgyz, Tajik, and Uzbek are primarily ; although the two major ethnic minority groups, the Uyghur and Hui, often maintain their own mosques. The Hui are culturally closer to the Han than the Uyghur, the latter originally hail from the of and their linguistic origins are Turkic in origin. While the Kazakh are also Muslim, their cultural origins are not quite the same as the Uyghur and historically they have developed traditions associated with herding that are more nomadic than the Uyghur.

Table 15: Ethnic Minority Populations in Xinjiang (2007) (Persons) % of Total % of Ethnic Minority Populations Population Groups Uyghur 9,650,629 46.1 76.7 Kazak 1,483,883 7.1 11.8 Hui 942,956 4.5 7.5 Kyrgyz 181,862 0.9 1.4 Mongolian 177,120 0.8 1.4 Tajik 44,824 0.2 0.4 Xibo 42,444 0.2 0.3 Manchu 25,626 0.1 0.2 Uzbek 16,138 0.08 0.13 Russian 11,609 0.06 0.09 Daur 6,678 0.03 0.05 Tatar 4,728 0.02 0.04 Others 124,158 0.59 1.0 Minority 12,712,655 60.7 100 Nationalities Source: Xinjiang Statistical Yearbook, 2008

The percentage of ethnic in Xinjiang has grown from 6 percent in 1949 to an official tally of over 39% in 2007. This figure does not include military personnel or their families, or the many unregistered migrant workers. Much of this transformation can be attributed to the Xinjiang Production and Construction Corps, a semi-military organization of settlers that has built farms, towns, and cities over scattered parts of Xinjiang. The demographic transformation is held by Uyghur independence advocates as a threat to Uyghur and other non-Han ethnicities in maintaining their culture and recently violent riots have broken out between Uyghur and Han Chinese.

18 Ethnic minority groups by size of population in descending order are as follows: Uyghur, Kazak, Hui, Kyrgyz, Mongolian, Tajik, Xibo, Manchu, Uzbek, Russian, Daur, and Tatar. The Uzbek people number about 16,000 and there are less than 5,000 Tatar people.

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However, the minorities of Xinjiang are exempt from the one-child policy and consequently the natural growth for ethnic minority populations is twice the growth rate of that for Han Chinese.

4.2.1 Ethnic Minority Population in the Project Area

The Project area has a total population of 1.557 million with an ethnic minority population of 524,000 or 33.7% but accounting for only 4.1% of Xinjiang's total ethnic minority population.19 With a population of 320,000 and accounting for 20.6% of population, the Uyghur people are the largest ethnic group residing in the Project area. The next most numerous ethnic group is the , with a population of almost 118,000, accounting for 7.6 % of the Project area population. The next two notable ethnic groups are the Mongolian and Kazak people, with populations of 41.2 thousand and 30.9 thousand, accounting for 2.7 and 2.0% respectively. Other ethnic groups who live in the Project area account for less than 1% of the population. Overall in the Project area, with the exception of the Mongolian, Hui and Manchu populations, all ethnic groups are underrepresented as compared to their proportion in the total population of Xinjiang.

Table 16: Ethnic Minority Populations in the Project Area (2007) (Persons) Total Hami Yanji Hui Changji Korla Hejing Project [Kumul] City County Area City County Total Pop. 1,556,813 423,781 347,818 472,147 129,897 183,170 Han 1,032,602 291,853 256,523 329,090 56,865 98,271 Total Ethnic Minority Pop. 524,211 131,928 91,295 143,057 73,032 84,899 Uyghur 320,451 101,207 11,749 123,118 39,276 45,101 Hui 117,613 15,196 54,967 11,156 29,570 6,724 Mongolian 41,239 1,023 1,444 5,328 3,171 30,273 Kazak 30,929 11,245 18,557 87 39 1,001 Others 8,017 1,280 2,336 2,050 764 1,587 Manchu 3,978 1,693 1,267 845 82 91 Xibo 709 161 370 167 11 Russian 605 88 287 211 2 17 Kyrgyz 303 16 84 11 104 88 Uzbek 209 7 106 68 23 5 Tatar 102 3 98 1 Daur 46 9 23 12 1 1 Tajik 10 7 3 Source: Xinjiang Statistical Yearbook, 2008

19 Xinjiang Provincial Statistical Yearbooks 2008.

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Table 17: Ethnic Minority Populations as Percentage of Total Population (2007) (% of Population) Total Hami Yanji Hui Changji Korla Hejing Project [Kumul] Autonomous City City County Area City County Han 66.3 68.9 73.8 69.7 43.8 53.7 Total Ethnic Minority Pop. 33.7 31.1 26.2 30.3 56.2 46.3 Uyghur 20.6 23.9 3.4 26.1 30.2 24.6 Hui 7.6 3.6 15.8 2.4 22.8 3.7 Mongolian 2.65 0.24 0.42 1.13 2.44 16.53 Kazak 1.99 2.65 5.34 0.02 0.03 0.55 Others 0.515 0.302 0.672 0.434 0.588 0.866 Manchu 0.256 0.399 0.364 0.179 0.063 0.050 Xibo 0.046 0.038 0.106 0.035 0.000 0.006 Russian 0.039 0.021 0.083 0.045 0.002 0.009 Kyrgyz 0.019 0.004 0.024 0.002 0.080 0.048 Uzbek 0.013 0.002 0.030 0.014 0.018 0.003 Tatar 0.007 0.001 0.028 0.000 0.000 0.000 Daur 0.003 0.002 0.007 0.003 0.001 0.001 Tajik 0.001 0.000 0.002 0.001 0.000 0.000 Source: Xinjiang Statistical Yearbook, 2008

During the Project social assessment, the percentage of ethnic minority population in the villages visited ranged from 26% to 56%.

4.2.2 Overview of Hami City

Hami [Kumul] Administrative Offices is a prefecture located in eastern Xinjiang, 595 kilometers from Urumqi, the capital of the Xinjiang Uyghur Autonomous Region. It is 308 kilometers from the border of Mongolia. The capital, Hami City (also refereed to as Kumul City) administers 15 townships, 2 towns and 92 villages.

The total population of Hami was 423,781 in 2007 with an average household size of 3 persons. The total ethnic minority population of Hami City is 131,928 or 31.1% of the total population of Hami City. The most populous ethnic minority group is the Uyghur with 23.9% of the total population, followed by the Hui with 3.6%, and the Kazak with 2.7% of the population. Apart from these three ethnic minority groups, there are 20 other ethnic minority groups including the Mongol, Xibo, Russian, Kyrgyz, Xibo, Tajik, Uzbek, Tartar, and Daur peoples.

The total provincial gross regional product of Hami City was 78.0 100 million CNY in 2007 providing Hami with a per capita gross regional product of only 18,469 CNY, which is above the provincial average (see table 13).

Primary industry accounts for 12.1% of gross regional product or 9.4 100 million CNY. The gross value of agricultural output amounted to 0.885 100 million CNY in 2007 with farming accounting for 0.661 million CNY or 61.2%.

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4.2.3 Overview of Changji City

Changji Hui Autonomous Prefecture is a prefecture located 35 kilometers from Urumqi. The capital, Changji City has 10 government administrative area, 6 towns and 88 villages.

The total population of Changji City is 347,818 with an average household size of 3.1 persons. The total ethnic minority population of Changji City is 91,295 or 26.2% of the total population of Changji City. The most populous ethnic minority group is the Hui with a total population of almost 55,000 or 15.8% of the total population, followed by the Kazak people who make up 5.3% of the population. Unlike other areas in Xinjiang the Uyghur people comprised a relatively small proportion of the population and make up only 3.4%. The remaining ethnic groups make up about 1.7% of the Changji City population.

The total gross regional product of Changji City was 108.0 100 million CNY in 2007 providing Xinjiang with a per capita gross regional product of only 25,042 CNY, which is above the provincial average and the second highest in the Project area (see table 13).

Primary industry accounts for 15.7% of gross regional product or 17 100 million CNY. The gross value of agricultural output amounted to 2.3 100 million CNY in 2007 with farming accounting for 1.1 million CNY or 49.3%.

4.2.4 Overview of Korla City, Hejing County and Yanqi County

Bayinguoleng Mongolia Autonomous Prefecture, or Bazhou, as it is commonly referred to, governs 8 counties of which three, Yanqi, Hejing and Korla City (also known as Korla City) will be involved in the Project.

The total populations of Korla City, Hejing County and Yanqi County are, 472,147, 183,170 and 129,897 respectively. The average household size in these counties is 2.5 persons, 3.2 persons and 3.0 persons for Korla City, Hejing County and Yanqi County respectively. However, the average size of rural households is significantly larger at 8.5 person, 3.8 persons and 5.2 persons for Korla City, Hejing County and Yanqi County respectively.

The total ethnic minority population in the Bayinguoleng Mongolia Autonomous Prefecture Project area is 1,224,080 or 57.5% of the total Prefecture population and a high percentages of ethnic minority people reside in each of the three Project counties (Korla City 143,057 or 30.3%, Hejing County 84,899 or 46.3% and Yanqi County 73,032 or 56.2%). The most populous ethnic minority group in all three counties is the Uyghur (Korla City 26.1%, Yanqi County 30.2% and Hejing County 24.6%). The other two most populous groups are the Hui people (Korla City 2.4%, Yanqi County 22.8% and Hejing County 3.7%) and Mongolian people (Korla City 1.1%, Yanqi County 2.4% and Hejing County 16.5%).

The total provincial gross regional products of Korla City, Hejing County and Yanqi County were 352.9, 17.2 and 25.1 100 million CNY in 2007 respectively, a per capita gross regional product of 72,074, 13,496 and 13,621 CNY respectively. Although, Korla City per capita income is exceptionally high due to the development in Korla City, a per capita income of the other two counties is below the provincial average (see table 13).

Primary industry accounts for only 5.3% of Korla City's gross regional product of 353.9 100 million CNY or about 18.6 100 million CNY. Primary industry accounts for about 36% of gross regional product in both Hejing County (6.2 100 million CNY) and Yanqi County (8.9

22 Preparing the FEDP in Three NWP of PRC: Draft EMDP

100 million CNY). The gross value of agricultural output accounted for 71%, 58.5% and 51.6% of primary industry output in Korla City, Hejing County and Yanqi County respectively.

4.3 Incomes in the Project Area

Table 18, provides a comparison of rural and urban income levels in Xinjiang as compared to Gansu and Shaanxi. On average rural incomes in the Xinjiang Project area are only about 50% of those in corresponding urban areas, a much higher ratio than found in Gansu and Shaanxi where urban incomes are on average 4.3 times and 4.1 times higher than rural incomes respectively.

Table 18: Comparison of Urban and Rural Per Capita Incomes (2007) (CNY) Urban Per capita Rural Per Capita Net Ratio of Urban to Disposable Income Income Rural Incomes Gansu 10,012 2,329 4.3 Tianshui 8,319 1,803 4.6 Pingliang 8,788 2,095 4.2 Qingyang 8,396 2,030 4.1 Dingxi 8,343 1,863 4.5 Longnan 7,653 1,600 4.8 Linxia 5,873 1,595 3.7 Shaanxi 10,763 2,645 4.1 Xian 12,662 4,399 2.9 Tongchuan 8,163 2,620 3.1 Baoji 10,993 2,888 3.8 Xianyang 10,970 2,914 3.8 8,827 2,410 3.7 Yanan 9,801 2,845 3.4 Hanzhong 8,209 2,393 3.4 Ankang 8,051 2,256 3.6 Xinjiang 10,313 3,183 3.2 Hami [Kumul] City 9,198 3,366 2.7 Changji City 10,651 5,004 2.1 Korla City 9,117 4,459 2.0 Yanqi County 8,005 4,897 1.6 Hejing County 6,580 4,243 1.6 Source: China Development Report, China Statistics Press, 2008; Gansu. Shaanxi and Xinjiang Statistical Yearbooks, 2008

In 2008, the national rural poverty line was annual per capita net income below 1,196 CNY. Table 19 provides a percentage breakdown of rural households by net income group. Based on China's new rural income poverty line 16.5%, 9.7% and 15.9% of rural households are at or below the poverty line in Gansu, Shaanxi and Xinjiang respectively. Absolute poverty is measured somewhat differently in the three project provinces but applying a food poverty line of 800 CNY would place 4.6%, 3.2% and 6.8% of the rural population below this level.

23 Preparing the FEDP in Three NWP of PRC: Draft EMDP

Table 19: Percentage of Rural Households Grouped by Per Capita Annual Net Income (2007) Income Groups Gansu Shaanxi Xinjiang 0 - 400 1.0 1.6 400-600 Yuan 1.2 0.7 1.7 600-800 Yuan 3.4 1.5 3.5 800-1000 Yuan 4.9 2.5 4.1 1000-1200 Yuan 7.0 4.0 5.0 1200-1500 Yuan 12.8 8.9 7.2 1500-1700 Yuan 7.9 5.8 4.7 1700-2000 Yuan 10.1 9.7 8.1 2000-2500 Yuan 14.9 18.0 10.5 2500-3000 Yuan 11.2 13.8 8.8 3000-3500 Yuan 7.9 9.8 8.3 3500-4000 Yuan 3.9 7.3 6.5 4000-4500 Yuan 4.1 5.6 6.7 4500-5000 Yuan 3.6 2.8 4.4 5000Yuan and over 7.1 8.5 19.0 100.0 100.0 100.0 Total Households below the National Rural Poverty line 16.5 9.7 15.9 annual per capita net income below 1,196 Yuan Source: Gansu. Shaanxi and Xinjiang Statistical Yearbooks, 2008

A social assessment completed in 200820 reported that the annual per capita income of ethnic minority households in Hami in ranged from CNY 15,520 for public sector employees (CNY 18,242 for the overall population) to CNY 19.450 for private sector waged employment (CNY 20,138 for the overall population). In the livestock and crop industry, the annual per capita annual income of ethnic minority households is CNY 16,470 (CNY 14,478 for the overall population), and small and medium enterprises CNY 17,550 (CNY 14,352). Hence, ethnic minority households fare better in some sectors of the economy than the Han.

However, there is a greater percentage of ethnic minority households in Hami living on the equivalent of less than US$2 per day (21.6% compared to 17.9% of the overall population), US$1 per day (17.6% compared to 11.1% of the overall population), US$0.5 per day (2% compared to 1.6% of the overall population), and in receipt of the Minimum Living Standard Allowance (MLSA) (11.1% compared to the overall population of 4.7%). Disposable income was CNY 1,330 for ethnic minority households compared to CNY 1,704 for the overall population. Food consumption as a percentage of monthly expenditure was 44% for ethnic minority households and 40% for the overall population and net value of household assets was CNY 128,634 for ethnic minority households and CNY 251,948 for the overall population.

The same 2008 social assessment, found that one-quarter (25%) of ethnic minority households in Changji City lived on less than the equivalent of US$2 per capita, per day (cf. 12.6% of the general population); 8.4% on less than US$1 per capita, per day (cf.6.2% of the general population); 0.7% on the equivalent of less than US$0.50 per capita, per day (cf. 1.6% of the general population; and, all households in receipt of MLSA (3.1%) are ethnic

20 Xinjiang Urban Transport and Environmental Improvement Project

24 Preparing the FEDP in Three NWP of PRC: Draft EMDP

minority households. However, other quantitative indicators of poverty such as food consumption as a percentage of monthly expenditure (33% for ethnic minority households compared to 31% for the general population); monthly income surplus over expenditure per household (CNY 3,183 compared to CNY 2,189 for the general population) and net value of households assets (CNY 325,496 compared to CNY 343,426) indicate that ethnic minority households are nearly as well off as the general population.

However, in the private sector per capita household incomes at CNY 26,616 are higher for Han households than the CNY 23,250 per capita household income for ethnic minority households. In relation to small and medium enterprises ethnic minority households actually have higher per capita incomes averaging CNY 16,650 than the CNY 14,848 of Han households but a smaller percentage of ethnic minority households (3.6%) derived their livelihoods in Changji compared to Han households (14%) according to the SES. It is instructive to note that for households classified as poor by the SES (less than US$1 per capita per day) the per capita household incomes are up to 40% lower than for both non-poor ethnic minority households and Han households.

4.4 Households

4.4.1 Household Size and Composition

Chinese households are generally small; the mean size of a household reported by the statistical Yearbook is 3.4 members but in Western China the average number of people usually residing in a dwelling is three.

Overall, the average household size in Xinjiang the average household size is 3.4. However, the average household in the Project counties of Xinjiang has 2.9 persons. This low household size is due to Korla city (average household 2.50) and all Project counties except Hejing are below the provincial average of 3.4 persons per household.

Rural household are usually larger, averaging 4.7 persons in Xinjiang as compared to 3.0 for urban households.

Table 20: Population of the Project Area (2007) Number of Number of Average Average Population Natural Rural Households Household Size Rural (10,000's) Growth Rate Households (10,000's) Size Household (10,000's) Xinjiang Province 2,095.2 614.4 3.4 11.8 233.4 4.6 Hami [Kumul] City 42.4 13.9 3.0 6.0 2.8 4.3 Changji City 34.8 11.2 3.1 8.2 2.9 3.9 Korla City 47.2 19.0 2.5 8.6 1.8 8.5 Yanji Hui 13.0 4.0 3.2 12.8 1.8 3.8 Hejing County 18.3 6.1 3.0 8.4 1.7 5.2 Xinjiang Project 155.7 54.2 2.9 11.0 5.0 Counties Source: Gansu. Shaanxi and Xinjiang Statistical Yearbooks, 2008

Overall in Xinjiang, and in each of the Project counties, the birth rate for ethnic minority groups is significantly higher than for the Han population. For example, in Hami and Changji the birth rates are 14.9% and 16.8% compared to the Han population at 9.9% and 11% respectively. Although death rates among ethnic minority groups are slightly higher than for

25 Preparing the FEDP in Three NWP of PRC: Draft EMDP

the Han population. Overall in Xinjiang, the natural growth rate for ethnic minorities is 17.0% compared to the Han at 11.8%. Hence the ethnic minority population is increasing at a faster rate in Xinjiang and the project area than the Han population.

Table 21: Population Growth Rates in Project Area (2007) Natural Birth Minority Death Minority Minority Growth Rate Nationalities Rate Nationalities Nationalities Rate Xinjiang 16.8 22.2 5.0 5.2 11.8 17.0 Hami [Kumul] City 9.9 14.9 3.9 4.7 6.0 10.3 Changji City 11.0 16.8 2.8 3.1 8.2 13.7 Korla City 11.7 20.8 3.1 3.7 8.6 17.2 Yanji Hui Autonomous County 17.5 20.9 4.6 4.6 12.8 16.4 Hejing County 14.2 20.3 5.9 6.6 8.4 13.7 Source: Gansu. Shaanxi and Xinjiang Statistical Yearbooks, 2008

Due to the small population and the increasing economic development of the province, there is little out migration in Xinjiang. Over 98% of Uyghur people reported that that they usually reside in their Xinjiang place of residence and over 86.7% reported that they still live in the village or township in which they were born, with another 7.8% reporting that they still live in the same county as their birth. Overall in Xinjiang only 3.6% of people left their community to look for work in 2007 but only 2.4% of Uyghur people.

Table 22: Household Members Usually in the Dwelling (2004-2005) % of Households Number Households Members Single Three Two member 4 - 6 member with more Usually in member member household household than 6 the Dwelling household household members Project Provinces Gansu 3.9 2.9 16.4 25.1 50.5 5.1 Shaanxi 2.3 5.3 25.2 28.1 40.1 1.4 Xinjiang 4.1 2.5 13.4 26.5 48.3 9.3 North West 3.6 3.6 19.9 29.9 42.6 4.0 Han 5.0 6.0 24.7 28.9 37.7 2.7 Uyghur 3.3 1.5 19.1 13.5 63.4 16.4 Hui 4.4 2.6 10.2 19.8 55.9 11.4 Source: Life in Western China, Chinese Statistical Press, 2008

For Western China, the household dependency ratio indicates the proportion of children under 15 and old people 65 years and above, constitutes the total of members of the household. The household dependency ratio declines steadily as income rises: for the western provinces the lowest income group has an average household dependency ratio of 0.38 but this drops to 0.22 for the highest income group.

26 Preparing the FEDP in Three NWP of PRC: Draft EMDP

Table 23: Household Composition (%) (2004-2005) Household Children Children 5 - With No Children Under Five 15 In The Children In The In The Household Both 0 - 5 Household Household And 5- 15 Project Provinces Gansu 10.8 42.8 7.8 38.7 Shaanxi 8.4 39.5 4.0 48.0 Xinjiang 10.5 37.1 8.2 44.2 North West 10.0 38.5 5.3 46.1 Han 12.4 41.0 8.0 38.6 Uyghur 11.3 46.2 19.9 22.6 Hui 15.1 44.2 14.5 26.1 Source: Life in Western China, Chinese Statistical Press, 2008

Twenty-two percent of the population in China's Western provinces is less than 15 years old. There is a difference in the size of young populations across the provinces; in Gansu 24.1% of the population is under the age of 15 whereas in Shaanxi only 19.3% are under 15 and in Xinjiang this group accounts for 23.2%. Compared to the total population in China, the Western regions have a higher proportion of young people. Yet, in none of the three Project provinces is the number of children between zero and four larger than the number of children between five and nine years indicating a decreasing young population.

Table 24: Age Distribution (% of Population) (2007) Gansu Shaanxi Xinjiang 0 -4 5.0 3.5 5.7 5 - 9 8.2 5.7 7.4 10 -14 10.9 10.1 10.1 15 - 19 9.7 10.2 10.5 20 - 24 5.6 6.6 8.4 25 - 29 5.8 5.5 7.4 30 - 34 10.0 7.8 9.0 35 - 39 10.7 9.2 9.2 40 - 44 6 .8 8.9 6.4 45 - 49 6.1 8.2 5.5 50 - 54 5.8 6.4 4.4 55 - 59 4.6 5.3 4.8 60 - 64 4.2 4.2 4.3 65 - 69 3.0 3.1 3.1 70 - 74 2.1 2.8 2.0 75 + 1.5 2.2 1.9 Source: Gansu. Shaanxi and Xinjiang Statistical Yearbooks, 2008

There has been an increase in the number of senior citizens since the census in 2000. At that time about 6% of the total population of the three provinces was over 64 years. However, in 2007 the percentage of the population over the age of 64 years accounts for 6.6%, 8.1% and 7.0% in Gansu, Shaanxi and Xinjiang respectively.

The population in the three provinces shows clear signs of an incipient decline in age. The age group between 20 and 29 years old is substantially smaller than the age groups above them (11.4% in Gansu, 12.1% in Shaanxi and 15.8% in Xinjiang). This age group was the first to be affected by the one child policy implemented in the late 1970s and the early 1980s. The age cohorts between 10 and 19 are somewhat larger than those above them,

27 Preparing the FEDP in Three NWP of PRC: Draft EMDP

representing a "demographic echo" from the large population between 30 and 39 years. Still, for the youngest children the results show a very rapid decline.

4.4.2 Household Facilities

Virtually all households, urban and rural have access to electricity. Use of common electrical appliances among ethnic minority households is nearly on a par with Han households, but for the poor and vulnerable ethnic minority households' ownership and usage rates for many consumer durables is lower.

In Xinjiang, more than 40% of household reported using wood or agricultural by-products for cooking and almost all use the traditional (laozoa) stove. For those that had a kitchen, 32.7% of these were unventilated and 29.3% of households reported having no designated kitchen.

Table 25: Facilities Used For Cooking (% of Households) (2004-2005) Main Source of Cooking Fuel Type of Kitchen Use Kitchen In Agricultural Kitchen In No Wood or Traditional House With Region Sideline House With Designated Branches Stove No Products Ventilation Kitchen "Laozoa" Ventilation Project

Provinces Gansu 26.3 36.5 48.4 85.6 19.3 43.6 14.3 Shaanxi 36.8 30.3 46.5 75.4 18.3 42.6 17.3 Xinjiang 36.6 4.9 31.0 93.9 28.9 32.7 29.3 Western Region 43.7 27.6 33.2 82.8 15.0 56.1 18.4 North West 2514 27.2 43.2 84.6 24.1 41.9 19.2 Rural 56.4 36.3 34.0 84.6 2.5 64.4 20.4 Urban 5.7 1.2 30.8 68.4 52.4 31.2 12.3 Lowest Income 59.0 32.6 29.5 85.5 2.7 54.4 29.3 Low Income 55.2 34.0 34.8 84.2 3.9 61.9 22.0 Middle Income 48.2 32.5 38.5 83.4 7.0 64.5 17.1 High Income 38.9 26.7 37.2 80.4 14.8 61.2 14.7 Highest Income 17.2 11.9 25.7 77.4 46.7 38.3 9.0 Source: Life in Western China, Chinese Statistical Press, 2008

Sources of and access to safe drinking water in Xinjiang is a serious concern. Although overall 61.5 % of households report tap water as there are main source of water, disparities between urban and rural areas are a significant. Almost 25% of rural households reported a lack of continuous access to safe drinking water.

28 Preparing the FEDP in Three NWP of PRC: Draft EMDP

Table 26: Source of Drinking Water (% of Households) (2004-2005) Tap Covered Uncovered Pressure River Reservoir Water Well Well Well Stream Spring /Lake Rain Bottled Other Project

Provinces Gansu 33.3 17.7 5 10.5 5.5 14.7 1.4 9.2 1.6 1.1 Shaanxi 28.1 42.2 5.4 5.5 5.2 8.2 0.3 2.3 2.1 0.7 Xinjiang 61.5 4.3 1.4 17.9 5.4 2.3 2.4 0.1 2.4 2.3 Western 27.8 22.1 13.3 9.6 5.3 14.4 1.7 1.8 2.9 1.1 Region North West 43.3 20.3 4.1 13.8 4 6.9 0.8 3 2.51 1.29 Rural 11.8 27.6 17.2 11.6 7 18.7 2.2 2.4 0.4 1.1 Urban 75.8 5.6 1.3 3.6 0.4 1.6 0.3 0.1 10.1 1.2 Lowest Income 14.0 22.1 16.8 10.1 8.8 21.2 2.3 3.0 0.6 1.1 Low Income 16.9 24.2 16.8 10.4 6.8 18.4 2.1 2.5 0.6 1.3 Middle Income 22.1 26.1 14.8 10.6 5.4 15.4 1.8 1.9 0.7 1.2 High Income 31.2 23.9 12.7 10.3 4.2 11.3 1.6 1.1 2.6 1.1 Highest 54.6 14.1 5.1 6.7 1.5 5.7 0.8 0.5 9.9 1.1 Income Source: Life in Western China, Chinese Statistical Press, 2008

Table 27: Percentage of Population Reporting Lack of Access to Safe Drinking Water (% of Households) (2004-2005) Unsafe Drinking Water Urban Rural Project Provinces Shaanxi 1.8 27.4 Gansu 2.3 48.7 Xinjiang 1.2 23.5 Western Region 4.2 48.4 North West 1.7 30.4 Lowest Income 7.2 56.8 Low Income 5.2 53.5 Middle Income 3.6 48.7 High Income 3.0 45.8 Highest Income 2.4 36.9 Source: Life in Western China, Chinese Statistical Press, 2008

In Xinjiang, almost 28% of households did not have a source of drinking water within the confines of their household. Of these, 17% had to travel for less than 15 minutes and about 5.6% had water with in a 15 to 60 minute distance. About 1.5% of households had to travel more than one hour to access safe drinking water.

29 Preparing the FEDP in Three NWP of PRC: Draft EMDP

Table 28: Time and Distance to Drinking Water (2004-2005) (% of Households) Water Water in Less More Bottle or Pumped Yard or 15-29 30-60 1-2 Than 15 Than 2 Water into Residence Minutes Minutes Hours Minutes Hours Truck Dwelling Building Project Provinces Shaanxi 25.0 47.2 15.6 4.1 3.2 1.5 0.6 2.8 Gansu 26.7 22.9 27.0 8.0 9.0 3.2 0.8 2.5 Xinjiang 52.8 19.6 17.1 2.8 2.8 1.0 0.5 3.4 Western Region 42.1 24.2 20.2 5.1 3.7 1.1 0.4 3.2 North West 39.9 25.6 21.2 4.3 3.9 1.5 0.5 3.2 Rural 31.8 29.5 24.9 6.6 4.8 1.4 0.5 0.6 Urban 72.8 8.5 6.2 0.8 0.6 0.2 0.1 10.8 Lowest Income 26.4 27.7 26.5 8.5 7.1 2.2 0.8 0.7 Low Income 33.4 28 24.4 6.7 5 1.4 0.3 0.8 Middle Income 39.4 27.7 21.5 5.7 3.5 1.0 0.2 1 High Income 48.4 23.9 18.1 3.6 2.2 0.7 0.3 2.8 Highest Income 62.6 13.7 10.7 1.3 0.8 0.3 0.1 10.4 Source: Life in Western China, Chinese Statistical Press, 2008

Winters in Xinjiang are cold with temperatures often dropping below zero. Methods of heating among rural and urban households also differ significantly. For urban households, central heating (67.1%) and the use of stoves (25%) are the main sources of heating in winter but in rural areas 82% of households used stoves (mainly fueled by coal) and 28.8% use a traditional heated bed or wall for winter heating.

Table 29: Type of Heating in Winter - Urban Areas (% of Households) (2004-2005) Central, Air Heated Electrical Coal No Piped Condi- Bed or Stove Other Heating Pan Heating Heating tioner Wall Project Provinces Gansu 70.6 0.3 1.1 3.6 26.3 0.3 0.4 0.4 Shaanxi 48.3 4.6 4.1 8.9 35.4 2.1 0.5 3.5 Xinjiang 67.1 0.8 0.2 12.4 25.0 0.4 - - Western Region 27.1 5.0 9.5 8.8 21.0 4.3 0.3 28.3 North West 56.0 1.3 1.5 18.4 28.1 0.6 0.3 0.8 Lowest Income 12.8 1.8 3.0 11.7 31.8 7.3 0.3 35.4 Low Income 19.6 2.5 5.4 10.9 28.0 6.2 0.4 32.4 Middle Income 24.9 2.4 8.5 9.8 23.4 4.0 0.3 30.6 High Income 33.8 6.4 13.8 7.7 15.2 2.7 0.3 24.3 Highest Income 42.5 11.2 15.8 4.4 8.0 1.6 0.2 19.9 Source: Life in Western China, Chinese Statistical Press, 2008

30 Preparing the FEDP in Three NWP of PRC: Draft EMDP

Table 30: Type of Heating in Winter - Rural Areas (% of Households) (2004-2005) Central, Air Heated Electrical Coal No Piped Condi- Bed or Stove Other Heating Pan Heating Heating tioner Wall Project Provinces % Gansu 0.4 0.0 0.3 71.7 70.5 3.5 0.2 0.5 Shaanxi 0.9 0.5 1.1 47.3 48.8 14.4 1.2 4.6 Xinjiang 2.4 0.0 0.0 28.8 82.1 0.3 0.4 0.7 Western Region 0.9 0.2 1.0 16.7 29.6 27.9 1.0 32.1 North West 0.9 0.2 0.5 57.9 62.1 6.5 0.7 2.0 Lowest Income 0.2 0.3 0.2 15.4 26.8 32.9 1.6 28.8 Low Income 0.2 0.2 0.3 17.8 29.3 30.9 1.2 29.4 Middle Income 0.1 0.1 0.7 17.4 30.7 27.0 1.0 32.7 High Income 0.2 0.1 0.9 16.0 30.3 26.2 0.6 34.7 Highest Income 0.9 0.4 3.0 17.3 31.3 22.0 0.7 35.0 Source: Life in Western China, Chinese Statistical Press, 2008

Access to sanitation also varies greatly among urban and rural areas in Xinjiang. Whereas flush toilets are the norm in urban areas (71.6%) they are the exception in rural areas (3.3%). Although open pit latrines are not uncommon in urban areas (23%) they are the most used form of sanitation facility in rural areas (65.6%). However, in rural areas 27.6% of households, as compared to only 1.3% in urban areas, have no toilet facilities.

Table 31: Type of Toilet (% of Households) (2004-2005) Urban Areas Rural Areas Covered Open Covered Open Flush Pit Pit No Flush Pit Pit No Toilet Latrine Latrine Toilet Other Toilet Latrine Latrine Toilet Other Project Provinces Gansu 76.6 2.3 20.7 - 0.4 2.2 12.9 70.9 12.6 1.4 Shaanxi 74.1 6.1 19.6 0.2 - 10.3 13.9 73.9 1.6 0.3 Xinjiang 71.6 3.7 23.0 1.3 0.4 3.3 2.6 65.6 27.6 1.0 Western Region 76.5 3.3 19.4 0.7 0.2 16.2 10.7 64.6 5.9 2.5 North West 64.5 4.3 29.8 1.2 0.2 5.3 11.1 72.9 9.0 1.8 Lowest Income 59.6 5.5 33.3 1.2 0.4 10.6 9.4 67.0 9.0 4.0 Low Income 70.6 3.8 24.4 0.9 0.2 11.2 11.9 67.4 6.6 3.0 Middle Income 74.6 4.2 20.3 0.7 0.2 14.3 10.6 67.6 5.0 2.5 High Income 84.3 1.6 13.6 0.3 0.1 18.8 11.4 63.7 4.3 1.8 Highest Income 91.2 1.6 6.8 0.3 0.1 26.7 10.4 57.2 4.3 1.4 Source: Life in Western China, Chinese Statistical Press, 2008

Road access in Xinjiang is relatively good although the majority of rural roads are unpaved. Only 5.5% of households report they had no road access.

31 Preparing the FEDP in Three NWP of PRC: Draft EMDP

Table 32: Access to Roads (% of Households) (2004-2005) All Rural Paved Gravel Paved Gravel

Road Road Dirt Road No Road Road Road Dirt Road No Road Project Provinces Gansu 31.4 10.9 36.5 21.2 13.8 10.4 47.3 28.5 Shaanxi 35.5 10.1 36.6 17.8 22.4 10.2 46.6 20.8 Xinjiang 42.5 12.0 42.2 3.3 13.6 16.5 64.4 5.5 Western Region 30.1 9.6 28.6 31.7 13.9 10.2 34.9 41.0 North West 38.5 10.1 39.8 11.6 17.3 11.4 54.5 16.9 Rural 13.9 10.2 34.9 41.0 Urban 79.0 7.7 9.6 3.8 Lowest Income 13.4 8.7 30.0 47.9 8.9 8.3 30.8 52.1 Low Income 16.9 9.5 32.7 40.9 10.5 9.7 33.3 46.5 Middle Income 22.9 11.0 33.1 33.0 13.1 10.2 36.7 40.0 High Income 33.5 10.6 29.6 26.3 14.9 10.8 36.7 37.5 Highest Income 64.2 8.1 17.2 10.5 22.2 12.3 36.9 28.6 Source: Life in Western China, Chinese Statistical Press, 2008

According to a social assessment conducted in 200821 mobile phone ownership is quite high in ethnic minority households with 71% of households owning one. However, among poorer households mobile phone ownership is 100%, in large part because poor households cannot afford fixed landlines. Computer ownership is not very great (9% of ethnic minority households and 11% of Han households) but no poor and vulnerable households, irrespective of ethnicity own or use a computer, except if they access an internet café.

4.5 Education

4.5.1 Literacy

Close to 28% of the population in Western China older than 15 years cannot read. There are clear differences between urban and rural areas with concern to the ability to read; less than 10% in urban areas are illiterate, whereas more than 36% in rural areas say they cannot read in any language. In Xinjiang, 78% of people can read in one language or other, however, only 45% can read easily in the . As with most indicators, there is a significant variance between rural and urban literacy rates, with rural literacy rates being about half those of urban rates in the Western region.

21 Xinjiang Urban Transport and Environmental Improvement Project

32 Preparing the FEDP in Three NWP of PRC: Draft EMDP

Table 33: Literacy by Province (% of People) (2004-2005) Literacy in any language Literacy in Han language Can read it Can Read Can not Can Read with Male Female easily read easily difficulty Project

Provinces Gansu 57.5 9.2 33.3 57.5 68.6 46.4 Shaanxi 69.0 13.0 18.0 69.0 76.1 61.7 Xinjiang 78.0 7.4 14.6 45.1 46.7 43.4 Western 56.3 15.8 27.9 54.3 62.2 46.1 Region North West 68.9 10.4 20.7 63.2 70.2 56.1 Rural 43.9 19.2 36.8 41.5 Urban 83.8 7.8 8.4 82.6 Source: Life in Western China, Chinese Statistical Press, 2008

Literacy among Uyghur people is relatively high (71.5%) and significantly higher than the general Han population (58.2%) in the western region. The literacy rate for Uyghur men is 73.7% but only 69.3% for Uyghur women.

There is a clear change in the ability to read across age groups. Literacy is relatively low in the age groups above 45. On the other hand, literacy is high among the younger age groups with close to 90% of people aged 15 to 20 or able to read without difficulty.

Table 34: Percentage of Population 15 + Literate - Western Region (% of People) (2004-2005) Literacy in any language Literacy in Han language Can Can read Can Can read Can not Can not Total Read it with Read it with read read easily difficulty easily difficulty Han 58.2 15.8 26 58.2 15.8 26 Male 64.4 17.2 18.4 62.2 17.3 20.5 Female 48.0 14.3 37.7 46.1 14.3 39.5 Uyghur 71.5 10.0 18.5 7.3 10.8 81.9 Uyghur 73.7 9.4 17.0 6.9 11.4 81.7 Male Uyghur 69.3 10.6 20.0 7.7 10.1 82.2 Female Age Group 15 - 19 88.3 7.7 4.0 84.5 8.9 6.6 20 - 24 81.6 10.3 8.1 77.1 10.8 12.1 25 - 29 73.5 13.7 12.8 70.4 13.9 15.7 30 - 34 64.5 17.0 18.4 62.3 17.0 20.7 35 - 39 61.0 19.5 19.6 59.3 19.4 21.3 40 - 44 62.6 17.2 20.3 61.1 17.0 21.9 45 - 49 48.9 16.9 34.2 47.6 16.7 35.7 50 - 54 38.8 60.6 40.6 37.6 20.4 42.0 55 - 59 36.4 21.8 41.8 34.9 21.5 43.6 60 - 64 34.4 17.9 47.7 33.1 17.7 49.1 65 - 69 26.6 16.5 56.9 25.7 16.3 58.0 70 - 74 19.5 12.5 67.9 18.8 12.4 68.8 75 + 13.7 9.5 76.8 13.2 9.2 77.6 Source: Life in Western China, Chinese Statistical Press, 2008

33 Preparing the FEDP in Three NWP of PRC: Draft EMDP

Close to 90% of the population in the Western speak Han Chinese as their main language in the household. Three provinces stand out with less than 80% of the population speaking Han Chinese - , where more than 20% speak some other minority language, , were close to 30%speak Zhuang language and Xinjiang were about an equal percentage of the population speak Uyghur and Han (46%).

Almost all (99.5%) of Uyghur people speak the as the main language at home, with only 8.9% being able to understand the Han language.

Table 35: Spoken Language and Access to Schools by Ethnic Group (% of People) (2004-2005) Han used as Main Understand

language in Han Chinese household Western region 87.2 48.2 North West 88.8 20.3 Xinjiang 45.4 12.2 Han 99.9 87.2 Hui 99.3 70.3 Uyghur 0.4 8.9 Other Ethnic 53.8 53.1 Groups Rural 84.5 43.5 Urban 94.2 73.3 Male 54.6 Female 41.4 Source: Life in Western China, Chinese Statistical Press, 2008

4.5.2 Completed Education

Education through to year nine is compulsory in China. A major recent initiative to address the goal of universal primary and junior secondary education has been the compulsory education finance reform. Introduced in March 2006, and written into the revised Education Law in September 2006, the reform repeals tuition/miscellaneous fees and textbook fees for all students, and provides boarding subsidies to poor students (the so-called “two exemptions and one subsidy” policy) to reduce the households’ financial burden of educational expenses, improve access and raise completion rates.

This has helped reduce the rural/urban gap in per student revenues, as well as the gap in spending per student across the primary, junior and senior secondary levels, thus contributing to a pro-poor shift of education financing. Fee reduction has improved enrolment probabilities for girls, poorer students, and those in higher grades. Gross enrolment rates at the junior secondary level are estimated to have reached 98% in 2007.

34 Preparing the FEDP in Three NWP of PRC: Draft EMDP

Table 36: Completed Education (% of People) (2004-2005) Average Never Junior Senior Incomplete Higher years of attended Primary high high primary education completed school school school education Project Provinces Gansu 29.4 13.1 16.4 26.6 11.2 3.4 7.4 Shaanxi 15.2 7.2 21.2 37.9 13.4 4.8 8.4 Xinjiang 13.0 9.7 21.3 36.5 12.1 7.4 8.2 Western Region 21.8 15.2 22.1 28.8 8.8 3.4 7.2 North West 18.3 9.5 19.0 34.7 13.1 5.4 8.1 Rural 28.4 19.1 24.3 23.5 4.1 0.5 6.2 Urban 7.2 6.3 16.7 40.0 19.3 10.4 9.3 Male 12.9 15.8 24.6 32.6 10.1 4.1 7.4 Female 31.0 14.5 19.5 24.8 7.4 2.8 7.0 Han 20.0 14.6 21.9 30.0 9.6 3.8 7.4 Uyghur 15.6 10.5 21.1 36.9 14.4 6.6 7.0 Hui 32.1 12.0 17.2 25.7 9.0 3.9 7.5 Source: Life in Western China, Chinese Statistical Press, 2008

Overall, in Xinjiang 21% of people have completed primary education and this is the same for both Han and Uyghur people but only about 17% of Hui people have completed primary school. Regardless of the fact that average years of completed school for Uyghur people is slightly lower than that for Han (7.0% compared to 7.4%), more Uyghur people have completed junior high school than Han (36.9% as compared to 30.0%). The same is true for senior high school (14.4% Uyghur completion rate as compare to 9.6% for Han people) and for higher education where 6.6% the Uyghur people compared to only 3.8% Han people have completed a higher education degree.

Overall in Western China, 82% of Han people have never used a computer, but for Uyghur and Hui people this is 93% and 81% respectively.

Table 37: Access to Schools (% of Households) (2004-2005) No Primary school No Junior Middle School within 30 minutes within 30 minutes Project Provinces Gansu 11.4 49.0 Shaanxi 9.3 47.3 Xinjiang 12.3 40.0 Western Region 15.3 55.5 North West 10.8 43.5 Rural 18.8 67.7 Urban 6.3 24.4 Uyghur 11.6 50.3 Hui 8.8 36.1 Source: Life in Western China, Chinese Statistical Press, 2008

On average in Xinjiang 12.3% of household report they have no primary school within 30 minutes access but Uyghur and Hui people appear to fair better with only 11.6% and 8.8% respectively reporting this problem. The situation is reversed for access to junior middle schools where Uyghur and Hui people experience more difficulty in accessing this level of education as compared to the general population; 53% and 36% respectively have no middle school within 30 minutes access as compared to 40% of the general population.

35 Preparing the FEDP in Three NWP of PRC: Draft EMDP

4.5.3 Employment

The most important industry in the western provinces of China is agriculture. Overall, 65% of the economically active population is employed in this sector, 73% of women and 58% of men.

Almost 80% of Uyghur people work in agriculture (99.8% of whom live in Xinjiang), but only about 62% of Han and 55% of Hui people are engaged in agriculture. Although, Uyghur people are engaged in all 19 sectors listed, they are under represented as compared to the Han population in all sectors except agriculture.

Table 38: Employment by Industry (% of Population) 2007 (2004-2005) Western China Gansu Shaanxi Xinjiang Industry Male Female Han Uyghur Hui Agriculture 64.7 57.7 59.7 57.9 73.3 61.7 79.9 55.3 Mining 5.1 1.9 0.7 2.5 0.5 1.7 0.2 1.4 Manufacturing 6.1 9.9 9.0 8.0 5.5 7.6 4.6 6.3 Energy, Manufacturing And 0.9 0.6 0.8 0.9 0.4 0.7 0.2 0.8 Water Construction 7.7 6.2 3.2 8.5 1.3 5.6 2.3 6.7 Transportation/Post 2.4 2.8 3.7 4.6 0.9 3.2 1.6 3.8 Information 0.3 0.5 0.5 0.3 0.2 0.3 0.0 0.3 Technology Wholesale And 6.0 7.0 7.3 6.0 7.5 7.3 3.7 9.9 Retail Hotel And 2.4 3.0 1.6 2.0 2.9 2.7 1.0 4.2 Restaurant Finance 0.2 0.5 1.0 0.3 0.4 0.4 0.1 0.5 Real Estate 1.0 0.1 0.4 0.2 0.2 0.2 0.0 0.1 Leasing And 0.6 0.6 0.7 0.8 0.4 0.7 0.2 1.0 Business Services Research 0.2 0.2 0.3 0.2 0.1 0.2 0.0 0.2 Environment 0.1 0.3 0.3 0.2 0.3 0.3 0.3 0.2 Preservation Service Industry 1.4 1.7 1.5 1.4 1.5 1.7 0.8 1.5 Education 2.5 3.4 3.2 2.1 6.3 2.2 1.9 2.7 Health And Social 0.8 0.9 1.4 0.8 2.8 0.9 1.0 0.8 Security Culture, Sports And 0.3 0.3 0.4 0.4 1.3 0.4 0.2 0.5 Entertainment Public Management And 1.9 2.9 4.4 2.8 7.3 2.2 2.0 3.9 Social Organization Source: Life in Western China, Chinese Statistical Press, 2008 and Western China Development Report China Statistical Press, 2008

In Gansu, Shaanxi and Xinjiang the percentage of the economically active population employed in agriculture is 64.7%, 57.7% and 59.7% respectively. Comparing these proportions with the percentage of economically active people who are self-employed clearly indicates that the vast majority of those engaged in agriculture own their farms. Indeed, overall, in the Western region, 98.3 % of agricultural employment is self employment.

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Table 39: Percentage Employment in Agriculture % Self % of Total % Rural Employed - Project Employment in Employment in Own Provinces Agriculture Agriculture Farm/Business Gansu 64.7 66.4 70.2 Shaanxi 57.7 63.2 66.1 Xinjiang 59.7 58.4 85.2 Western region 65.1 68.2 81.6 North West 57.0 60.7 Male 57.0 62.1 Female 72.7 75.2 Uyghur Hui Source: Life in Western China, Chinese Statistical Press, 2008 and Western China Development Report China Statistical Press, 2008

Overall in the five counties in the Xinjiang Project areas, over 82 per cent of employment is in the "Agricultural, Forestry, Animal Husbandry and Fishery" sector.

Table 40: Rural Employment by Sector in Xinjiang Project Area (Employed Persons) (2007)

Project Area Others Fishery Industry Services Post and Post and sale Trades Agriculture, IT, Computer Cons-ruction Cons-ruction Husbandry And And Husbandry Forestry, Animal Number Of Rural Retail And Whole- And Retail Service Industries Service Industries Laborers (Person) (Person) Laborers Hotel And Catering Catering Hotel And Telecommunication Telecommunication Trans-port, Storage, Storage, Trans-port,

Xinjiang 4,252,584 3,543,386131,942 116,747 120,885 6,954 134,794 87,086 110,790 Hami [Kumul]City 61,726 49,928 1,562 1,250 3,488 188 2,160 1,342 1,808 Changji City 60,426 49,210 2,841 1,170 1,906 120 1,966 785 2,428 Korla City 31,370 26,592 216 328 1,083 35 2,371 401 344 Yanqi Hui Autonomous 27,005 21,084 2,020 860 1,059 6 831 578 567 County Hejing County 37,884 32,598 704 1,314 1,148 39 895 601 585 Total Project Area 218,411 179,412 7,343 4,922 8,684 388 8,223 3,707 5,732 Sector as % of Project 82.1 3.4 2.3 4.0 0.2 3.8 1.7 2.6 Area Employment Source: Xinjiang Statistical Yearbook, 2008

In 2007, the registered unemployment rate was low in the Project area and on average slightly lower than the provincial average of 3.9%.

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Table 41: Unemployment Rate in Project Areas 2006 2007 Xinjiang 3.9 3.9 Hami [Kumul] Administrative Offices 3.9 3.9 Changji Hui Autonomous Prefecture 3.5 3.5 Bayangol Mongol Autonomous 3.4 2.7 Prefecture Source: Xinjiang Statistical Yearbook,

2008

4.6 Health

Overall, the Project area fares better than the province overall in terms of access to medical facilities. The number of hospital beds and the number of doctors per 10,000 population is significantly higher in the Project area than in Xinjiang as a whole. Out of 15 prefecture, Hami [Kumul] Administrative Offices, Changji Hui Autonomous Prefecture and Bayangol Mongol Autonomous Prefecture rank 4, 5 and 3 respectively.

Table 42: Number of Doctors and Hospital Beds (Per 10 000 Population) (2007) Number Of Number Of Hospital Beds Doctors Per Prefecture, Autonomous Prefecture and Provincial Provincial Per 10,000 10,000 City Ranking Ranking Population Population (Unit) (Person) Xinjiang 41.6 20.8 Hami [Kumul] Administrative Offices 49.2 4 30.6 3 Changji Hui Autonomous Prefecture 49.0 5 24.3 6 Bayangol Mongol Autonomous Prefecture 53.2 3 23.5 7 Source: Xinjiang Statistical Yearbooks, 2008

The health status of ethnic minority groups appears to be little different to that of the general population. However, a social assessment completed in 2006, reported that more ethnic minority people, almost double the percentage of Han households, attributed respiratory disorders to poor hygiene practices such as burning household waste.

In Xinjiang, over 82% of both the general population and Uyghur people reported being in good health.

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Table 43: Self Assessment of Health Status (% of Population) (2004- 2005) In Good Health Not in Good Health Project Provinces Gansu 75.3 24.7 Shaanxi 83.8 16.2 Xinjiang 82.2 17.7 Western Region 74.3 25.7 North West 81.1 18.9 Rural 81.4 18.6 Urban 71.6 28.4 Male 78.4 21.7 Female 69.3 29.7 Han 74.0 26.0 Uyghur 82.5 17.5 Hui 74.0 25.9 Source: Life in Western China, Chinese Statistical Press, 2008

Although medical facilities are relatively accessible in Xinjiang about 16% of people reported not seeing a doctor when they are ill. Lack of money was reported as the reason by 58.6% of the Uyghur population as compared to 44.2% of the overall population while 4.0% of the Uyghur population as compared to 2.1% of the overall population gave lack of access as the reason for not seen a doctor.

Table 44: Reason For Not Contacting Doctor When Ill (% of Population) (2004- 2005) Reason for Not Seeing Doctor Did Not visit Illness is Relied on Group Doctor not Lack of No Nearby self when Ill serious money facility treatment enough Project Provinces Gansu 21.9 20.7 31.5 3.4 50 Shaanxi 20.1 31.7 37.3 0.3 30.6 Xinjiang 16.1 14.1 44.2 2.1 32.4 Western Region 23 24.6 43.1 2.3 30.8 North West 20.9 25.4 35.8 1.7 37.5 Urban 22 28.7 23.7 0.5 43.3 Rural 23.3 23.8 44.6 2.6 28.6 Male 24.6 25.6 41.7 2.8 30.6 Female 21.6 23.6 44.5 1.8 31.0 Han 21.7 24.3 42.2 1.9 32.4 Uyghur 13.4 7.8 58.6 4.0 20.7 Han 28.9 28.0 39.9 1.4 33.9 Lowest Income 26.7 18.4 60.0 2.5 22.4 Low Income 24.0 23.3 46.5 3.0 29.2 Middle Income 20.1 27.5 35.6 1.7 34.8 High Income 20.1 29.8 31.4 2.1 33.3 Highest Income 21.9 32.5 17.8 1.4 47.6 Source: Life in Western China, Chinese Statistical Press, 2008

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4.6.1 HIV/AIDS

China’s HIV epidemic remains one of low prevalence overall, but with pockets of high infection among specific sub-populations and in some localities. Estimations show that by the end of 2007, approximately 700,000 were HIV positive. The HIV infection rate among China’s population is 0.05 per cent. HIV prevalence among young people age 15 to 24 is estimated to be 0.1%.

ƒ An estimated 85.000 Chinese have AIDS. Of these 35,000 have been infected thru commercial blood donation and transfusion ƒ In 2007 alone: 50,000 new infections. ƒ Transmission routes of new infections in 2007: 44.7% sex (hetero); 12.2 % sex (MSM); 42% IDU; MTCT 1% ƒ Among the living HIV positives, 40.6 per cent were infected through heterosexual transmission. ƒ Approximately 32.000 (over 15 years of age) currently on ART treatment. ƒ The number of people who have a high risk of exposure to HIV could be 30-50 million: mainly injecting drug users and their sexual partners, sex workers, their clients and partners as well as men who have unprotected sex with men. ƒ However there are currently no signs of a generalized epidemic in the country. The Government aims to keep HIV estimates below 1.5 million in 2010

By the end of October 2007, the cumulative total of reported HIV positives was 223,501, including 62,838 AIDS cases and 22,205 recorded deaths. From January to the end of October 2007 the number HIV positives reported was 39,866, including 8,539 AIDS cases and 4,232 deaths.

Among the estimated HIV positives, 38.1 per cent were infected through IDU. There are seven provinces and autonomous regions in which the number of HIV positives infected through IDU is over 10,000; namely Yunnan, Xinjiang, Guangxi, , , and . These provinces contain 87.9 per cent of people infected through IDU. The cumulative number of people living with HIV in Yunnan, Henan, Guangxi, Xinjiang, Guangdong and Sichuan accounts for 80.5 per cent of the total reported numbers in China. Xinjiang, is reported to have between 20,000 to 30,000 cumulatively reported HIV positive cases and between 1,000 to 5,000 AIDS cases.

In Gansu, Shaanxi and Xinjiang respectively, 61%, 69% 72% of people have heard about HIV/AIDS, however, only 54.7% of Uyghur have heard of HIV/AIDS.22

22 Life in Western China, Chinese Statistical Press, 2008

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Heard of AIDS Never Heard of AIDS Project Provinces Gansu 61.0 38.7 Shaanxi 69.0 30.7 Xinjiang 71.8 27.9 Western Region 58.1 40.9 North West 70.1 28.9 Rural 48.5 50.3 Urban 87.1 12.5 Male 63.6 35.6 Female 52.8 Source: Life in Western China, Chinese Statistical Press, 2008

The Project is not expected to have an impact on the rate of HIV/AIDS infection in the Project area.

41 Preparing the FEDP in Three NWP of PRC: Draft EMDP

5. Gender and Development

5.1 Poverty

There is no doubt that the status of Chinese women in absolute and relative terms has improved in many over the 20 years. However, there is significant evidence that progress toward gender equality is threatened by many of the economic and social currents in contemporary China. While there have been enormous gains in reducing poverty over the last 20 years, market-led growth, without policies which directly address the causes of poverty and of gender inequality, is likely to increase inequalities between regions, groups and between women and men.

Table 45: Consumption Poverty of Children, Women and Elderly in China (2003) Share of Number of Number % who are Share of population people for (million) poor poor (%) (%) (million)

Children (less than 16 years old Boys 10.6 136.4 16.3 22.3 13.2 Girls 9.2 119.1 17.3 20.6 12.2 Working age adults (between 16 and 60 years old) Men 36.0 465.7 12.2 56.9 33.6 Women 35.7 460.8 12.0 55.3 32.7 Elderly (more than 60 years old) Men 4.2 54.3 12.8 6.9 4.1 Women 4.3 55.9 13.0 7.2 4.3 100.0 1292.3 1 13.1 169.2 100.0 Source: An Assessment of Poverty and Inequality In China, World Bank, March 2009

In China, children, particular girls, are at a higher risk of poverty than working-age adults and even the elderly. The data indicate that of the 169 million persons living below the World Bank poverty line in 2003, about 14 million (about 8%) were elderly above age 60, 112 million (66%) were adults in age group 16-60, and 43 million (about 25%) were children below 16. The poverty incidence for male and female adults and the elderly population is very similar; between 12 and 13 percent. The incidence amongst children below 16 is however higher; about 16% for boys and 17% for girls.

Figure 3: Relative Risk of Poverty for Children, Women and Elderly (2003)

Source: An Assessment of Poverty and Inequality In China, World Bank, March 2009

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Figure 3 shows the relative risk of poverty for different demographic groups (defined as the ratio of poverty incidence for a particular group to the overall national poverty incidence). Consistent with the higher poverty incidence amongst children, the relative risk of poverty is above one only for those below age 16. Thus, relative to the general population, children are more likely to be poor or, strictly speaking, living in poor households. However, a key finding highlighted by the figure is that girls below 16 face a significantly higher risk of poverty (1.32) relative to boys below 16 (1.25). Thus, while children of both sexes are over-represented amongst the poor relative to their share in the population, girls are over-represented more than boys.

5.2 Trends in Sex Ratios

The family planning program and one-child policy, in place since the late 1970s, has had a profound impact on Chinese society, both urban and rural. In urban areas the one-child policy has become well enshrined in practice and multiple-child families are now a rarity. In rural areas the policy has been much more unevenly applied and ethnic minority people are exempt from this policy. Thus, in rural areas, and particularly in ethnic minority areas, multiple children are the norm rather than the exception.

Policy and a continued cultural preference for boys have resulted in a bias in favor of boys. The ratio of girls to boys amongst children below the age of 16 for the nation as a whole is 873 girls for every 1000 boys. Ironically, amongst the poor, the sex-ratio is less adverse for girls. While the overall sex ratio for those below 16 is 873, the ratio for the non-poor is 864 while in contrast the ratio for the poor is 924. Thus, poorer households on average have 60 more girls per thousand boys than non-poor households.

Figure 4: Child Sex Ratio Amongst Poor and Non-Poor In China (2003) Number of Girls Less Than 16 Years Old For Every Thousand Boys Below 16

Source: An Assessment of Poverty and Inequality In China, World Bank, March 2009

Girl children, particularly in rural areas, are disadvantaged. For example, the 1999 child mortality rate (for children under 5) was 40 per 1,000 females and 35 per 1,000 males, reflecting the better level of health care often provided to sons, especially in poorer regions where overall access to health care is more difficult. One study found that the presence of a young son was associated with as much as 50% more spending on health care than a daughter.23

23 Gender equality and poverty reduction in China, Department for International Development (DFID), August 2003

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5.2.1 Sex Ratios in the Project Area

Overall, the sex ratio in the western provinces is 106 males to 100 women. However, the sex ratio for the youngest age group is substantially higher; the 2000 census reported a sex ratio at birth of 117 for the age group between 5 and 9. Provinces, such as Xinjiang with larger minority populations, have a lower sex ratio; 102 as compared to 105 and 108 for Gansu and Shaanxi respectively. The overall sex ratio in the project area in Xinjiang is 110 men to 100 women. However, this ratio is somewhat skewed by the presence of Korla city which has a sex ratio of 121 because the city has attracted many male migrants in search of work. The average sex ratio for the Bayangol Mongol Autonomous Prefecture is 111 and the average sex ratio for other project counties is between 105 and 106.

Table 46: Male and Female Populations and Sex Ratio in Project Area (2007) Population (10 000) persons) Project Areas Total Male Female Sex Ratio Xinjiang 2,095.2 1,072.5 1,022.7 105 Hami [Kumul] City 42.4 21.7 20.7 105 Changji City 34.8 17.9 16.9 106 Korla City 47.2 25.9 21.4 121 Yanji Hui Autonomous County 13.0 6.6 6.4 105 Hejing County 18.3 9.4 9.0 105 Project Area 155.7 81.5 74.2 110 Source: Xinjiang Statistical Yearbook, 2008

All rural areas of the project have significantly lower sex ratios than in urban areas of the project. Indeed, rural areas of Gansu and Xinjiang have a greater number of women than men indicating women's greater presence in agricultural work.

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Table 47: Gender Distribution in the Project Provinces (2004-2005) Gansu Shaanxi Xinjiang Group % in Population % in Population % in Population Sex Ratio Sex Ratio Sex Ratio Male Female Male Female Male Female Group 105 51.2 48.8 108 51.9 48.1 102 50.5 49.5 Urban 118 54.2 45.8 116 53.7 46.3 105 51.2 48.8 Rural 98 49.6 50.4 104 51.0 49.0 98 49.4 50.6 Han ------105 51.7 48.3 Uyghur ------103 50.7 49.3 Age

Group 0 - 4 138 58.0 42 182 64.6 35.4 110 52.3 47.7 5 - 9 128 56.1 43.9 135 57.4 42.6 96 49.0 51 10 - 14 112 52.8 47.2 117 53.9 46.1 106 51.5 48.5 15 - 19 101 50.3 49.7 107 51.8 48.2 111 52.5 47.5 20 - 24 97 49.3 50.7 109 52.1 47.9 94 48.5 51.5 25 - 29 101 50.3 49.7 109 52.1 47.9 103 50.8 49.2 30 - 34 88 46.9 53.1 98 49.6 50.4 90 47.5 52.5 35 - 39 96 48.9 51.1 91 47.7 52.3 97 49.2 50.8 40 - 44 104 51.0 49.0 99 49.7 50.3 116 53.7 46.3 45 - 49 105 51.2 48.8 116 53.6 46.4 95 48.7 51.3 50 - 54 107 51.6 48.4 110 52.4 47.6 94 48.5 51.5 55 - 59 95 48.6 51.4 92 47.8 52.2 78 43.9 56.1 60 - 64 107 51.6 48.4 114 53.2 46.8 110 52.4 47.6 65 - 69 110 52.3 47.7 87 46.5 53.5 123 55.2 44.8 70 - 74 122 55.0 45.0 109 52.0 48.0 148 59.6 40.4 75 + 99 49.6 50.4 102 50.4 49.6 132 56.8 43.2 Source: Gansu, Shaanxi and Xinjiang Statistical Yearbooks, 2008; Life in Western China, Chinese Statistical Press, 2008

The 2000 census reported that for the youngest age group between 0 and 4 the sex ratio is 128 for the country as a whole and significantly higher in some provinces. One of these is Shaanxi where girls are only 35% of the population between 0 to 4 years resulting in a sex ratio of 182 for that age group. In Gansu and Xinjiang the disparities are not as great but, nevertheless, the trend is strong with the percentage of boys increasing from 56.1% to 58.0% in Gansu and from 40.0% to 52.3% in Xinjiang in the 5 to 9 and 0 to 4 age groups respectively.

With fewer women, more men are less likely to find a spouse. As shown in Table 48, a significantly larger proportion of men remain unmarried as compared to women in Western China and in the three project provinces. Although the relative gap between the proportion of unmarried men and women among the three provinces is largest for Gansu, 20.4% of men as compared to 13.7 of women, and in Xinjiang it is 25.1% of men to 18.7% of women, the gap is greatest for where 29.1% of men as compared to 20% of women remain unmarried. This may in part be due to the strong tradition of marrying only within the Uyghur (Muslim) community and because Uyghur people may marry somewhat later in life. Education data in (Section 4.5) indicates that both male and female Uyghur people have relatively high completion rates for higher education.

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Table 48: Marital Status for Population 16 and Above (2004-2005) Aged 16 and Above Population Aged 16 and Above By Not Married % Age Group Not Married Male Female Age Group Male % Female % Western China 21.8 13.2 15 - 19 98.7 95.6 North West 21.9 15.6 20 - 24 78.9 49.4 Han 20.6 12.6 25 - 29 31.7 11.0 Hui 23.2 16.9 30 - 34 11.5 2.0 Uyghur 29.1 20.0 35 - 39 5.4 1.0

Project Provinces 40 - 44 3.6 0.5 Gansu 20.4 13.7 45 - 49 3.3 0.5 Shaanxi 22.1 15.8 50 - 54 4.0 0.3 Xinjiang 25.1 18.7 55 - 59 3.5 0.5 60 - 64 3.1 0.6 65 - 69 2.8 0.5 70 - 74 2.6 0.6 75 + 1.4 0.3 Source: Gansu, Shaanxi and Xinjiang Statistical Yearbooks, 2008; Life in Western China, Chinese Statistical Press, 2008

Table 48 clearly shows that this gap is widening for younger age groups with an increasing percentage of young men remaining unmarried as compared to young women. As the impact of the shift in boy preferences progresses through the age groups it is certain that this situation will worsen over the coming years.

5.3 Gender and Land Rights

In China, women and men have equal legal rights to land and other productive resources as well as equal inheritance rights. Theoretically, both male and female members of the household are entitled to be named on land use certificates but in practice it is more difficult for rural women to exercise these rights, compared either to rural men or urban women. The property rights of women and how to enforce them are key issues in the countryside. Land was redistributed to households some 20 years ago under the rural household responsibility system, with the government’s commitment that there would be no reallocation for 30 years. Subsequent land reallocation has been delegated to village committees and requires the approval of two-thirds of the village population.

In rural areas, despite the principle of gender equality in land rights, women’s land rights within a patriarchal system remain precarious. Women often lose their access to the family’s land after marriage, and lose access to their “married” land after divorce. Because of laws relating to village autonomy, unless village heads are sympathetic to their situation, women may have no way to access land to which they are legally entitled.

Hence, despite the existence of a clear policy in relation to women relocating to their husband’s village after marriage (i.e. that they will not lose land rights in their maiden village until they are granted rights in their spouse’s village), more than a quarter of villages report “no rule” or “depends on case” as the village policy. About 60% of the villages report that women marrying out of the village will lose their land rights at the next big or small land readjustment. Lack of a clear policy is more acute for widowed or divorced women with nearly 50 and 70% of the villages respectively reporting “no rule” as their policy. Thus, in the prevailing legal and social environment, women have much lesser assurance of retaining their land use rights.

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Table 49: Village Policies in Relation to Women's Land Rights (2004) (% of Villages) (% of Villages) Women Women Widowed Divorced Marrying Marrying Women Women In Out Receive/Loose Land Immediately 3.7 3.3 Get land automatically 44.5 8.6 Get land only of family At the next big/small adjustment 58.4 4.9 17.3 58.1 agrees Only when land becomes available 4.9 Don’t get any land 1.5 3.8 Will not get land 6.5 No rule 49.1 70.3 Will not loose land 11.0 Depends on case 4.8 5 No rule 22.0 23 Total 100 100 Total 100 100 Source: An Assessment of Poverty and Inequality In China, World Bank, March 2009

Rural women’s access to land is further compromised when they marry urban residents. This situation is becoming increasingly common and means that these women lose the right to land in their home village but are not allocated land in their husband’s home village (because he is no longer a resident, and land is scarce). If they follow their husbands to the city, they are not eligible for urban status, restricting their and their children’s access to various services and to formal employment.

The security of women’s land rights have become particularly salient in recent years as the higher propensity of men to migrate to urban areas for work has led to what has been termed the “feminization” of agriculture. Working-age and child-bearing women in particular, who are less likely to migrate and who face the triple burden of child-care, elder-care, and farm work may not be able to enforce their land use rights.

In traditional Muslim culture, ownership of land is vested in the hands of the oldest male member of the household. Among the Uyghur who typically hold larger landholdings than among other rural people in the project area it would appear that many village and township committees issued land use certificates only in the name of the male household head24. Anecdotal evidence suggests that land use certificates, especially those covering irrigated land have largely been issued in the name of the male head of household.

This means that women not named on the household land use certificate cannot use the land as collateral to access credit unless this is agreed upon by the household head. In the context of the project, it means that women would not be named as borrowers, which may limit their capacity to participate, to influence the borrowing decision and be properly compensated for labor inputs.

5.4 Gender and Employment

Analysis of data from the Urban Household Survey indicates that women are more likely to be in lower paying occupations and sectors. A significant wage gap exists between men and women in formal employment, even when controlled for education, location, and type of

24 Xinjiang Regional Road Improvement, Final Report November, ADB, 2006

47 Preparing the FEDP in Three NWP of PRC: Draft EMDP

enterprise. Women receive an average of 77% of male earnings. Furthermore, the gender wage gap has increased since the mid-1980s. This wage gap is not explained by gaps in education or location, but is largely accounted for by the fact that women are concentrated in low-paying sectors of the economy.

Women find it hard to compete in the new competitive labor market, where employers can demand younger, more educated employees and will often specify males in order to avoid the potential costs of employing women in their child-bearing years - a practice which is in direct violation of the Labor Law and the Women’s Law. Female university graduates are openly discriminated against during recruitment drives.

Even in old age, women face unequal treatment in some areas. Most strikingly, the China Urban and Rural Elderly Survey of 2000 indicated that the rural pension system, the coverage of which is low to begin with, largely bypasses older women. Only 10% of pensioners were women even though women actually comprise a larger fraction of the elderly. Considering the challenge of a rapidly aging population, elderly women are particularly vulnerable to poverty.

Data is not available for Xinjiang on the disparities between male and female wages but Table 50 below provides a breakdown of female employment by sector for the province. The percentage of female employment in the Farming, Forestry, Animal Husbandry and Fishery Sector is officially 43.5%. Enterprises visited in the project area stated that more than 40% of employment was female. In Hami, more than 60 percent of grape production is now contracted to women25.

25 The Xinjiang Agriculture Development Project, World Bank

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Table 50: Female Employed in Urban Units at Year-end by Sectors in Xinjiang (2007) Employment (10,000

persons) % Female Sectors Female Total All Sectors 104.27 239.45 43.5 Farming, Forestry, Animal Husbandry and Fishery 26.17 59.87 43.7 Mining 5.39 15.89 33.9 Manufacturing 9.97 24.18 41.2 Production and Distribution of Electricity, Gas and Water 2.14 5.92 36.1 Construction 2.73 13.53 20.2 Transport, Storage and Post 3.68 10.22 36.0 Information Transmission, Computer Service and Software 0.79 1.76 44.9 Industries Wholesale and Retail Trades 2.97 6.83 43.5 Hotels and Catering Services 1.53 2.49 61.4 Financial Intermediation 3.22 4.87 66.1 Real Estate 1.15 2.43 47.3 Leasing and Business Services 1.92 4.96 38.7 Scientific Research, Technology Service And Geological 1.58 4.33 36.5 Prospecting Management of Water Conservancy, Environment and 1.87 4.39 42.6 Public Facility Services to households and Other Services 0.16 0.28 57.1 Education 19.76 32.85 60.2 Health, Social Security and Social Welfare 7.59 11.37 66.8 Culture, Sports and Entertainment 1.15 2.46 46.7 Public Management and Social Organizations 10.49 30.82 34.0 Source: Xinjiang Statistical Yearbook, 2008

These figures may underestimates the contribution women make to the farming sub-sector in rural areas. Overall in Western China, 65% of the economically active population is employed in this sector, 73% of women and 58% of men. Indeed, taking into consideration male migration for off-farm employment, the percentage of agricultural work undertaken by woman it is often noted to be more in the range of 75% to 100% at the household level.

5.4.1 Feminization of Agriculture

Availability of jobs in urban areas for rural migrants and the progressive diversification and market orientation of rural production have transformed the character of rural life since the mid-1980s. These developments have affected women and men differently, and as a whole, have contributed to a phenomenon noted earlier, the “feminization of agriculture”: • The majority of off-farm rural jobs have gone to men, leaving rural women with fewer employment options apart from farming; • The majority of migrants (short-term, seasonal or permanent) are men, although the rate of growth of female out-migration is increasing more rapidly than that of men, these tend to be young unmarried women; • In rural households which are less than 100% agricultural, the bulk of the agricultural work is done by women; • In many parts of the country, the majority of full-time farmers are women; • Studies have shown that as the proportion of rural household income derived from sources other than farming increases, the proportion of female labor in agriculture also increases.

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It is officially acknowledged that in much of the Chinese countryside, the lion’s share of the farm work is done by women. This is especially true in farming areas where men are engaged in off-farm labor. This has wide implications for women’s health, women’s income, the reliance on children’s labor and the subsequent impact on girls’ education, women’s social isolation, mobility and their ability to exercise their rights. The feminization of agriculture is in many parts of the country linked to the feminization of poverty.

5.4.2 Female Unemployment

In Xinjiang, the official unemployment rate was 3.9% in urban areas in 2007. The data below for women is higher than for men; 2.1% as compared to 1.8%. Interestingly, the overall unemployment for Uyghur people is slightly lower than for the general population; 2.9% as compared to 3.0%. Although the unemployment rate for Uyghur women (3.3%) is higher than that for Uyghur men (2.5%) the relative gap in unemployment rates for Uyghur men and women is not as large as the relative gap between men and women in the general population.

Table 51: Gender Difference in Unemployment Unemployment in Economically Active (16 Group years+) (%) Xinjiang (2007) 3.9 Xinjiang (2005) 3.7 Uyghur (2005) 2.9 Male Female Xinjiang (2005) 3.0 4.5 Uyghur (2005) 2.5 3.3 Hui (Western Region, 2.6 2.7 2005) Source: Xinjiang Statistical Yearbooks, 2008; Life in Western China, Chinese Statistical Press, 2008

The process of State Owned Enterprise reform and now the global economic crisis will likely exacerbate the wage gap, since lay-offs disproportionately affected women workers. Although reliable sex-disaggregated national statistics are not available to date, it appears that women comprise perhaps 60% of layoffs despite representing only 39% of formal employment in urban areas.26 Assistance for laid-off women workers now emphasizes self employment rather than re-employment, however most self-employed women work in the “informal sector” with low earnings and little security.

5.5 Gender and Education

While the current policy of nine-year compulsory education applies to both boys and girls, and while the overall gap between male and female education levels is diminishing, gender differences in rural school enrolment at all levels tend to be greater than in urban areas. An underlying cause is the belief that any investment in a daughter’s education is much less useful than a son’s education because it will only benefit her husband’s family. Rising costs of education and the need for children’s labor in agricultural households often means that

26 Gender equality and poverty reduction in China, Department for International Development (DFID), August 2003

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female children are withdrawn from school earlier than boys, especially in poorer rural households. Most discrimination occurs in multi-child families, where girls are withdrawn in favor of boys.

A recent survey on disability in primary school children in four counties in Gansu province showed a much higher proportion of disabled boys than girls in school.27 In some communities, however, boys may not have equal opportunities for education. For example, in herder communities, girls’ enrolment in schools may exceed boys’ because boys may have an important role in caring for animals.

5.5.1 Literacy

Illiteracy and lack of education are concentrated among women and girls. In China, 55 million women constitute 65% of the country's 85 million illiterate or semi-illiterate people. Furthermore, 90 percent of illiterate people live in rural areas, and half in western regions. The problem of girl dropouts remains serious in these areas.

Literacy rates for both men (81.1%) and women (74.8%) are highest in Xinjiang as compared to the other two project provinces but literacy rates for women are still significantly lower than those from men. Overall, in Xinjiang 17.6% of women and 11.6% of men cannot read.

Table 52: Literacy in Any Language (%) (2004-2005) Can Read Easily Can Read It With Difficulty Can Not Read Female Male Female Male Female Male Project Provinces Gansu 46.4 68.7 8.4 10.1 45.2 21.2 Shaanxi 61.7 76.1 13.4 12.6 24.9 11.3 Xinjiang 74.8 81.1 7.6 7.2 17.6 11.6 Western Region 48.0 64.4 14.3 17.2 37.7 18.4 North West 61.6 76.2 10.3 10.4 28.1 13.5 Rural 34.3 53.5 16.8 21.6 48.9 24.9 Urban 79.1 88.3 8.6 7.0 12.3 4.7 Uyghur 69.3 73.7 10.6 9.4 20.0 17.0 Hui 46.4 66.0 7.9 10.4 45.7 23.5 Source: Life in Western China, Chinese Statistical Press, 2008

Among the Uyghur community literacy rates are significantly lower than the general population and the gap between male and female literacy rate is greater. Only 69.3% of Uyghur women as compared to 73.7% of Uyghur men can read easily and 20% of Uyghur women as compared to 17% of Uyghur men cannot read at all. High illiteracy rates for women and lower educational levels for girls in rural areas have obvious negative impacts on their economic opportunities and social status.

5.5.2 School Attendance

Overall in the North West region, 4.5%.of boys aged seven to 14 are not attending school as compared to 6.1% of girls in that age group. However, in Xinjiang higher percentages of both girls and boys aged seven to 14 are not attending school, 7.4% of boys and 7.5% of

27 An Assessment of Poverty and Inequality In China, World Bank, March 2009

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girls. The disparity in these rates between Xinjiang and the North West region is greater for boys than for girls most likely indicating the labor boys contribute to herding of animals. Nevertheless, attendance rates for girls are lower in Xinjiang than for boys. Generally the non attendance rate for girls and young women is lower in all age groups with the exception of the youngest years.

Table 53: % of Male and Females by Age Groups Not Attending School (2004-2005) Age 7 - 14 Age 7 - 20 Not Attending School Not Attending School % Region Male Female Age Male % Female % Project Provinces 7 7.4 9.9 Gansu 4.2 8.0 8 5.5 5.4 Shaanxi 1.9 2.3 9 2.5 3.7 Xinjiang 7.4 7.5 10 1.8 3.1 Western region 4.8 6.0 12 2.7 3.7

North West 4.5 6.1 13 5.3 6.7 Rural 5.8 7.2 14 10.6 10.8 Urban 1.5 2.4 15 20.6 21.3 Low Income 4.7 5.3 16 31.2 33.7 Middle Income 3.7 4.3 17 44.2 44.0 High Income 2.8 2.8 18 56.1 52.7 Highest 1.8 1.8 19 63.9 64.4 20 68.3 79.7 Age 7 - 14 Age 7 - 20 Not Attending School % Not Attending School % Ethnic Groups Male Female Male Female Uyghur 9.8 10.7 34.0 33.3 Han 3.3 3.9 18.7 19.7 Hui 10.6 17.8 29.6 37.1

Other Ethnic 9.0 12.4 27.9 3.3 Groups Source: Life in Western China, Chinese Statistical Press, 2008

The non attendance rate for Uyghur children is higher than the Xinjiang average; 9.8% of boys and 10.7% of girls age seven to 14 are not attending school. In the age group 7 to 20, there are considerably more children and young adults from Uyghur families not attending school as compared to the Xinjiang average and slightly less Uyghur girls than boys.

5.6 Women's Health

This “marketization” of health care has made health services prohibitive for many rural households, particularly in poor areas. Access to trained medical personnel becomes more difficult in remote, mountainous and sparsely populated regions. In large part due to their reproductive role, women tend to be heavier users of health care services. Their ability to access services is greatly dependent on income levels and decision-making on how to allocate resources at the household level. Some studies have found that rural families tend to spend scarce resources on men and boy’s health care rather than on women and girls.

Female life expectancy (72 years) is higher than men’s (69 years), which is a common phenomenon worldwide. However, women’s healthy life expectancy is lower than men’s, which means that women on average suffer ill health longer and have a lower quality of life than men. Health indicators overall are worse for rural women than for urban women.

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Access to trained assistance during childbirth, is a particularly revealing indicator. In the western region cities, 94.5% of births are assisted by a doctor or nurse but in rural areas only 55.8% of women receive such assistance, with a further 17.3% assisted by a birth attendant, usually a midwife. Overall, the percentage of assisted births decreases steadily as income falls and for the lowest income group 38.6% of all births are not assisted by any trained medical personnel or midwife.

In Xinjiang, 64% of births are assisted by some form of medical personnel and a further 13.5% are assisted by a traditional midwife. For the Uyghur women, only 44.8% are assisted by some form of medical personnel and 20.8% by a traditional midwife with 34.5% having no trained assistance when giving birth.

Table 54: Help at Delivery (% of Women) (2004-2005) Doctor or Traditional Other Not Group Family Nurse Midwife Person Assisted Project Provinces Gansu 73.0 16.9 6.5 2.0 1.6 Shaanxi 91.6 4.0 3.3 0.5 0.6 Xinjiang 64.0 13.5 20.0 2.4 0.1 Western Region 61.8 14.9 18.3 2.7 2.3 North West 78.3 10.8 8.8 1.4 0.7 Urban 94.5 1.6 3.2 0.3 0.4 Rural 55.8 17.3 21.3 3.2 2.5 Han 71.1 12.6 12.3 1.9 2.1 Uyghur 44.8 20.8 30.9 3.5 0.0 Hui 61.9 15.9 16.6 2.6 2.9 Lowest Income 38.9 22.6 28.9 5.1 4.6 Low Income 57.6 17.2 20.4 3.0 1.8 Middle Income 69.7 13.4 13.6 1.7 1.6 High Income 79.4 8.6 10.4 0.9 0.7 Highest Income 91.2 1.9 5.7 0.4 0.8 Source: Life in Western China, Chinese Statistical Press, 2008

In Xinjiang overall, 60.7% of births take place in hospitals, while 38.5% of births take place at home, with obvious dangers for mother and child. The maternal mortality rate was 45 per 100,000 live births in 200728 for China overall but figures in poorer regions are reported to be much higher.

28GenderStats, World Bank, 2009 http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTGENDER/

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Table 55: Place of Giving Birth (% of Births) Group At Home In Hospital At a Clinic Other Place

Project Provinces Gansu 42.8 54.8 2.1 Shaanxi 13.0 81.3 5.2 0.5 Xinjiang 38.5 60.7 0.6 0.2 Western Region 45.4 51.5 2.1 1.0 North West 29.0 68.3 2.4 0.3 Urban 7.9 90.3 1.8 0.0 Rural 52.2 44.5 2.2 1.1 Han 37.6 59.2 2.4 0.9 Uyghur 6.9 42.2 0.6 0.3 Hui 42.6 53.2 3.0 1.2 Lowest Income 66.4 29.7 1.9 2.0 Low Income 53.4 43.9 2.3 0.4 Middle Income 39.4 57.2 2.8 0.6 High Income 26.7 70.4 2.1 0.8 Highest Income 10.7 87.5 1.3 0.4 Source: Life in Western China, Chinese Statistical Press, 2008

In terms of the form of birth control, there appears to be little difference in the overall use of contraceptives although the use in rural areas is somewhat higher than in urban areas of the project. About 76% of women using birth control use contraceptives

Table 56: Forms of Birth Control (% of Women) (2007)

Male Female Contraceptive Condom Other Sterilization Sterilization

Total 0.30 7.61 76.11 12.57 3.4 Urban 0.20 4.78 73.38 18.46 3.2 Rural 0.36 9.28 77.71 9.11 3.5 Hami [Kumul] 0.05 3.76 72.97 20.73 2.5 Administrative Offices Changji Hui 0.33 9.96 72.69 15.14 1.9 Autonomous Prefecture Bayangol Mongol 0.99 7.01 79.36 11.08 1.6 Autonomous Prefecture Source: Xinjiang Statistical Yearbook, 2008

One cause for grave concern is the very high suicide rate among young rural women. China’s overall suicide rate is the highest in the world, and three times higher for women than for men. This is a pattern unlike any other country in the world where the male suicide rate exceeds that for females. Each year between 1990 and 1994, suicides accounted on average for 5.1% of all deaths among rural women, and 3.4% of deaths of rural men. This

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compares to 1.8% for urban women and 1.5% for urban men, respectively. Suicide is the number one cause of death in persons aged 15 to 34, and fourth in the 35-44 age group29. The most common method is ingestion of pesticides and, because of the widespread availability of very potent pesticides, most rural suicide attempts are successful.

5.7 Women and the Rural Environment

Rural environmental degradation (land degradation, water availability, water pollution and forest degradation) can exacerbate rural gender inequalities, especially when combined with poverty and with the trend towards the feminization of agriculture. In many areas women are now responsible for all aspects of rural production in addition to their traditional roles. Where clean water is scarce or distant, where land productivity is deteriorating due to erosion, where fuel sources become increasingly harder to find, the burden of women tends to increase.

However, women are also key change agents in efforts to reverse rural environmental degradation, and are increasingly recognized as such by the Chinese government, foreign donors and Chinese and international NGOs. There has been a growing emphasis on engaging women’s participation in rural extension, environmental protection and sustainable development programs. Bottom-up participatory approaches are relatively new in China and the project will need to emphasize the involvement of women and men in decision making.

5.8 Ethnic Minorities and Gender in the Project Area

Greater gender discrimination also takes place in ethnic minority groups and in Xinjiang the status of women is greatly influenced by cultural values. The Uyghur, Hui and Kazak people follow traditional Islamic practices. In Muslim communities, the belief that women’s place is in the home and that women should not be outspoken in public is still strong despite the fact that women are involved in productive, remunerative work. In Xinjiang, Uyghur, Hui and Kazak women are not require to be veiled although most Muslim women wear a head-scarf.

The center of village life in the Uyghur culture is the mosque. This is largely a male-centered institution although females are also permitted to worship in the mosque but generally not at the same time as males. The most notably restrictions for women relate to their public participation of in both religious and civil affairs. Examples include women being accorded less status than men in relation to activities religious activities and women generally excluded from direct participation in public decision-making processes related to matters that impact upon the household, but this is often true for non-Muslim groups.

The kinship structure is patrilineal in nature which also creates a bias towards males in several aspects. For example, the oldest male is generally considered as the authority figure-head in the household and property is generally inherited through males thereby giving men the control over economic resource. As noted previously, many land use certificates are not in both spousal names.

29 Gender equality and poverty reduction in China, Department for International Development (DFID), August 2003

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Young unmarried Uyghur women live with their families until they marry creating barriers for young women in relation to paid employment. This impacts more on rural women than urban and in recent times many young, unmarried women are employed in cities. Newly-wed women typically leave their parental home and reside in their spouse's household where they are subject to the authority of their spouse, his father, uncles and older brothers and in some cases other older women.

Han women have fewer restrictions on their public participation and are less likely to be subject to arranged marriages. There are also fewer restrictions on younger, unmarried Han women living and working away from their parental household, including in provinces faraway where there might be greater economic opportunities.

In the rural villages most women undertake all or most activities that men do. This is particularly true in agricultural-based activities but men generally operate machinery. However, rural Uyghur men perform very little household-based labor activities which results in women working longer hours each day than men and boys. Again, this is true for most rural women in China.

Nevertheless, gendered relations are changing among these three groups, especially among the more urbanized. Younger Uyghur women and to a lesser extent Kazak and Hui are now exercising greater choice in who they marry. Educated Uyghur women are encouraged to find paid employment and educational outcomes appear to be at least equal to or better than for all males. Also ethnic minority women are gaining greater control of household finances and decision-making for important issues, such as children’s education.

5.9 Gender and the Project

The key issue for the project is one of participation and the empowerment of women in relation to decisions on economic tree planting and associated loans. Unless gender is considered in tree planting and loan decision-making, the workload of women may greatly increase, and their opinions will be excluded in project design and implementation. Because ethnic minority women are subject to more socio-cultural constraints in relation to public participation, it will be necessary to facilitate their involvement so that they may be fully informed of the project's activities and actively participate in decision-making.

Although, ethnic minority women may face greater restrictions than Han women, for Uyghur and Kazak women the ability to converse in the Chinese language is often their greatest barrier, particularly for older women. Hui women speak Chinese and many older Hui women not only speak Chinese but also speak Uyghur and Kazak.

To ensure the inclusion all ethnic minority people, the use of ethnic minority languages, especially for the Uyghur and Kazak will be mandatory for the Project. The use of ethnic minority languages is needed for verbal communication and also for all published materials and legal documents.

A Gender Strategy for the Project has been prepared.

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6. Farming in the Project Area

6.1 Rural Agricultural Income

More than 60% of the population in the Project area work in agriculture. Income from household agriculture very considerably across the three project provinces; it is highest in Xinjiang at 1,943 CNY per year and lowest in Shaanxi where it is only 922.8 CNY per year.

Table 57: Agricultural Population in the Project Area Population (10,000's) Project Areas Non-Agricultural Agricultural % Agriculture Total Population Population Xinjiang Province 2,095.2 907.7 1,187.5 56.7 Hami [Kumul] City 42.4 28.9 13.4 31.7 Changji City 34.8 22.3 12.5 36.0 Korla City 47.2 30.0 17.2 36.4 Yanji Hui 13.0 5.6 7.4 57.2 Hejing County 18.3 8.3 10.1 54.9 Xinjiang Project 155.7 95.0 60.7 39.0 Counties Source: Gansu. Shaanxi and Xinjiang Statistical Yearbooks, 2008

Table 58 provides a breakdown of household income. In Xinjiang, income form agriculture accounts for 61% of total net income and 74% of household business income.

Table 58: Per Capita Income of Rural Households by Income Source Gansu Shaanxi Xinjiang Net Income from Household Gross Income 3,340.90 3,816.10 6,068.80 Business by Source (%) Income from Wages and Salaries 716.4 1,036.20 330.8 Income from Household Business 2,429.40 2,478.30 5,482.80 Income from Transfers and Properties 195.1 301.6 255.3 Gansu Shaanxi Xinjiang Total Net Income 2,328.90 2,645.00 3,183.00 Income from Household Business 1,426.90 1,346.30 2,625.70 100.0 100.0 100.0 Net Income from Primary Industry Agriculture 972.6 922.8 1,943.60 68.2 68.5 74.0 Forestry 50.2 23 106.5 3.5 1.7 4.1 Animal Husbandry 195.6 166.8 322.6 13.7 12.4 12.3 Fishery 1.3 0.6 0.1 0.0 0.0 Net Income from Secondary Industry 0.0 0.0 0.0 Industry 19.5 25.4 47.5 1.4 1.9 1.8 Construction 32.9 22.7 12.2 2.3 1.7 0.5 Net Income from Tertiary Industry 0.0 0.0 0.0 Transportation, Post and Telecommunications Services 67 58.1 28.5 4.7 4.3 1.1 Wholesale, Retail Trades and Catering Services 51.8 78.2 75.5 3.6 5.8 2.9 Services Trades 11.5 23 29.3 0.8 1.7 1.1 Cultural, Education, Medicines and Medical Services 8.4 5.3 5.8 0.6 0.4 0.2 Others 16.1 20.3 54.3 1.1 1.5 2.1 Income from Transfers and Properties 185.63 262.2 226.56 Source: Gansu. Shaanxi and Xinjiang Statistical Yearbooks, 2008

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6.2 Household Production

Almost all households grow wheat and/or corn, most of which is not sold but consumed within the household and this is generally true for both better-off and poor farmers. In Xinjiang, 53% of farmers also grow cotton or hemp whereas in Gansu and Shaanxi beans, potato and oil crops have a greater presence in crop selection. These crops along with the vegetables are more likely to be sold by the household then the wheat and corn. At the household level, fruit is grown by only 11% of household farming in Xinjiang but in Shaanxi is as high as 20%.

Table 59: Households Crops (2007) % of Farming Households Crop Type Gansu Shaanxi Xinjiang Rice 1.9 13.9 6.7 Wheat 85.2 69.9 63.1 Corn 63.3 74.5 50.9 Other Cereals 13.0 4.5 4.9 Beans 28.5 10.4 2.0 Potatoes 50.3 17.7 1.9 Oil Crop 34.8 15.4 6.3 Cotton/ Hemp 3.0 7.4 52.9 Sugar Cane/ 0.6 0.4 1.3 Tobacco 0.4 0.7 0.0 Medical Plants 6.5 2.1 0.2 Vegetables 16.4 10.0 6.1 Fruit 11.9 19.8 11.0 Other Crops 12.4 4.9 6.3 Source: Gansu, Shaanxi and Xinjiang Statistical Yearbooks, 2008

6.3 Agricultural Output of the Project Area

Table 60: Output of Major Agricultural Products by Province (10,000 tons) Crop Gansu Crop Shaanxi Crop Xinjiang Grain 824.4 Grain 1,068.0 Grain 867.0 Cotton 12.9 Cotton 9.0 Cotton 290.0 Oilseed 46.4 Oilseed 39.2 Oilseed 40.3 Beet Roots 27.8 Tobacco 5.6 Beet Roots 586.9 Fruits 228.1 Fruit 940.2 Fruits 412.0 Meat 92.5 Meat 96.7 Meat 160.6 85.7 Tea 1.4 Aqua products 8.9 Source: Gansu, Shaanxi and Xinjiang Statistical Yearbooks, 2008

Table 60 provides data on the output of major crops showing that grain output is the largest by tonnage for all three provinces, followed by fruit in Gansu and Shaanxi but by beet root in Xinjiang, although by tonnage Xinjiang's fruit production is higher than in Gansu.

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Table 61: Xinjiang Project Area Gross Output Value (2007) Total Commodity as % of Total Output Output Xinjiang Value Animal Farming Forestry Fishery Value of (10,000 Husbandry Services CNY) Total 10,634,648 72.1 2.0 21.8 0.7 3.5 Hami [Kumul] 159,272 61.2 2.7 33.5 0.8 1.8 Administrative Offices Hami [Kumul] City 88,466 74.7 1.8 20.8 1.0 1.7 Changji Hui Autonomous 1,192,472 50.3 1.8 45.5 0.8 1.6 Prefecture Changji City 227,981 49.3 1.6 45.1 2.7 1.2 Bayangol Mongol 912,405 72.0 1.2 22.4 0.7 3.6 Autonomous Prefecture Korla City 250,116 71.9 0.4 24.9 0.2 2.7 Yanqi Hui Autonomous 98,854 58.5 0.9 36.5 0.5 3.7 County Hejing County 86,182 51.6 2.1 43.3 0.2 2.9 Source: Gansu, Shaanxi and Xinjiang Statistical Yearbooks, 2008

As discussed in Section 4, farming represents the greatest proportion of this sub-sector but as Table 61 shows many farming households raise livestock as well as planting crops. In Gansu and Xinjiang, 88.7% and 79.7% respectively of farming households also raise livestock but only 54.9% of farmers raise livestock in Shaanxi. In Gansu and Xinjiang most farmers are raising cattle (32.4% and 47.3% respectively) and sheep (22.3% and 70.6% respectively) but in Shaanxi goats are preferred (24.7%) and cattle (20.2%). In Gansu and Shaanxi, 59.3% and 62.3% respectively raised pigs. However in Xinjiang only 2.4 per cent of households raise pigs due to cultural tradition associated with Moslem religion. Many families also raise chickens, ducks or geese (Gansu 58.6%, Shaanxi 36.2%, and Xinjiang 38.6%).

6.4 Shifting to Higher Valued Products

The economic transformation in PRC has involved a substantial decline in the relative share of the agricultural sector in total output and employment. Nevertheless, agriculture has played, and continues to play, an important role in rural development.

With increasing incomes consumption pattern are shifting from cereals to high-value agricultural products which include fruits. In the Project area the relative shares of different commodities are changing significantly, reflecting these income driven changes in demand and the production of fruits has increased relative to other crops. The Project will make a significant contribution to this shift by planting a total 6,014.9 ha of economic fruit trees in Xinjiang. The major benefits for households arise from significant increased returns to farm land and labor and from short- and long-term employment requirements of the project. The project will also created externalities in terms of public goods in the form of soil and water protection.

Generally at the initial stages, new technology tends to be scale neutral. However, over time when production becomes increasingly sophisticated and more market oriented, farm size has to expand to accommodate the application of new technology. The scale economies tend to become more important when agriculture is shifting to high-value agricultural products in response to changing demand.

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Tables 62 and 63 below provide data on fruit and forestry production in Xinjiang in 2007;

Table 62: Xinjiang Fruit Production in Project Area (2007) (tons) Pome- Xinjiang Total Apples Pears Grapes Peaches Apricots Jujubes Others granate Total 4,119,760 388,881 541,451 2,590,225 86,137 1,252,036 87,206 48,088 61,379 Hami [Kumul] Administrative Offices 72,907 35 698 123,199 13 3,824 2,911 28 Changji Hui Autonomous Prefecture 129,558 7,424 41 115,773 2,123 3,921 18 366 Bayangol Mongol Autonomous Prefecture 284,685 11,435 177,597 31,913 737 48,615 14,571 2302,827 Project Area 487,150 18,894 178,336 270,885 2,873 56,360 17,500 230 3,221 Source: Xinjiang Statistical Yearbooks, 2008

Table 63: Xinjiang Condition on Forest Products (2007) Hectare Timber Planting Felling Forest Walnut Area in Out- put Xinjiang Timber Economic Wind- Firewood for Output the in Village Forest Forest break Forest Special (ton) Current or Below Purpose Year (cu.m) Total 117,299 3,30051,958 60,704 1,256 81 64,330 518,943 Hami [Kumul]Administrative 3,500 3,500 1,310 Offices Changji Hui Autonomous 15,477 292 15,185 30,228 Prefecture Bayangol Mongol Autonomous 1,936 344 1,592 51,646 Prefecture Project Area 20,913 636 20,277 83,184 Source: Xinjiang Statistical Yearbooks, 2008

6.5 Type of Cultivated Lands

Agricultural households with access to cultivated land include those households that cultivate any type of land, rent out land or have any land cultivated for whatever reason. Households often have a combination of different plots and user rights to different plots vary. All land in China belongs to the government. Households have the user rights to the land distributed to them for a given period of time. Land can also include distributed land, "self reserve" land; self cleared land or land rented from other household.

ƒ Distributed land is land contracted to the household by the collective administrative unit based on the size and composition of the household and for which the household is required to pay fees (either in the form of grain quota requirements and/or taxes) to the government. Noble. ƒ "Self reserve lands" are small plots of land usually located close to the household and is given/distributed to the household mainly for self consumption activities such as the cultivation of vegetables, fruit trees etc.

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ƒ Self cleared land or in direct translation "privately explored wastelands" are land household acquire by exploring deserted mountains, wastelands and barren beaches. Some villagers actively encourage such exploration and households use the land for free or for a small sum of symbolic money to the collective unit. ƒ Rented land designates land contracted from the village pool of land by households interested in expanding their land holdings and land use right transfers between households in exchange for money, in kind payments or other benefits.

6.5.1 Access to Cultivated Land

Overall, three in every four households in Western China have access to land with a higher percentage of households in the South West than in the North West having access to land (82% versus 60%). In Gansu, Shaanxi and Xinjiang, 74.5%, 73.1% and 44.8%, respectively, had access to cultivatable land.30

Most households have distributed land, accounting for about 90.5% of households in the North West overall and 97.3%, 86.7and 78.5% of households with access to cultivated land in Gansu, Shaanxi and Xinjiang respectively.

Table 64: Households With Access to Cultivated Land (2004-2005) Type Of Cultivated Land (%)* Had Access Self Self Rented or Other To Distributed Reserved Cleared Borrowed Type Cultivated Land (%) Project Provinces Gansu 74.5 97.3 34.8 7.2 10.8 2.1 Shaanxi 73.1 86.7 27.4 1.8 8.4 0.8 Xinjiang 44.8 78.5 37.3 9.5 7.9 3.1 Western Region 75.0 93.8 46.1 9.2 16.9 16.9 North West Region 60.0 90.5 27.5 5.1 9.6 1.7 Rural 95.0 94.2 46.4 9.4 16.9 2.3 Urban 14.9 83.1 37.5 5.5 16.9 3.5 Lowest Income 89.6 92.9 43.8 9.2 13.5 2.2 Low Income 89.2 93.6 47.3 9.1 16.4 2.4 Middle Income 84.7 94.4 46.5 8.9 17.9 2.2 High Income 72.8 94.8 47.0 9.3 18.8 2.3 Highest 38.4 93.3 46.0 10.8 20.2 2.8 * Percentage adds to more than 100 as one household can have more than one type of land. Source: Life in Western China, Chinese Statistical Press, 2008

Generally, land rental markets are undeveloped and only a small proportion of households rent out land and even a smaller proportion households rent or borrow land. In North West only about 8% of all households with cultivatable land rented out some or all of their land. The most important reason for renting out land is that the household lack capacity to grow it themselves.

30 These are all households with "access" to cultivatable land, not necessarily households cultivating all or part of this land.

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Only about 17% of all households in Western China reported that they rented or borrowed some land from others but in the North West this percentage was only 9.6%. In the project provinces, only a small percentage of farmers borrow or rent land; in Gansu, Shaanxi, Xinjiang only 10.8%, 8.4% and 7.9 % of farmers respectively borrowed land.

Interestingly, 53.7% of farmers in the North West would borrow more land if they could. This is true for both the lowest income and the highest income group where 44.6% and 37.3% respectively would borrow more land. In Xinjiang, over 77% of farmers would like to borrow more land if they could but in Gansu and Shaanxi this drops to about 45%.

In Gansu and Shaanxi, 44.2% and 58.3% of households cultivating land reported that their land was flat, 41.2% and 27.9% household reported there are land was sloping, and 14.6% and 13.8% reported that they had no flat land. However, in Xinjiang the situation is quite different where 95.2% of farmers reported that the cultivated land was flat, only 2.9% of farmers farm on sloping land and only 1.9% reported that they had no flat land. Not surprisingly, 32.9% of the lowest income groups reported to have no flat land whereas only 18.9% of the highest income group reported they had no flat land.

6.5.2 Average Size of Household Cultivated Land

The average farm size in the PRC is small, only around 0.53 hectares for most farm families.31 Considering all households in Western China that have access to cultivatable land, the average size of land holding per household is 5.8 mu (3,867 square meters or 0.39 hectare). In the South West the average size of cultivated land is less than half the size of what it is in the North West areas (4.1 mu versus 10.6 mu).

For those households cultivating land the average size of plot in Western China overall is only 1.5 mu and 2.7 mu in the North West. Again, Xinjiang has the largest average plot size at 4.1 mu per household, with farm plots in Gansu averaging 2.1 mu per household but only 1.5 mu in Shaanxi.

Table 65: Average Size of Cultivated Land Per Household (2004-2005) Households Cultivating Land: mu Per Household Project Provinces 25 Percentile Median 75 Percentile Mean Gansu 0.9 1.5 2.6 2.1 Shaanxi 0.8 1.2 1.8 1.5 Xinjiang 1.3 2.5 4.8 4.1 Western Region 0.6 1.0 1.6 1.5 North West Region 1.0 1.7 3.0 2.7 Rural 0.6 1.0 1.6 1.5 Urban 0.3 0.6 1.3 1.6 Lowest Income 0.4 0.7 1.2 1.0 Low Income 0.6 1.0 1.5 1.3 Middle Income 0.6 1.0 1.7 1.5 High Income 0.7 1.1 1.9 1.7 Highest 0.7 1.2 2.5 2.5 Source: Life in Western China, Chinese Statistical Press, 2008

31 Rural Development Outcomes and Drivers: An Overview and Some Lessons, Nimal A. Fernando, ADB 2008.

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These plot sizes vary significantly across percentiles and across income groups. For example, households falling within the 25 percentile and the lowest income group have an average cultivated area of only 0.4 mu whereas within the 75 percentile and highest income group the average plot size is 2.5 mu per household. For all types of land holding and within each percentile the size of the average household farming plot increases with income.

Table 66 below describes the total cultivated hectares and the average cultivated area per farming household in the project counties. Overall, Xian in Shaanxi has the smallest per capita cultivated area at 0.9 mu and Xinjiang the largest at 4.6 mu. However, plot sizes also vary considerably across counties within provinces with cultivated areas as low as 1.3 mu/household in Linxia, Gansu and 2.8 mu/person in Hejing, Xinjiang.

Table 66: Cultivated Area by County by Agricultural Household (2007) Total Cultivated Mu per Agricultural Project Area Area (hectare) Household Gansu Province 3,449.0 2.6 Tianshui 382.6 2.3 Pingliang 372.6 3.0 Qingyang 443.4 3.0 Dingxi 513.4 2.9 Longnan 289.0 2.0 Linxia 143.4 1.3 Gansu Project Area 2,144.5 2.5 Shaanxi Province 2,840.7 1.6 Xian 261.2 0.9 Tongchuan 63.9 2.2 Baoji 311.2 1.7 Xianyang 360.0 1.4 Weinan 517.9 2.0 Yanan 231.4 2.2 Hanzhong 201.0 1.1 Ankang 191.5 1.3 Shaanxi Project Area 2,138.0 1.5 Xinjiang Province 3,787.3 4.8 Hami [Kumul]City 25.2 2.8 Changji City 53.5 6.4 Korla City 44.3 3.9 Yanqi Hui 22.7 4.6 Hejing County 20.2 3.0 Xinjiang Project Area 165.7 4.1 Source: Gansu. Shaanxi and Xinjiang Statistical Yearbooks, 2008 Consultants estimates.

By size, the vast majority of cultivated land is distributed land; 84.0% in Gansu, 76.9 in Shaanxi and 42.9% in Xinjiang. Self reserve lands plots, those used for mainly for self consumption (vegetables, fruit trees etc), are considerably smaller in Gansu and Shaanxi (0.16 mu and 0.03 mu) as compared to Xinjiang (0.5mu). Overall, in Western China the average size of these household garden plots is 0.5 mu and this varies little across income groups with average size for the lowest income group being 0.4 mu and 0.6 mu for the highest income group.

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Table 67: Cultivated Land by Land Type (2004-2005) Average Size of Cultivated Land by Type % Type of Land Type to (mu) Total Cultivated Land Region Distri- Self Re- Self Distri- Self Re- Self Rented Rented buted served Cleared buted served Cleared Project Provinces Gansu 8.2 0.5 0.16 0.41 84.0 6.8 1.74 3.62 Shaanxi 4.6 1.0 0.03 0.27 76.9 16.7 0.44 3.00 Xinjiang 12.8 1.9 0.50 0.84 42.9 22.4 3.51 2.96 Western Region 4.6 0.5 0.22 0.47 68.8 10.8 2.69 6.65 North West Region 8.8 0.9 0.21 0.63 80.6 12.0 1.55 3.70 Source: Life in Western China, Chinese Statistical Press, 2008

6.5.3 Land Left Uncultivated

Less than 7% of all households with access32 to cultivated land left some land uncultivated. The main reasons for leaving the land on cultivated are different in the North West than in the South West part of China; in the North West land is mainly left on cultivated due to bad land quality, whereas in the South West, the main reason for leaving land on cultivated is the lack of capacity to work the land.

In Gansu and Xinjiang, the main reasons for leaving land uncultivated were lack of irrigation (32.4% and 41.5% respectively) followed by low quality land (24.3%) for Gansu and lack of capacity (21.0%) in Xinjiang. Whereas, in Shaanxi, the main reasons were lack of capacity (37.1%) followed by low quality land (30.7%). In Gansu and Shaanxi, 3.2% and 2.1% of households respectively left land uncultivated because they could not afford agricultural inputs. In Xinjiang, this was a much larger percentage of households (15.4%) but this must be balanced against Xinjiang's larger than average farm size per households.

32 Households with access to cultivated land include non-framing households, meaning land holders that may never farm their land or may rent it out. Thus, 7% greatly overstates the proportion of farming households that leave land uncultivated, particularly for poor households.

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Table 68: Reasons for Land Left Uncultivated (% of households) (2004-2005) Reasons For Not Cultivating Land % HH Cannot With No Low The The Land Low Afford Fear Region Land Left Lack Of Quality Lack Of Land Is Used Profit- Agricul- Natural Other Uncul- Capacity Too Irrigation Has to For Other ability tural Disaster tivated Poor Rest Purposes Input Project

Provinces Gansu 92.9 19.7 15.1 3.2 24.3 32.4 1.6 11.1 0.8 15.7 Shaanxi 97.4 37.1 19.4 2.1 30.7 6.1 5.4 3.4 20.7 Xinjiang 97.7 21.0 20.1 15.4 19.7 41.5 - - 2.0 11.4 Western Region 93.5 35.7 14.0 2.6 27.7 11.6 4.1 3.3 0.8 20.4 North West 95.8 22.5 15.9 3.4 29.3 22.9 3.1 7.3 0.9 16.2 Region Lowest Income 91.9 39.4 9.5 4.4 24.8 11.5 5.6 3.7 1.0 18.1 Low Income 92.8 33.3 13.8 3.1 28.7 12.4 4.7 3.9 0.4 20.1 Middle Income 94.0 33.4 17.5 0.7 26.2 13.8 3.1 1.7 0.4 22.9 High Income 93.9 34.9 12.6 1.4 32.9 9.3 2.7 4.6 0.4 22.0 Highest 94.0 37.5 24.1 2.0 27.1 9.8 2.6 1.3 3.2 19.5 Source: Life in Western China, Chinese Statistical Press, 2008

6.6 Agricultural Inputs

6.6.1 Fertilizers and Pesticides

Almost all households that cultivate land use fertilizer and about 90% combine the use of both manure and chemical fertilizers. In Gansu 86.3% farming households use pesticides to improve fertilizers, in Xinjiang 88.5% and Shaanxi at 86.9%. The percentage of households using fertilizers and pesticides varies very little among low and high income groups with the rate of usage at about of 85.7% for all households using both.

6.6.2 Use of Agricultural Tools

The use of agricultural machinery is limited in all three Project provinces but mainly in Gansu. In Gansu, about 72% of the fields are ploughed using animals but in Shaanxi this drops to 41% and 26% in Xinjiang. Not surprisingly, the use of animals to plough rather than machinery is greater for the lower income groups (72.2%) than for highest income groups (59.6%).

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Table 69: Households Using Agricultural Machinery (% of households) (2004-2005) Plough Plough Machine No Pulled by Pulled by Water Machine Machine Machine Pesticide Machinery Animal Machine Pump Harvester Seeder Thrasher Sprayer used Project Provinces Gansu 71.7 33.8 20.1 11.3 19.7 20.9 86.6 0.9 Shaanxi 41.8 48.9 43.1 44.5 46.2 33.6 85.3 2.5 Xinjiang 25.9 86.4 16.6 25.3 85.4 38.6 83.9 0.4 Western Region 69.2 22.3 27.9 9.3 12.0 31.1 87.2 1.8 North West 49.4 52.3 32.6 28.1 44.6 34.6 82.0 1.4 Lowest Income 72.7 13.8 18.9 5.0 7.6 21.5 79.8 3.4 Low Income 71.9 19.8 25.0 7.9 10.2 27.7 86.5 1.7 Middle Income 69.3 23.6 30.2 9.8 12.8 33.3 89.5 1.1 High Income 66.6 27.7 33.9 12.5 14.7 38.8 92.2 1.0 Highest 59.6 35.6 40.8 15.4 20.0 42.2 91.7 1.0 Source: Life in Western China, Chinese Statistical Press, 2008

6.6.3 Source of Seeds

Households that used seed for the crops bought all or some of the seeds. The percentage of farming households in Gansu that buy seeds is 78.1%, 86.4% in Shaanxi and 88.2% in Xinjiang. Most farmers in Gansu and Shaanxi also use seeds from their own crop. Both high income households (93.4%) and low income households (84.4%) bye seeds.

The most popular place to buy seeds are the state run seed stations that provided 54.5%, 40.8% and 75.3% of households with purchased seeds in Gansu, Shaanxi and Xinjiang respectively. Overall in North West China only 12.1% of households purchase seeds from the government agricultural technology stations, ranging from 8.3% of households in Gansu to 15.8% in Xinjiang33. Most of the remaining seeds purchases are made from privately run seedling plantations and private retailers but about 6% are purchased from technicians and salesmen who come to the villages. Very few households have received seeds provided though a government program; 1.8% in Gansu, 0.7% in Shaanxi and 4.5% in Xinjiang.

However, as Table 70 shows, there are a number of different channels through which the government provides seat. Combining seeds purchased through state run seed stations, government agricultural technology seed stations and other government channels, the total percentage of households obtaining seed through government channels is 51.4% in Gansu, 54.6% in Shaanxi and 16.8% in Xinjiang.

33 The situation is quite different in southwest China where 36.4% of households purchase seeds from government agricultural technology stations.

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Table 70: Source of Seeds (% of households) (2004-2005) Source of Seeds Source of Purchased Seeds Seeds State Privately Government Retailer Gov. Technician Salesman Region Bought From Run Run In Agricultural In Provide Who Came Who Came Other Seeds Own Seed Seed Technology Private Seeds To Village To Village Crop Station Station Station Store Project

Provinces Gansu 78.1 75.5 1.8 54.5 26.7 8.3 0.4 11.7 16.1 5.6 Shaanxi 86.4 52.8 0.7 40.8 47.2 11.9 0.6 5.3 2.8 1.3 Xinjiang 88.2 19.8 4.5 75.3 10.1 15.8 0.4 1.5 3.7 1.3 Western 90.3 63.2 3.3 40.9 24.5 30.6 0.7 6.4 17.0 2.4 Region North West 84.6 53.1 1.6 52.9 31.9 12.1 0.6 6.4 6.8 2.5 Region Lowest Income 84.4 66.3 2.8 39.0 20.8 32.6 0.7 6.2 17.8 2.5 Low Income 89.2 66.7 3.1 40.2 23.3 31.2 0.8 7.7 18.5 2.6 Middle Income 93.0 61.8 4.0 40.6 26.5 30.3 0.8 6.3 16.8 2.1 High Income 93.9 61.1 3.7 41.2 26.5 30.7 0.7 5.6 15.5 2.0 Highest 93.4 53.9 2.9 46.9 27.2 25.5 0.5 5.8 14.6 3.1 Source: Life in Western China, Chinese Statistical Press, 2008

6.6.4 Irrigation

The percentage of households with irrigated land varies widely across the three provinces. Whereas 96.4% of households in Xinjiang irrigated land, only 34.2% in Gansu and 39.6% of households in Shaanxi have irrigated land. Furthermore in Gansu and Shaanxi, the bottom 25%, (i.e. those with small landholdings) has no irrigated land percentage of irrigated land to total land.

Table 71: Households With Irrigated Land (% of households) (2004-2005) Type of Transport to Land Land Partly Land Not Flood Field Region Completely Irrigated Irrigated Irrigation Irrigation Mechanical Irrigated Canals Pump Project Provinces Gansu 34.2 13.8 52.0 97.4 87.5 24.4 Shaanxi 39.6 20.6 39.8 97.4 81.6 53.3 Xinjiang 93.3 3.8 2.2 97.5 97.8 1.1 Western Region 33.9 34.4 31.7 90.5 61.5 31.9 North West Region 46.7 17.3 36.0 96.7 82.3 32.7 Rural 33.5 34.8 31.7 90.8 61.7 31.9 Urban 47.0 22.4 30.5 82.6 57.5 33.0 Lowest Income 25.2 33.4 41.4 89.8 61.3 26.6 Low Income 30.4 34.5 35.0 90.2 62.3 31.5 Middle Income 30.6 35.4 28.5 90.6 60.3 33.9 High Income 39.3 36.0 24.7 90.9 60.4 34.2 Highest 48.3 30.8 20.8 91.2 61.9 33.9 Source: Life in Western China, Chinese Statistical Press, 2008

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6.7 Analysis of Household Economic Tree Planting Model

This section provides an analysis of the project's economic tree planting component at the household level. The analysis provides an assessment of the cash flow impact and identifies potential barriers for participation of poor households.

Tables 72, 73 and 74 below, provide a household analysis of the "with" and "without" project case for three of the project's proposed economic trees for the first 7 years. For each tree type the average size of planting area has been based on average household farm size in provinces where those crops dominate the project's planting activities. Thus, for Chinese dates that will be planted in Xinjiang and where the average farm sizes are relatively large, the average size of planting will be 4.1 mu, whereas for walnuts and apples, mainly planted in Gansu and Shaanxi, the average size is, 1.5 mu and 3 mu respectively.

In all cases, it is assumed that the land is currently cultivated with wheat or cotton and that these will be intercropped at a decreasing rate as the trees grow. Project production models have estimated the income value of the crop forgone and the gain/loss in income as the economic trees mature taking into consideration household labor grant payments, loan payments and cost of agricultural inputs. For dates and walnuts trees it is assumed that trees will begin to bear fruit and make an overall profit by year 5 but not until year 6 for apples.

Thus, in all cases there is a net loss of income starting in year 2 and running through until year 5 for dates and walnuts and until year 6 for apples.

Table 72: Chinese Dates-Household Cash Flow and Loan Payments For Chinese Dates grown on .27 hectares (4.05 mu) Item Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Income without project 1600.0 1600.0 1600.0 1600.0 1600.0 1600.0 1600.0 Net crop income 1360.0 1040.0 800.0 1440.0 3600.0 6480.0 14400.0 Intercrop 1360.0 1040.0 800.0 Date 0.0 0.0 0.0 1440.0 3600.0 6480.0 14400.0 Household grant 714.7 357.3 0.0 0.0 0.0 0.0 Gain or loss w/project 474.7 (202.7) (800.0) (160.0) 2000.0 4880.0 12800.0 Loan 3179.2 4116.7 4880.4 4880.4 4880.4 4880.4 4636.4 Debt service Interest 90.9 117.7 139.6 139.6 139.6 139.6 132.6 Repayment on loan principal 0.0 0.0 0.0 0.0 0.0 244.0 244.0 Total debt service 90.9 117.7 139.6 139.6 139.6 383.6 376.6 Interest Rate 2.86% Source: Forestry Ecological Development Project PPTA, June 2009

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Table 73: Walnuts-Household Cash Flow and Loan Payments For Walnuts grown on 0.1 hectares (1.5 mu) Item Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Income without project 75.0 75.0 75.0 75.0 75.0 75.0 75.0 Net crop income 63.8 48.8 37.5 0.0 420.0 630.0 756.0 Intercrop 63.8 48.8 37.5 date 0.0 0.0 0.0 0.0 420.0 630.0 756.0 Household grant 60.0 15.0 0.0 0.0 0.0 0.0 Gain or loss w/project 48.7 (11.3) (37.5) (75.0) 345.0 555.0 681.0 Loan 922.5 1083.4 1164.4 1164.4 1164.4 1164.4 1106.2 Debt service Interest 26.4 31.0 33.3 33.3 33.3 33.3 31.6 Repayment on loan principal 0.0 0.0 0.0 0.0 0.0 58.2 58.2 Total debt service 26.4 31.0 33.3 33.3 33.3 91.5 89.9 Interest Rate 2.86% Source: Forestry Ecological Development Project PPTA, June 2009

Table 74: Apples- Household Cash Flow and Loan Payments For Apples grown on 0.2 hectares (3.0 mu) Item Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Income without project 600.2 600.2 600.2 600.2 600.2 600.2 600.2 Net crop income 510.1 390.1 300.1 0.0 440.0 1320.0 2640.0 Intercrop 510.1 390.1 300.1 Date 0 0 0 0 440 1320 2640 Household grant 130 40 0 0 0 0 Gain or loss w/project 40.0 (170.1) (300.1) (600.2) (160.2) 719.8 2039.8 Loan 1140.00 1398.00 1604.00 1,604 1,604 1,604 1,604 Debt service Interest 32.6 40.0 45.9 45.9 45.9 45.9 43.6 Repayment on loan principal 80.2 80.2 Total debt service 32.6 40.0 45.9 45.9 45.9 126.1 123.8 Interest Rate 2.86% Source: Forestry Ecological Development Project PPTA, June 2009

The key issue from a social and poverty reduction perspective is the risk that poorer farmers may not be able to participate or will fall further into poverty because they will not be able to endure the loss of wheat production (or loss of other crop) prior to their economic trees bearing fruit.

The social assessment found that near to 100% of wheat and corn produced by households is consumed by the household. Most households sell other crops and have income from other sources (i.e. off-farm labor during non-agricultural season). The previous sections show that most households have small farms with no land left uncultivated, hence, no additional land to bring into production for tree planting. Hence, those households that survive at subsistence level or have incomes just above the poverty line and who may not have access to other income sources will become poorer before they become better off by participating in the Project.

In Section 4, a breakdown of households by rural income groups was presented (Table 19). To illustrate the potential impediment to participation for poor households a portion of this table is provided in Table 75 showing the only low income groups.

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Table 75: Proportion of Project Households Potentially Unable to Participate Income Groups by % of Households Per Capita Annual Net Income (CNY) Gansu Shaanxi Xinjiang 0 - 400 1.0 1.6 400-600 1.2 0.7 1.7 600-800 3.4 1.5 3.5 800-1000 4.9 2.5 4.1 1000-1200 7.0 4.0 5.0 1200-1500 12.8 8.9 7.2 % of project area households below per 16.5 9.7 15.9 capita annual net income of 1,196 % of project area households below per capita annual net income between 1200- 29.3 17.6 21.5 1500 Source: Gansu. Shaanxi and Xinjiang Statistical Yearbooks, 2008

Assuming that farming households in the Project areas are representative of the income distribution shown in Table 75, and that households with income at or below the poverty line could not sustain the loss of income until the trees mature, then 16.5%, 9.7% and 15.9% of Project area households in Gansu, Shaanxi and Xinjiang respectively would be not be able to participate in the Project.

However, the income group just above the poverty line (those with per capita annual net income between 1,200 to 1,500 Yuan) would likely fall into poverty if they participated in the economic trees planting and loan activity. If so, this would result in 29.3%, 17.6% and 21.5% of rural households in the project areas of Gansu, Shaanxi and Xinjiang respectively not being able to participate in the Project through the household economic tree planting model. Moreover, as project implementation is targeted at poverty counties, an even greater proportion of households are poor than shown in Table 75 and, therefore, the percentage of households unable to participate would be even higher.

Without the participation of poor households the Project's direct impact on poverty reduction will be minimal and limited to benefits from employment through the enterprise model (which is only being implemented in Xinjiang and not in Gansu and Shaanxi). Indeed, without very careful consideration of how household borrowers are identified the Project could increase poverty in the Project areas. As noted in Section 3, one the characteristics of poverty in Western China is the degree to which people fall in and out of poverty and the Project must ensure that it does not impact negatively on this phenomenon.

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7. Project Benefits

7.1 Project Benefits in Xinjiang

In Xinjiang, about 6,000 ha of economic tress will be planted by 12,019 households and 19 farm enterprises and another 435 ha of ecological planting, including sand stabilization, will be undertaken. The total Xinjiang project cost, including contingencies and financing costs is 401,602 100CNY or $57.9 million. This represents 33% of the total cost or the project.

Poverty is linked closely to limited land per capita, declining productivity, low education levels, increased migration for work and female-headed households, increased dependence on firewood, straw and crop residues for heating, and limited off-farm work. Average rural incomes are about 30% of urban incomes creating incentives for those who are able to move. Most poor farmers have limited land, technology, and working capital and have no other choice for income. Farmer constraints include access to markets resulting in low prices, low productivity and quality of outputs, lack of access to improved technologies and credit, poor infrastructure, and lack of group-based solutions to rainwater harvesting and storage for household and crop use.

The major benefits for households arise from significant increased returns to farm land and labor and from short- and long-term employment requirements of the project. The Project will facilitate farmers’ access to markets and higher prices and rural labor to move into off-farm employment, obtain higher income opportunities, and build capacity to exit poverty. The Project interventions will result in productivity improvements and greater market certainty leading to increased incomes. Adoption of appropriate technologies, land use matched to soil capability, improved water use and nutrient efficiency, strengthened farmer associations, access to rural finance, contract farming agreements linked to processing and market chains, and capacity development will all contribute to improved sustainable livelihoods and improved resilience for poor rural households.

The Government considers increasing urbanization an important way to reduce poverty. Urban population growth is increasing rapidly, but urban employment opportunities can be scarce for unskilled laborers from the countryside, many of whom have minimal elementary education and are ill-equipped for the demands of migration and urban living. The Project promises to create significant new job opportunities through fruit orchard development and increased growth in service industries that derive business from tourism and other traffic along the old . The Project will build capacity for participatory and community- oriented ecological system restoration, and for sustainable land use that protects biodiversity while improving rural livelihoods.

Ecological planting will increase the hectares and improve the condition of forests and will created externalities in terms of public goods in the form of soil and water protection.

7.1.1 Benefits to Farming Households From Economic Tree Planting

In Xinjiang, economic crops planted will be apples, apricot, Chinese dates and table and wine grapes. The household economic tree planting component will provide seedlings and other agricultural inputs in the form of in-kind loans to households and to pay households for planting trees on their own lands. The Project will fund the first three years of materials for

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crop establishment. The planting program will be spread evenly over three years in recognition that most planting blocks are small and also to minimize the impacts of inflation.

Xinjiang households will plant 3,245 ha of economic trees and approximately 12,019 households will participate in this component. The average size of loan per household will be about 4,800 CNY34. Borrowers will be paid a labor grant for planting during the first and second years of the project. In Xinjiang this labor grant will be paid to all participating farmers at the rate of about two-thirds the normal daily labor wage (67% of 50 Yuan/day)35. Over the first two years of the project total labor payments will amount to 22 million Yuan or about 1,700 CNY per household.

Borrowers will also receive technical support through the Forest Bureau technical staff on an ongoing basis for at least the first five years. The support will ensure that fertilizer, pruning and tree shaping is completed to a high standard and technical weaknesses are rectified.

Households, particularly women, will benefit from reduced labor demand. Once tree crops are established they require far less heavy manual labor and provide flexibility in labor inputs. Therefore, households will gain economically and socially through significantly higher crop returns to land and labor and reduced agricultural demand for household labor, the supply of which has been aging, declining and feminizing.

7.1.2 Benefit to Households From the Enterprise Model

In Xinjiang, a total of 2,413 ha will be planted by enterprises and it is estimated that 2,200 people (full time equivalent) will gain direct employment through this model during the first two years of establishment. At maturity, these will create about 490 full time jobs, the majority of which will go to poor unskilled laborers. All of the enterprises are in Xinjiang and it is expected that ethnic minorities will account for about 33% of the employment (their proportion in the project area population). It is expected that 40% of enterprise jobs will go to women and it is generally accepted that enterprises job opportunities are more suitable for women.

Households will also benefit by renting their land to enterprises. Enterprises will sign rental contracts with local farming households in order to achieve scale economies that exist in orchards. This option will allow households to use their labor in non-agricultural activities that provide better returns on labor.

Water scarcity is a serious concern in the Project area. Households, enterprises and the ecosystem overall will benefit from water savings from the economic crops planting area. For example, the grape and date production in Xinjiang will have significant water savings as compared to the current land uses of cotton in Xinjiang.

34 The average household loan size is considerably larger in Xinjiang than in Gansu and Shaanxi because the average planting area in Xinjiang is about twice that of the other two project provinces. 35 In Gansu and Shaanxi the labor grant will only be paid at a rate equal to 20% the normal wage (20% of 50Yuan/day)

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The Project will plant a total of 30 hectares of economic timber crop in Changji. Although the main benefit will be timber, about 22 people will gain employment and ecological benefits will also be realized.

7.1.3 Benefits From Ecological Planting

The Project will plant 630 ha of shelter planting to protect the new economic crop. It is expected that about 184 people will gain direct employment from this activity. The protective function of farmland shelter belt systems will also greatly increase yields of existing crops. The reduction in wind velocity will also create a better living environment and improve the quality of life of households.

In addition, another 435 ha of sand fixing will be undertaken which should create about 15 full time equivalent jobs. In Hami, the three townships of Erbao, Taojiagong and Dawanquan, total households numbering 2,107 (population of 6,143), will benefit from the project's sand fixing activity. It is estimated that 585 houses and 7,056 ha of crop land will be save. This accounts for approximately one-third of households, and their homes, crops, and infrastructure (roads, water and electric distribution systems. etc.) that would otherwise be lost to the encroaching sands within the next 12 years. The immediate short term benefits will the creation of nearly 200 full time jobs.

7.2 Risks and Mitigation Measures

7.2.1 Ethnic Minority Development Plan

Xinjiang Autonomous Region has an ethnic minority population of 12.7 million or 60.7% of the total population, mainly Uyghur (46.1%), Kazak (7.1%), Hui (4.5%), Kyrgyz (0.9%) and Mongolian (0.8%). Overall, more than 30 different ethnic groups live in Xinjiang. The Project area in Xinjiang has a population of 1.557 million with an ethnic minority population of 524 thousand or 33.7% but accounting for only 4.1% of Xinjiang's total ethnic minority population. The population of Gansu and Shaanxi are 91.4% and 99.4% Han respectively and there are no ethnic minority communities living in these Project areas.

Ethnic minorities will benefit along with the Han population and the social assessment showed that ethnic minority people supported the Project. Social risks that require mitigation measures under the loan agreement according to ADB policy, such as significant resettlement impacts or the risk of increasing the incidence of HIV/AIDS and human trafficking, and that often impact to a greater extent on ethnic minorities, have not been identified for the Project.

However, ethnic minority people may face barriers to participation due to language and cultural differences, which may particularly impact women. Thus, a number of assurances and enhancements to the Project design are required to ensure the participation of ethnic minority people and improve the poverty reduction impacts. Furthermore, a consultation and disclosure strategy is also required to implement the household economic tree planting model in Xinjiang.

The key gender issue for the project is one of participation and the empowerment of women in relation to decisions on economic tree planting and associated loans. Unless gender is considered in tree planting and loan decision-making, the workload of women may greatly increase, and their opinions will be excluded in project design and implementation. Because

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ethnic minority women are subject to more socio-cultural constraints in relation to public participation, it will be necessary to facilitate their involvement so that they may be fully informed of the project's activities and actively participate in decision-making. For Uyghur and Kazak women the ability to converse in the Chinese language is often their greatest barrier, particularly for older women. Hui women speak Chinese and many older Hui women not only speak Chinese but also speak Uyghur and Kazak.

To ensure the inclusion all ethnic minority people, the use of ethnic minority languages, especially for the Uyghur and Kazak will be mandatory for the project. The use of ethnic minority languages is needed for verbal communication and also for all published materials and legal documents.

Mitigating Measure: An Ethnic Minority Development Plan (EMDP) has been prepared for the Project containing adequate provisions to ensure the full participation of ethnic minority people. The EMDP will be implemented through a Community Consultation and Disclosure Strategy adapted for Xinjiang's unique cultural environment.

Xinjiang Community Consultation and Disclosure Strategy The size and complexity of the household economic tree planting component represents an enormous undertaking for state forestry bureaus (approximately 12,018 households will participate in Xinjinag). A Community Consultation and Disclosure Strategy (CCDS) is required by the Project to provide the Xinjiang Project Management Office (XPMO) and County Project Management Offices (CPMOs) with a consistent and comprehensive process for implementing the household economic tree planting model.

The CCDS will ensure that households, including ethnic minority households, are fully informed and make their decisions to participate with complete information related to implementation processes, benefits and risks. Information about the Project needs to be widely promulgated and farmers need to be made aware of its both benefits and risks. In particular, household financial risk analysis and consideration for women's participation and workloads is required. To date, in most cases, only village heads and villagers that participated in the social assessment survey area aware of the Project. Information on loan terms and possible cash flow impacts must be fully disclosed. In addition, there are higher risks associated with some economic trees and there is uncertainty that poorer farmers will be able to fill the income gap from forgone wheat or cotton production prior to the economic trees maturing and providing improved incomes. Furthermore, there are a number of assurances and enhancements to the Project design that will improve the poverty reduction impacts for all poor households, for women as well as for ethnic minority people.

Therefore, a Community Consultation and Disclosure Strategy (CCDS) has been prepared for Xinjiang. The Xinjiang CCDS outlines community engagement activities that will be undertaken to implement the household borrowing model and, in particular, the required dialogue and information exchange leading up to the identification households participating in the Project's loan activities. It sets out the Project’s rationale for consulting and involving communities, identifies who will be consulted, and lists consultation methods and techniques that will be used to ensure community awareness and participation in the Project. The CCDS also explicitly incorporates a gender strategy. Key features that will be incorporated are:

• The use of appropriate language and culturally appropriate implementation methods; • Analysis of household financial risk and mitigation measures; • Gender strategy to ensure the full participation of women; and,

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• Collection of baseline data.

The Xinjiang CCDS is provided in Appendix 2 of this report.

7.2.2 Measures on Household Labor

The State Forestry Agencies will ensure that households that participate in the seedling loan component are fully compensated at the agreed upon rate for the labor required for planting. The amount of labor per seedling planted and the labor wage will be based on models agreed to as part of the loan agreement. Such payments will be made to individuals whereby both husband and wife will receive payments regardless of whether both names appear on the land certificate.

7.2.3 Measures on Local Labor

The implementation the Enterprise Model and of ecological planting activities through the Provincial Forestry Agencies will provide significant local employment opportunities. State Forestry Agencies will ensure that local ethnic minority people, women and poor are given priority for employment. The County Forestry Departments, in consultation with County Poverty Alleviation Offices should actively target and recruit minority people, women and the poor and vulnerable. Recognizing that Xinjiang has a slightly different social context with markedly lower labor availability and growers need to hire from the seasonal migrant labor market, priority should remain focused on the local community.

State Forestry Agencies will ensure the enterprises employment contracts include clauses prohibiting child labor and ensuring equal pay for men and women for work of equal value.

7.2.4 Gender Measures

There is a risk that women may be marginalized in terms of capacity building and participation in the project activities and their workloads may be increased in comparisons to those of men participating in the project. Furthermore, assurance that women participating in the household seedling planting are fairly compensated for labor inputs are required.

There is limited capacity for gender mainstreaming in provincial government State Forestry Agencies to assist with gender mainstreaming in the project.

Mitigation measures take two forms:

1. A gender strategy has been incorporated into the CCDS and will ensure the full participation of women in the economic planting component of the project.

2. Gender analysis and mainstreaming training for the State Forestry Agencies is required to ensure the successful integration of gender integration in the project.

• Gender analysis and mainstreaming training will be provided to State Forestry Agencies at Provincial, County and Township levels. • The State Forestry Agencies will engage an appropriate institute or professional trainer to design and deliver three gender analysis and mainstreaming courses over the life of the project.

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• The training will be specifically designed to apply to the project and will assist the State Forestry Agency in designing, collecting and reporting on gender mainstreaming performance indicators for the Project. • It is recommended that the first two courses are delivered at the beginning of the year one and year two and the final course delivered at a time that will provide gender mainstreaming performance indicators for input to the project completion report. • Resources required for the delivery of the gender mainstreaming training are explicitly noted in the Project budget.

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APPENDIX 1

Monitoring Framework for Ethnic Minority Development Plan Funding Lead/Supporting Proposed Action Targets Timing Requirements (CNY Monitoring Indicators Agencies Involved 000's) PROJECT BENEFITS Household Model In total 12,019 rural Xinjiang Provincial 2010- Crop inputs, including No of households households in 5 counties and Counties 2013 labor payments participating In Xinjiang ,a total of 3,245 ha will participate Forestry Agencies CNY 650,000 of economic trees planed No. of ha planted About 40% or 4,800 of No of loans these will be ethnic minority households No and amount of labor payments Average loan= CYN 4,800

Average labor payment 1,700 per household

In Year 1, about 49% of the loan participants or 5,928 households (40% or 2,371 ethnic minority households) will be identified and receive loans for economic planting

In Year 2, another 49% of the loan participants or 5,928 households (40% or 2,371 ethnic minority households) will be identified and receive loans for economic planting

In Year 3, the remaining 2% of loan participants or 163 households will be identified and receive loans for economic planting. Enterprise Model About 2,770 ha of State and Counties 2010- Crop inputs No of Enterprises economic tree crops will Forestry Agencies 2013 CNY 75,000 participating In Xinjiang 2,413 ha of be planted in Xinjiang by Private Enterprises No of ha planted enterprise by 2016. economic trees will be and Farms Labor Payments CNY No of full times job planted. 26,400 over 2 years created About 2,200 people full time equivalent) will gain direct employment through the enterprise model during the first two years of establishment.

At maturity, the enterprise model will create about 490 full time jobs, the majority of which will go to poor unskilled laborers.

Ethnic minorities will account for about 33% of this employment (their proportion in the Project area population).

It is expected that 40% of enterprise jobs will go to 1 Preparing the FEDP in three NWP of PRC: Draft CCDP

Funding Lead/Supporting Proposed Action Targets Timing Requirements (CNY Monitoring Indicators Agencies Involved 000's) women. Ecological Planting 435 people gain State and Counties 2010 - CNY 8,480 No of ha planted employment for shelter Forestry Agencies 2013 No pf full times job In Xinjiang a total 650 ha of belts, 50% ethnic minority created shelter belts people No of houses and In Xinjiang 435 ha of sand 15 people gain hectares saved fixing employment through sand fixing, 70% ethnic minority

585 houses and 7,056 ha of crop land save.

MITIGATING MEASURES EMDP/Community All project sites Independent 2010- In Xinjiang CNY 100 No. of village Consultation and Disclosure Facilitator/ NGO 2013 consultations Plan State and Counties No. of community Forestry Agencies meetings

Local Poverty No. of poster/brochures Alleviation Office and Women's No. of TV/radio announcements

Independent monitoring report

Gender Strategy a) Gender inclusive State and Counties 2010- a) Incorporated into No. women receiving approaches -all project Forestry Agencies 2013 EMDP/ Community loan and labor sites Consultation and payments NGO Disclosure Plan b) 3 Gender Analysis b) CNY 100 per No. of village course for 3 course training courses for State Local Poverty consultations for Forestry Agencies Alleviation Office women and Women's Federation No. of community meetings for women

No. of gender inclusive poster/brochures

No. of gender inclusive TV/radio announcements with

No. of GAD training sessions

No. of SFA staff trained

Independent monitoring report

Assurances to Household a) All project sites State and Counties 2010- Incorporated in Labor: The State Forestry Forestry Agencies 2013 project Agencies will ensure that implementation and households that fully NGO management compensation for the labor required for planting. Both Local Poverty husband and wife will receive Alleviation Office payments regardless of and Women's whether both names appear Federation on the and certificate.

Assurance to Local Labor Actively target and recruit ethnic minority people, 2 Preparing the FEDP in three NWP of PRC: Draft CCDP

Funding Lead/Supporting Proposed Action Targets Timing Requirements (CNY Monitoring Indicators Agencies Involved 000's) women and the poor and vulnerable. Employment contract include clauses prohibiting child labor b) all enterprise and State and ensuring equal pay for Forestry employment men and women for work of equal value. Poverty and Social Baseline Data

Baseline Data Collection Method and Sources • Household, village and township data will be collected through the Xinjinag Consultation and Disclosure Strategy process • Data collection will be verified by Project Independent Monitor • Provincial and County statistical data • State Forestry Records • Project Monitoring and evaluation surveys

Baseline Requirements Household Model • Number and percentage of households within a village participating in the Household Model in year 1, year 2, year 3 and year 5 • Number and percentage of poor and near poor households (as defined by rural poverty lines) within a village participating in the Household Model in year 1, year 2, year 3 and year 5 • Average income of participating households disaggregated by non-poor and poor groups in year 1, year 2, year 3 and year 5 • Average size of Project planting area per participating household disaggregated by non-poor and poor groups • Average seedling loan amount and average of labor payment per participating household disaggregated by non- poor and poor groups • Number and percentage of female seedling loan recipients • Number and percentage of ethnic minority seedling loan recipients • Average age of household member actively farming and participating in the Project

Enterprise Model • Number of full time equivalent jobs created • Percentage of ethnic minority people employed • Percentage of women employed

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APPENDIX 2

Xinjiang Community Consultation and Disclosure Strategy

Executive Summary

The Community Consultation and Disclosure Strategy (CCDS) for the Forestry and Ecological Development Project (FEDP) is the methodology by which people and communities are involved in Project decision-making. The Project proposes to implement an economic tree planting program designed to shift household crop production towards higher valued and more sustainable tree crop production systems and an ecological program designed to reforest and re-vegetate hilly and degraded land. The Project will also engage enterprises that will plant economic trees that will create employment opportunities.

• Economic and social benefits relate to significantly higher crop returns to land and labor and reduced agricultural demand for household labor - the supply of which has been aging, declining and feminizing. • Ecological benefits arise from securing land that is ecologically sensitive by reduced risk and scale of erosion, sand blow and off-site effects that arise from these. • These interventions will also capture additional ecological benefits from reduced soil degradation, improved soil organic matter and soil carbon leading to increased water percolation and holding capacity.

The Project area has a total population of 1.557 million with an ethnic minority population of 524 thousand or 33.7% but accounting for only 4.1% of Xinjiang's total ethnic minority population. Ethnic minorities will benefit along with the minority Han population. However, ethnic minority may face barriers to participation not normally encountered by the Han population. Therefore, an Ethnic Minority Development Plan (EMDP) has been prepared for the project that identifies special measure to ensure the full participation of ethnic minority people and culminates in this Community Consultation and Disclosure Strategy.

The size and complexity of this component represents an enormous undertaking for Xinjiang forestry bureaus. A Community Consultation and Disclosure Strategy (CCDS) is required by the Project to provide the Xinjiang Provincial Project Management Offices (XPMOs) and County Project Management Offices (CPMOs) with a consistent and comprehensive process for implementing the Household Economic Tree Planting Model. The CCDS will ensure that households, including ethnic minority households, are fully informed and make their decisions to participate with complete information related to implementation processes, benefits and risks.

The CCDS outlines community engagement activities that will be undertaken during the preparation of the Project and, in particular, the required dialogue and information exchange leading up to the identification household participation in the project's loan activities.

It sets out the Project’s rationale for consulting and involving community, identifies who will be consulted, and lists consultation methods and techniques that will be used to ensure full community awareness and participation in the project

Of critical importance to the success of the Project will be how the CCDS can help create an enabling environment for ethnic minority and poor farmers through appropriate livelihood assessments, cash flow analysis and risk mitigation measures.

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1. Community Consultation and Disclosure Strategy

1.1 Project Overview

The Project responds to policy failures related to forest land tenure that has resulted in resources being allocated to low value non-sustainable land uses - causing a loss of ecological services, disadvantaged socio-economic conditions including higher poverty, and non-viable organizations in-terms of capacity and revenue being responsible for managing the high-priority ecological assets in natural forests and critical watersheds for urban water supplies.

The Project proposes to implement an ecological program designed to reforest and re- vegetate hilly and degraded land and an economic tree planting program designed to shift household crop production towards higher valued and more sustainable tree crop production systems. The project will also engage enterprises that will plant economic trees which will create employment opportunities.

Within the Economic Tree Planting Component, key participants and beneficiaries will be individual households that will take up in-kind loans (seedlings) in order to facilitate the shift from traditional cropping patterns (mainly wheat, corn and cotton) to fruit and nut trees. This transition will impact on demand for household labor, availability of self- consumption/subsistence crop, household cash flow and will increase the need for agricultural technical/training inputs.

1.2 Proposed Household Economic Tree Planting Model

The Economic Tree Planting Component intervention will be implemented through an enterprise model in which enterprises will be the borrowers and a Household Economic Tree Planting Model in which individual households will be the borrower. The latter approach is a direct replication of previous forest sector programs where local households (including small private sector production companies composed of larger households) borrow funds from the This modality that will be used in all three Project provinces.

The household model for economic tree planting will provide seedlings in the form of in-kind loans to households that will plant these on their own lands. Economic planting will involve species of fruits, nuts, and timber trees. These trees are more ecologically sustainable and it is expected these crops will provide households with greater economic benefits in the medium-term than current cropping patterns. The seedlings will be offered as an in-kind loan with repayment terms significantly more favorable than those offered by commercial sources. The Project loan scheme aims to improve access to credit that is generally limited particularly for poor farmers.

The Project will fund the first three years of materials for crop establishment. The planting program will be spread evenly over three years in recognition that most planting blocks are small and also to minimize the impacts of inflation. Borrowers will receive a small cash grant in recognition of the labor required to plant the economic trees.

Borrowers will also receive technical support through the Forest Bureau technical staff on an ongoing basis for at least the first five years. The support will ensure that fertilizer, pruning and tree shaping is completed to a high standard and technical weaknesses are rectified.

Once tree crops are established they will provide a greater return to household labor and capital, require far less heavy manual labor and provide flexibility in labor inputs. Households, particularly women, will benefit from reduced labor demand.

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1.3 Rational for Community Consultation and Disclosure Strategy

In total, 3,245 ha of economic trees will be planted by households in Xinjiang. With the average household farm size of 0.27 ha in Xinjiang, it is estimated that 12,018 households will participate in the Household Economic Tree Planting Model. The average size of loan per household will be about 4,800 CNY in Xinjiang. Borrowers will be paid a labor grant for planting during the first and second years of the Project. In Xinjiang this labor grant will be paid at the rate of about two-thirds the normal daily labor wage (67% of 50 Yuan/day).

The scope and complexity of this component represents an enormous undertaking for Xinjiang's forestry bureaus. Each household will need:

• The Project implementation arrangements explained; • The potential benefits and risks disclosed; • Their role and obligations explained; • A planting site plan prepared, which will determine the loan amount, labor payment, and reduction in other crops; and, • A cash flow analysis undertaken to understand the net income impact from the reduction in other crops prior to economic trees bearing fruit.

Once these steps have been completed, households will be in a position to decide whether to participate in the Project. If that decision is positive, household loan agreements will need to be established.

Thus, given the scope and complexity of the household economic tree planting component, a participation strategy is required to achieve consistent, comprehensive and equitable implementation of the activities. Therefore, a Community Consultation and Disclosure Strategy (CCDS) has been prepared for Xinjiang. The CCDS will be the process through which Xinjiang Project Management Offices (XPMOs) and the County Project Management Offices (CPMOs) engage communities, including ethnic minority communities, prepare site plans and identify loan participants. The CCDS is, therefore, a core Project activity for Xingjiang's PMOs.

The CCDS outlines community engagement activities that will be undertaken during the preparation of the Project and, in particular, the required dialogue and information exchange leading up to the identification households participating in the Project's loan activities. It sets out the Project’s rationale for consulting and involving communities, identifies who will be consulted, and lists consultation methods and techniques that will be used to ensure community awareness and participation in the Project.

The CCDS also provides a number of assurances and enhancements to the Project design. Household financial risk analysis is particularly crucial for poor and near poor households. The key issue from a social and poverty reduction perspective is the risk that poorer farmers may not be able to participate or will fall further into poverty because they will not be able to endure the loss of other crops prior to their economic trees bearing fruit. Ensuring the participation of women and consideration of women's workloads is also essential to the success of the Project. Therefore, the CCDS explicitly incorporates a gender strategy.

Of critical importance to the success of the Project will be how the CCDS can help create an enabling environment for ethnic minority and poor farmers through appropriate livelihood assessments, cash flow analysis and risk mitigation measures.

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The key issue from a social and poverty reduction perspective is the risk that poorer farmers may not be able to participate or will fall into poverty because they will not be able to endure the loss of wheat production (or loss of other crop) prior to their economic trees bearing fruit.

The social assessment indicates that farm sizes are small, that little land is left uncultivated and that near to 100% of wheat and corn produced by households is consumed by the household. Currently most farmers are cultivating wheat or cotton and these will be intercropped at a decreasing rate as the economic fruit and nut trees grow. Project production models have estimated the income value of the crop forgone and the gain/loss in income as the economic trees mature taking into consideration household labor grant payments, loan payments and cost of agricultural inputs. For dates and walnuts trees it is assumed that trees will begin to bear fruit and make an overall profit by year 5 but not until year 6 for apples.

Thus, in all cases there is a net loss of income starting in year 2 and running through until year 5 for dates and walnuts and until year 6 for apples. Annex 1 provides a detailed assessment of the household cash flow models for three economic trees and estimated the percentage of poor farming households in the project areas that may not be able to participate.

Without the participation of ethnic minorities and poor households the project's direct impact on poverty reduction will be minimal and limited to benefits from employment through the enterprise model. Indeed, without very careful consideration of how household borrowers are identified the project could increase poverty in the project areas.

2 Xinjiang CCDS Institutional Implementation Arrangements

The Community Consultation and Disclosure Strategy will be implemented under the loan agreement and is a core Project implementation process.

Overall Project management, including the implementation of the CCDS is consistent with the delegation of responsibility to the Xinjiang Provincial Forestry Department. At the Provincial level the coordination of Project activities will be managed and technical services and training provided to the operational staff located within the County Forest Bureaus (CBF) and their respective Forest Stations. Operational planning and implementation, financial management, procurement and disbursement management will be undertaken at the County under the supervision and monitoring of the XPMO.

The provincial and county governments will be the Implementing Agencies (IAs) for all CCDS implementation, monitoring and reporting activities. The XPMO will be a unit within the ICD of the Provincial Forest Department. Expertise in the ICD will be assigned responsibilities for the CCDS for their respective provinces and counties.

2.1 National Project Management Office (NPMO)

At the national level, State Forestry Administration (SFA) will be in charge of overall coordination and monitoring of the Project and will coordinate and supervise all Project implementation activities through its International Cooperation Division (ICD). The ICD will establish a National Project Management Office (NPMO) and appoint a Project Director and assign specific responsibilities to staff relating to project activities, including the implementation, monitoring and reporting of the CCDS. Key roles in the NPMO with respect to the CCDS are:

• Communication with ADB

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• Consolidation of reports, disbursements, procurement and monitoring • Consolidated financial records • Auditing and evaluation leadership

2.2 Steering Committees

Within each Province a high-level leading group (Steering Committee) will be established for the duration of the Project. The Xinjiang Steering Committee will consist of the Vice Governors of Finance, Forestry, and People Development Reform Committee (PDRC) and will be chaired by the Vice Governor PDRC.

Key roles of the Xinjiang Steering Committees are to ensure coordination between sector agencies and to address project strategic decisions, including the CCDS. The Steering Committee will be expected to review the draft CCDS implementation plans, ratify discretionary expenditure decisions and meet quarterly to receive reports from the Project Director on CCDS implementation.

2.3 Xinjiang Provincial Project Management Offices (XPMO)

The XPMO will be a unit within the ICD of the Provincial Forest Department. Expertise in the ICD will be assigned responsibilities for the implementation, monitoring and reporting of the CCDS. The XPMO will provide:

• A Project Director, XPMO who will have over sight and be responsible for decisions, achievements and issues related to the implementation of the CCDS over the life of the Project in their respective province. • Technical support and training for the CCDS implementation and monitoring. • Project management for CCDS; formulation and approval of CCDS implementation plans; procurement of experts/consultants; implementation of training; reporting to SFA on CCDS activities • Inclusion of CCDS activity data in the Project PPMS/MIS.

The Project will provide additional equipment that may be necessary including computers, laptops, printers, photocopier/scanner, phone/fax, file cabinet, and transport.

2.4 County Project Management Offices (CPMOs)

At the county level the CCDS will be the responsibility of each CPMO, which will operate under the leadership of a County Project Director who will be appointed by the Director County Forest Bureau (CFB).

The County Project Director shall have an existing rank of Deputy Director. The CPMOs shall be staffed with up to 7 full time equivalent staff depending on the scale and complexity of the planting program in the County. These staff would fill the following roles:

• Project Director (Deputy Director Forest Bureau) – leadership and coordination of program at the County level, including the organization of technical training from other sections of the Forest Bureau • Technical support for household planting site plans: working out annual planting plan and design for planting, preparation of household site plans and identification household loan participants; technical training; promotion; site monitoring, inspection and ratification of documentation on field level performance based on the approved design, coordination and technical support of forest station programs.

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• Project management, data collection; contract management (households, civil works contractors, private sector); procurement of planting materials for ecological forestry, documentation management including reimbursement claims to be provided to the XPMO. • Finance management, managing disbursement and reimbursement procedures, reconciliation of county level expenditure, maintenance of repayment registers, cooperation for auditing.

The XPMO and CPMOs will require the following equipment: computers, laptops, printers, photocopier/scanner, phone/fax, file cabinet, and transport.

The County shall assign full time staff to the CCDS and will work closely with the CFB to prepare work plans and arrange operational staff to undertake the CCDS activities. Implementation of the CCDS will necessitate the active involvement and participation of Forestry Stations, Poverty Alleviations Offices and Women's Federation at the Township level.

In implementing the CCDS, the CPMOs will ensure that appropriate risk mitigating measures allow the participation of ethnic minorities, the poor and women in the Project household borrowing model and that households make decisions to participate in the Project with full information of potential benefits and risks.

The CPMOs will identify the household borrowers through the Township Forest Stations who will work with borrowers to develop technical site plans. These site plans once approved by the CFBs will be used to obtain a loan agreement with the County Finance Bureau that will be countersigned by the CPMOs. The loan agreement will trigger an advance of funds that will be used to source goods from the private sector and to subsidize labor inputs.

Specifically, the consultation activity will ensure that all participants in the project, including ethnic minorities, the poor and women, are informed of the implementation arrangements, the rights and obligations of householders and individuals and the potential benefits and risks associated with participation. Therefore, CPMOs will undertake the preparation of household site plans through the CCDS that will include but not be limited to:

• Ensure that the reduction in subsistence crop yields are minimized through the preparation of sites plans that allow for maximum intercropping. • Ensuing that all households understand the basis of the labor grant payment and the amount and timing of these payments. • Analyze the household net income impact from the reduction in subsistence crops and the provision household grant labor payments. • Provide detailed cash flow models to potential borrowers that inform households of the potential cash flow gaps so that decisions can be made with complete information (see CCDS: Annex 1). • Develop household financial risk mitigation measures. This is particularly important for poorer farmers who may not be able to fill the income gap from the loss of wheat or cotton planted before the economic trees mature and provide improved incomes. • Consider alternative arrangements (such as increased grant payment and/or extended repayment grace periods) for crops that appear particularly risky and to increase the participation of poorer households. • Include a grievance procedure in the CCDS to respond to grievances and gaps in activities. The grievance mechanism will be implemented by the CPMO and each grievance will be reported to the XPMO and the SFA.

9 Preparing the FEDP in three NWP of PRC: Draft CCDP

• During consultation process, CPMO will inform the communities about other project activities and, in particular, the potential employment opportunities provided through the enterprise model.

2.5 Training

Training programs are proposed at Provincial and County level. The training will cover the following topics: ƒ Project management, including financial management, procurement and disbursement, and management information; ƒ Ecological and environmental training, including pest identification, use of pesticides, integrated pest management, integrated crop management, and good agricultural practices; ƒ Community consultation approaches, social issues and safeguards training; ƒ Gender awareness and specific opportunities for women.

Technical training will be provided to the beneficiaries on household financial (cash flow) management. The training will be provided by the Provincial Level specialists to the County and Forest Station staff who will then train beneficiaries. Similarly, technical training for each crop and environmental training will be designed and conducted by specialists to County and Forest Station staff, who will then train beneficiaries.

2.6 Project Management Information System (PMIS)

The proposed project will involve multiple departments such as SFA, MoF, NDRC and administrative divisions in the study regions; and the project implementing process and outcomes will affect a huge number of households and government agencies of 18 districts, 57 counties of these three provinces. Therefore, it is essential to develop management information systems in order to efficiently and effectively plan, organize, coordinate, guide and manage the whole process.

A Project management information system (PMIS) will be established in each province, which will form a set of effective supporting tools for project decision-making. The CCDS will be explicitly incorporated into the components of the PMIS; Project process monitoring, Project execution management, document management and system management.

Inclusion of the CCDS in the PMIS process monitoring module will enable the project directors and managers to browse and query all CCDS related information timely and accurately. Project execution management module will provide an effective tool for project manager to plan CCDS daily work. Document management module will allow CCDS document establishment and maintenances. These three modules, combined with the system management module, compose an integrative decision supporting system for CCDS.

2.6 Monitoring and Evaluation

International and national experts will be recruited to support the preparation and delivery of the CCDS and to provide independent monitoring and reporting on the CCDS. All recruitment will follow ADB’s Guidelines on the Use of Consultants (2007, as amended from time to time) by ADB and its Borrowers. The Independent Monitor will monitor and report on management of social issues, including the consultation processes, payment of funds to households, management of risks and mitigation, gender issues, and management of risks and mitigation for ethnic minority issues.

2.7 Financing Arrangements

10 Preparing the FEDP in three NWP of PRC: Draft CCDP

The Borrower is the PRC. On behalf of the Government, the Ministry of Finance MOF) will enter into subsidiary loan agreements with Gansu ($33.3 million), Shaanxi ($33.3 million), and Xinjiang ($33.4 million) as sub-borrowers of the proceeds of the ADB loan on the same terms and conditions as those of the ADB loan. The provinces will on-lend the proceeds of the loan to the county finance bureaus on the same interest and commitment charges as the ADB loan for further on-lending to households, enterprises, and state forest farms on the same interest and commitment charges as the ADB loan but with an additional interest rate spread of up to 0.2%, if applicable, to cover possible loss and delay of repayment, for a 25 year term to households, a 15 year term to enterprises, and a 10 year term to state forest farms, including a grace period of up to 5 years. The participating households, enterprises, and state forest farms will pay the interest charges to the county finance bureaus for onward payment to ADB through the provincial governments and MOF.

The CCDS is the process by which the XPMP and CPMOs will implement the Household Economic Tree Planting component. The process is a core Project implementation and management responsibility of the Provinces and is funded under the loan agreement within Component 3, Project Management Operating Costs.

It is strongly recommended that the SFA and Provincial Forestry Agencies engage professional facilitators to assist in implementation.

3. Elements of the Communication Strategy

This document provides the Community Consultation and Disclosure Strategy for the Forestry Ecological Development Project. This CCDS outlines communication and engagement activities that will be undertaken during the preparation of the Project. In particular this CCDS provides an outline of planned community/household engagement activities that are to be undertaken leading up to the identification of household loan participants.

The FEDP CCDS specifies that the engagement process involves free, prior and informed consultation with the affected communities and households to enable informed participation and confirmation of broad community support for the project within these communities. The concepts of free, prior and informed consultation are explained below: • Free – the Project representatives will not coerced intimidated or unduly incentivise the affected population to be supportive of the project; • Prior – Consultation with project-affected communities must be sufficiently early in the project planning process; and, • Informed – Consultation with all project-affected communities on project operations and potential adverse impacts and risks, using methods of communication that are inclusive, culturally appropriate and adapted to the community’s language needs and decision making.

The methodology will includes these elements: • Listening; • Providing, gathering and sharing information; • Incorporating community priorities and concerns into activities for the implementation of the planting program; and, • Creating opportunities for participatory learning and action.

The consultation strategy is built on principles of partnership between the communities and the project, characterized by mutual respect, transparency, systematic information sharing, capacity building, and by working with and adding value to existing Chinese systems and networks. 11 Preparing the FEDP in three NWP of PRC: Draft CCDP

The Project will support the process of identification of households by conducting surveys in participating provinces of farm structures and producer dependence on self- consumption/subsistence crops for their livelihoods. It will support the consultation process needed to identify borrowers and establish fair and transparent loan arrangements. It will assist the local authorities and farmers in establishing new economic tree plantings and promote market development.

3.1 Rationale and Components of the Consultation Strategy

Regardless of positive attitudes, understanding of project implementation procedures, loan terms and possible cash flow impacts are limited at the village and household level. Information about the project needs to be widely promulgated and provided to all potential participants, not only village heads and better-off villagers. There are higher risks associated with some economic trees and there is uncertainty that poorer farmers will be able to fill the income gap from the loss of wheat or cotton planted before the economic trees mature and provide improved incomes.

Through community consultation the project can better understand what implementation approaches are most appropriate and how to best facilitate equitable participation, particularly for poorer households.

Consultation will allow the Project to assess community and households needs and vulnerabilities, hear and respond to community concerns and identify the opportunities and constraints that communities and households may experience in their efforts to shift current cropping patterns.

Consultation will allow the Project to provide detailed information on project implementation processes, loan terms, labor payment terms, potential reductions in self- consumption/subsistence crops, cash flow implications and household loan management and financial risk mitigation measures.

Community consultation will play a key role in the development of an effective and equitable economic tree planting program. Community consultation will help identify how the Project can work with both poor and better-off households to improve household livelihoods and increase the poverty reduction potential and ecological benefits.

Consultation will be undertaken using participatory and culturally sensitive approaches that will enable all stakeholders to be informed and participate in the planning and implement to support positive changes.

Thus, the CCDS serves several functions and components of the strategy are outlined below.

3.1.1 Information Gathering for Implementing Agencies

• To provide information and facilitate discussion about the activities being implemented, so that community and individual needs, priorities and concerns are heard and taken into account. • To maximize sustainability through community awareness of the value of monitoring and maintaining the economic trees. • To gauge the level of public approval for the project, it's implementation approaches, time lines, benefit and obligations.

12 Preparing the FEDP in three NWP of PRC: Draft CCDP

• To enable project partners and staff to understand community perceptions, needs and experiences in relation to the economic planting program. • To provide data for project baseline, monitoring and evaluation.

3.1.2 Ensuring Appropriate Risk Mitigating Measure

Specifically, the consultation activity will ensure that all participants in the Project, including ethnic minorities, the poor and women, are informed of the implementation arrangements, the rights and obligations of householders and individuals and the potential benefits and risks associated with participation. The consultation is designed to allow households to make the decision to participate based on complete information. Therefore, measures within the consultative process will include but not be limited to:

• Ensuring that the reduction in subsistence crop yields are minimized through the preparation of sites plans that allow for maximum intercropping. • Analysis of household grant labor payments to assess the degree of compensation relative to the reduction in subsistence crops due to the planting area needed for the new economic trees. • Ensuing that all households understand the basis of the labor grant payment and the amount and timing of these payments. • Provision of detailed cash flow models to potential borrowers that inform households of the potential cash flow gaps so that decisions can be made with complete information. • Recommendations for household financial risk mitigation measures. This is particularly important for poorer farmers who may not be able to fill the income gap from the loss of wheat or cotton planted before the economic trees mature and provide improved incomes. • For crops that appear particularly risky and to include poorer households, consideration of alternative arrangements (such as increased grant payment and/or extended repayment grace periods). • During consultation process, SFA and State Forestry Agencies will inform the community about other project activities and, in particular, the potential employment opportunities provided through the enterprise model.

3.1.3 Grievance Procedure

The EMDP and in particular the CCDS strongly encourages household participation. If that occurs as recommended, there should not be any major issues or grievances. However, there may be some unforeseen issues during such a detailed Project. In order to effectively settle such issues and ensure the smooth implementation of the Project, an effective and transparent channel for lodging complaints and grievances has been established.

Public participation is encouraged throughout the preparation and implementation of the Project. Therefore, it is likely that great disputes will not arise. However, some unexpected issues may arise. In order to address such issues and ensure the successful implementation of this Project, a transparent and effective appeal channel has been established. The basic procedure is as follows:

Stage 1: If any right of any Affected Person (AP) is infringed upon in any aspect of the Project, he/she can report this to the village committee. Either the committee or the AP may seek a solution from the town government through consultation. After receipt of an appeal, 13 Preparing the FEDP in three NWP of PRC: Draft CCDP

the town government will record it, and study a solution together with the committee and the AP within 2 weeks. Stage 2: If the complainant is dissatisfied with the disposition of Stage 1, he/she may file an appeal to the County Forestry Bureau after receiving such disposition, which shall make a disposition within 2 weeks. Stage 3: If the complainant is dissatisfied with the disposition of Stage 2, he/she may file an appeal to the Provincial Forestry Bureau after receiving such disposition, which shall make a disposition within 2 weeks. Stage 4: If the complainant is still dissatisfied with the disposition of Stage 3, he/she may file an appeal to the administrative authorities with competent jurisdiction level by level for arbitration in accordance with the Administrative Procedure Law of the People’s Republic of China after receiving such disposition. Stage 5: If the complainant is still dissatisfied with the arbitration award, he/she may bring an action to a civil court in accordance with the Administrative Procedure Law after receiving such award.

The above procedure is enabled by Order of the State Council of the People’s Republic of China (No. 431): The Regulation on Complaint Letters and Visits, which was adopted by the 76th executive meeting of the State Council, and came into force as of May 1, 2005.

Appeals to the County Forestry Bureau or Provincial Forestry Bureau shall be managed by the Department of Civil Affairs or Legal Department of each Bureau, respectively.

All appeals shall be notified to the Independent Monitor.

The AP can appeal against any aspect of the Project that affects household income or welfare. The appeal process, institutions, sites, leaders, and telephone numbers for redress of grievances will be publicized to APs via meetings, notices and the information handbook. In this way, APs will fully realize their rights of appeal. Meanwhile, the system of information dissemination will be strengthened through use of the media, and all AP feedback will be compiled and distributed to all involved organizations.

Relevant institutions shall accept the complaints and grievances lodged by APs free of charge. The reasonable charges as incurred shall be covered by the contingency of the Project. During the whole process of Project implementation these grievance procedures remain valid so that the APs may deal with relevant issues.

3.1.4 Ensuring Gender Sensitive Implementation

There is a risk that women may be marginalized in terms of capacity building and participation in the project activities and their workloads may be increased in comparisons to those of men participating in the project. Furthermore, assurance that women participating in the household seedling planting are fairly compensated for labor inputs is required.

To ensure the successful integration of gender integration in the project the CCDS will include a gender implementation strategy. The Gender Strategy will include the following measures: • Project consultation and technical assistance activities will provide separate spaces for women to engage in project design and implementation decision-making and learning opportunities. These spaces should fit their schedules and labor demands. • During consultation processes the Project will review of women's workload loads. The project will consult with women in order to design implementation processes that ensure women's workloads are not unduly increased.

14 Preparing the FEDP in three NWP of PRC: Draft CCDP

• CCDS will ensure that adequate arrangements are in place so that all household labor payments are fairly distributed to both men and women. Payment for labor will not be made solely to the head of households, who is usually a man, regardless of whether land certificate is only in the husband's name. Household site preparation plans and loan contracts will explicitly state how labor payments will be distributed between household members. This aspect of the project needs to be carefully monitored to ensure that women receive payment for their labor. • Poor women and minority women will receive special support from the project to empower them and increase their level of participation.

3.1.5 Independent Monitoring

• The Project will engage an Independent Monitor (IM) to monitor, evaluate and report on the implementation and effectiveness of the CCDS.

3.2 The Value of Community Consultation

The experience from many types of Projects in different locations in China has shown that community consultation is an essential element of project success. Over the past 10 years there has been a growing realization that many top-down approaches fail to address the specific local needs of vulnerable communities, ignore the potential of local resources and capacities and may in some cases even increase people’s vulnerability.

An International Conference examining the broad spectrum of FAO’s experience agreed that a participatory approach that reaches the community is essential for success and that national action plans should be based on community plans for awareness and capacity building. Community consultation can facilitate effective local programs, and add value to government and international development Projects through the contribution of local knowledge and experience to policy and planning processes.

Working with provincial and local governments, agencies, community organizations, local producers and farmers, institutions, local experts and contractors, the Project will create a dynamic and multi-layered network of community consultation and involvement. The Project consultation process will also act as training and capacity building exercise for government agencies and local organizations that will learn to apply new consultation strategies and techniques as well as utilize consultation strategies that are well established in China. The Project will document the results and lessons learned from its consultation with the community.

3.2.1 Who Will Be Consulted?

By ‘communities’ the consultation strategy means groups of people/households who live in the same geographic area, share resources, and have common interests and similar cultural beliefs.

The strategy will focus on communities and individual households targeted for the Project's Household Model for economic tree planting, including ethnic minority, poor and female- headed farming households residing in the selected counties the Project provinces.

Key community organizations will play an important role in the organization and implementation of the consultation process. A first step in consultation is often to discuss issues and gather information from key informants and community organizations at the provincial, county, township and village levels. Key informants are likely to include forestry

15 Preparing the FEDP in three NWP of PRC: Draft CCDP

and agricultural extension workers (officials and volunteers) and staffs from Poverty Alleviation Offices (PAO), Women's Federation (WF) and NGOs.

3.2.2 Stakeholder Analysis

The consultation program will commence with a stakeholder analysis and an identification of areas of influence. Based on past experience and in recognition of the usual areas of influence in the Chinese context, Table 1 below outlines the potential stakeholder groups that should be consulted and provides a summary of how those consultations maybe undertaken.

16 Preparing the FEDP in three NWP of PRC: Draft CCDP

Table 1: Stakeholder Analysis Public Project notices in national and local Provincial and County Public newspapers, web site and making documentation Awareness available to all interested parties. Meetings will be held with various government agencies and Project documentation circulated Government Agencies through SFA, Provincial and Counties Forestry Agencies, Township and Village Committees and other key implementing agencies. Key informants are likely to include forestry and Key Informants and Key Community agricultural extension workers (officials and Organizations volunteers), local farmers and staff of from PAO, WF NGOs. NGOs may be identified and contacted to arrange NGOs (national and local) and facilitate meetings. NGO concerns and interests will also be identified. County, township and village governments contacted to inform them of the project. Consultation Local Communities Leaders committees will be established to assist in consultation activities with local villages. Local farmers and producers will be the group of stakeholders most affected by the project. Public Local Farmers/Potential Borrowers meetings will be held in the affected communities to advise people of the project and to receive their comments and concerns. Vulnerable group representatives (ethnic minorities, Vulnerable groups women, youth and) will be included on Consultation Committees. Special Consultation groups may need to be formed for ethnic minority peoples and women. Business Operators Key affected businesses will be consulted through public meetings and individual interviews.

Local farmers and producers will be the group of stakeholders most affected by the project. The Project is focused on assisting local farmers, many of whom are small producers and have limited experience in growing new economic trees. The intention of the project is to reduce rural poverty and improved incomes and sustainable livelihoods from the use of forest land in the project area. The CCDS will help to ensure the best possible outcomes for individual households, communities, the Forestry Agencies and the province of Xinjiang.

3.2.3 Public Consultations

An extensive public consultation program using methods best suited to the diverse interests of the various stakeholders, their language needs and education levels will be undertaken with local, regional, national and international interests and stakeholders.

Public meetings will be held in counties/township/villages targeted for the project. These meetings will introduce the project to the community and provide information, invite comment from the perspective of local farmers, and identify potential difficulties and mitigating measures related to the design of the Household Model and the implementation schedule. Publicity materials such as brochure and description of loan procedures, obligations, and terms will be circulated through counties/township/village committees, Government extension services and mass organizations. Methods of public consultation that will be applied during the course of the project will include:

• Targeted briefings; • Displays and exhibitions;

17 Preparing the FEDP in three NWP of PRC: Draft CCDP

• Project progress reports and newsletters; • Multi-media Advertising; • Interviews with key people; • Site visits; • Informal at-home meetings; • Surveys; and, • Focus group discussions.

The Project will report on and provide summaries of all consultations that are undertaken and the major issues/concerns that are raised.

3.2.4 Consultation and Equity

Ethnic minority people, women and the elderly and will be included. Special meetings and information session may be needed to ensure the views and priorities of these stakeholders are taken into account through the consultation process. Statistical data will be collected and disaggregated by gender and by age. The potential impacts, positive and negative, of Project activities on these groups, with particular attention to women and ethnic minority people will be investigated through key informant interviews and discussions.

The Project will report on and provide summaries of all consultations that are undertaken and the major issues/concerns that are raised.

3.2.5 Consultation Requirements

Table 2 below outlines the consultation requirements

18 Preparing the FEDP in three NWP of PRC: Draft CCDP

Table 2: Consultation Requirements INDICATORS ISSUES APPROACH TO ADDRESS ISSUE Review Stream 1 – Conducted free, prior and informed consultation that enables participation of affected communities.

1. Stakeholder Identification and Area of influence includes: Targeted project counties in 3 Area of influence will be defined and stakeholders Analysis provinces. identified and profiled. Stakeholder profiling will be based on socio-economic surveys and selected group Potential interests to be consulted include: those whose meetings. Key stakeholder issues will be identified and livelihoods are affected; local communities and their responses/resolutions provided and documented. representatives; ethnic minority groups; women; business operators and associations; local and international NGOs; national government.

2. Community Engagement Communities will be engaged to provide input on identifying Project affected communities will be engaged at various potential impacts; assessing the consequences of those impacts; stages. In each case stakeholders will be provided the

on mitigation & developing benefits. opportunity to provide comments and to express their issues of concern.

3. New Information Disclosure The Project will ensure that procedures stress the need of Numerous information releases will be made available information disclosure to ensure that stakeholders are making to the affected communities. This will include the

informed decisions. release of: the Project EMDP, the CCDS and the Consultation Summary Reports, project newsletters and the draft final Project documentation. The Summary Report and newsletters will be produced in the local ethnic languages were appropriate. The communities will also be informed through public meetings held in each county/township and village participating in the project in conjunction with the release of the Consultation Summary Reports.

4. Consultations The Project will ensure that “free” consultation can be All consultations will be undertaken freely and under demonstrated through records of communication with community the observation of the IM. The Project will ensure that a) Free representatives, key informants and group representatives. the results of all consultations undertaken with various stakeholders are documented. b) Prior The Project recognizes the importance of early and timely Awareness of project needs to be high and efforts over consultation so that the released information can be interpreted an extended timeframe will be needed to ensure all and comments formulated; so that material input can be provided stakeholders are informed and provided with relevant on broad loan design options; and on the choice and design of documentation and information prior to implementation. mitigation measures. Stakeholders must always have the opportunity to provide comments after consultation and reviewing the

provided materials.

19 Preparing the FEDP in three NWP of PRC: Draft CCDP

c) Informed Consultation needs to be inclusive (accommodating different Various types of consultations will be undertaken levels of vulnerability), culturally appropriate and adapted to throughout the project period with all identified

language needs and decision-making processes. stakeholder groups. Meetings will be undertaken and information materials provided in the local ethnic

languages. Vulnerable groups representatives will be included as part of consultation committees.

5. Informed Participation The process needs to be iterative to show how decisions are The consultation process will be iterative in that it is will made and that the views of the participating households are be undertaken through a number of phases that

taken into account including mitigation and benefits sharing. corresponded to the release of the EMDP, CCDS and the Consultation Summary Reports. The results of the consultation activities will be fed into the overall Project planning process. Key issues that are identified will be responded to.

6. Vulnerable Groups – Groups such as the poor, ethnic minorities, elderly and women Vulnerable group representatives will be included as consultation and mitigation need to be explicitly consulted. Documentation needs to be clear part of the Consultation Committees. as to how these groups are consulted, the potential for impacts

on them and how their concerns are to be addressed.

7. Grievance Mechanisms Need to address potential grievances within the Project A grievance mechanism will be implemented by the IM configuration and for any unfulfilled project commitments. in conjunction with the Consultation Summary Reports.

The project will put in place a process of responding to grievances and gaps in activities.

8. Feedback to Affected The Project will specify procedures where by the results of the Input received through the consultation and disclosure Communities consultation are fed back to the communities to demonstrate how process will be fed back into the project planning comments/recommendations have been accommodated and process through responses to identified issues and

where not accommodated, provide a rationale for this. concerns. A grievance mechanism process will be implemented to address issues during project

implementation.

Review Stream 2 – Identifying the level of support and dissent among the communities for the project affected.

1. Formal Expressions of Support The Project will provide materials that indicate that formal CCDS and its implementation is designed in such a of Objection support has been expressed through minutes of meetings with manner to move to a level of broad community support government bodies and community bodies. for the project. Key stakeholders such as the local

governments and communities can provide verbal

support for the project. Formal expressions of support from the county, township and village committees should be obtained.

20 Preparing the FEDP in three NWP of PRC: Draft CCDP

2.Informal Expressions of Support Can be expressed through media releases, agreements, Key stakeholders such as the local governments and or Objection consultation event participation levels and responses to these communities can provide verbal support for the project. events. Informal reviews of newspaper articles and other local

materials may be used.

3.Evidence of good faith Providing evidence that problems will be rectified. Documenting The project will commit to resolving issues and initiate negotiations the results of the negotiations and agreements reached and actions. outlining how the project proponent intends to honor these

agreements.

Analysis of Contents 1. Net Benefits The Project will provide evidence that the project affected Benefits of the project to the participating communities communities will receive net benefits from the project. (including must be clearly articulated and any agreed community

all sub groups of those participating or affected). development initiatives to be implemented must be dependent on needs assessment work undertaken in consultation with the communities prior to project planting implementation.

2. Legal Framework/Public Policy Need to provide evidence that local land use planning approvals Specific land use planning approvals that are required Considerations have been obtained and other regulations meet/ address for the project and approval procedures will be consistency of project with national/regional/local policies. investigated.

3. Local and National Political Need to examine whether community opinions have been Need to examine whether community opinions have Considerations influenced by the political system/cycle. been influenced by the political system/cycle.

21 Preparing the FEDP in three NWP of PRC: Draft CCDP

CCDS: Annex 1 Analysis of Household Economic Tree Planting

This section provides an analysis of the Project's economic tree planting component at the household level. The analysis provides an assessment of the cash flow impact and identifies potential barriers for participation of poor households.

Tables 1, 2, and 3 below, provide a household analysis of the "with" and "without" Project case for three of the Project's proposed economic trees for the first 7 years. For each tree type the average size of planting area has been based on average household farm size in provinces where those crops dominate the Project's planting activities. Thus, for Chinese dates which will be planted in Xinjiang and where the average farm sizes are relatively large, the average size of planting will be 4.1 mu, whereas for walnuts and apples, mainly planted in Gansu and Shaanxi, the average size is, 1.5 mu and 3 mu respectively.

In all cases, it is assumed that the land is currently cultivated with wheat or cotton and that these will be intercropped at a decreasing rate as the trees grow. Project production models have estimated the income value of the crop forgone and the gain/loss in income as the economic trees mature taking into consideration household labor grant payments, loan payments and cost of agricultural inputs. For dates and walnuts trees it is assumed that trees will begin to bear fruit and make an overall profit by year 5 but not until year 6 for apples.

Thus, in all cases there is a net loss of income starting in year 2 and running through until year 5 for dates and walnuts and until year 6 for apples.

Table 1: Chinese Dates-Household Cash Flow and Loan Payments For Chinese Dates grown on .27 hectares (4.05 mu) Item Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Income without project 1600.0 1600.0 1600.0 1600.0 1600.0 1600.0 1600.0 Net crop income 1360.0 1040.0 800.0 1440.0 3600.0 6480.0 14400.0 Intercrop 1360.0 1040.0 800.0 Date 0.0 0.0 0.0 1440.0 3600.0 6480.0 14400.0 Household grant 714.7 357.3 0.0 0.0 0.0 0.0 Gain or loss w/project 474.7 (202.7) (800.0) (160.0) 2000.0 4880.0 12800.0 Loan 3179.2 4116.7 4880.4 4880.4 4880.4 4880.4 4636.4 Debt service Interest 90.9 117.7 139.6 139.6 139.6 139.6 132.6 Repayment on loan principal 0.0 0.0 0.0 0.0 0.0 244.0 244.0 Total debt service 90.9 117.7 139.6 139.6 139.6 383.6 376.6 Interest Rate 2.86% Source: Forestry Ecological Development Project PPTA, June 2009

Preparing the FEDP in Three NWP of PRC: Draft EMDP

Table 2: Walnuts-Household Cash Flow and Loan Payments For Walnuts grown on 0.1 hectares (1.5 mu) Item Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Income without project 75.0 75.0 75.0 75.0 75.0 75.0 75.0 Net crop income 63.8 48.8 37.5 0.0 420.0 630.0 756.0 Intercrop 63.8 48.8 37.5 date 0.0 0.0 0.0 0.0 420.0 630.0 756.0 Household grant 60.0 15.0 0.0 0.0 0.0 0.0 Gain or loss w/project 48.7 (11.3) (37.5) (75.0) 345.0 555.0 681.0 Loan 922.5 1083.4 1164.4 1164.4 1164.4 1164.4 1106.2 Debt service Interest 26.4 31.0 33.3 33.3 33.3 33.3 31.6 Repayment on loan principal 0.0 0.0 0.0 0.0 0.0 58.2 58.2 Total debt service 26.4 31.0 33.3 33.3 33.3 91.5 89.9 Interest Rate 2.86% Source: Forestry Ecological Development Project PPTA, June 2009

Table 3: Apples- Household Cash Flow and Loan Payments For Apples grown on 0.2 hectares (3.0 mu) Item Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Income without project 600.2 600.2 600.2 600.2 600.2 600.2 600.2 Net crop income 510.1 390.1 300.1 0.0 440.0 1320.0 2640.0 Intercrop 510.1 390.1 300.1 Date 0 0 0 0 440 1320 2640 Household grant 130 40 0 0 0 0 Gain or loss w/project 40.0 (170.1) (300.1) (600.2) (160.2) 719.8 2039.8 Loan 1140.00 1398.00 1604.00 1,604 1,604 1,604 1,604 Debt service Interest 32.6 40.0 45.9 45.9 45.9 45.9 43.6 Repayment on loan principal 80.2 80.2 Total debt service 32.6 40.0 45.9 45.9 45.9 126.1 123.8 Interest Rate 2.86% Source: Forestry Ecological Development Project PPTA, June 2009

The key issue from a social and poverty reduction perspective is the risk that poorer farmers may not be able to participate or will fall further into poverty because they will not be able to endure the loss of wheat production (or loss of other crop) prior to their economic trees bearing fruit.

The social assessment found that near to 100% of wheat and corn produced by households is consumed by the household. Most households sell other crops and have income from other sources (i.e. off-farm labor during non-agricultural season). The previous sections show that most households have small farms with no land left uncultivated, hence, no additional land to bring into production for tree planting. Hence, those households that survive at subsistence level or have incomes just above the poverty line and who do not have access to other income sources will become poorer before they become better off by participating in the Project.

Table 4 provides a breakdown of households by rural income groups to illustrate the potential impediment to participation for poor households.

Preparing the FEDP in Three NWP of PRC: Draft EMDP

Table 4: Proportion of Project Households Potentially Unable to Participate Income Groups by % of Households Per Capita Annual Net Income (CNY) Gansu Shaanxi Xinjiang 0 - 400 1.0 1.6 400-600 1.2 0.7 1.7 600-800 3.4 1.5 3.5 800-1000 4.9 2.5 4.1 1000-1200 7.0 4.0 5.0 1200-1500 12.8 8.9 7.2 % of project area households below per 16.5 9.7 15.9 capita annual net income of 1,196 % of project area households below per capita annual net income between 1200- 29.3 17.6 21.5 1500 Source: Gansu. Shaanxi and Xinjiang Statistical Yearbooks, 2008

Assuming that farming households in the Project areas are representative of the income distribution shown in Table 4, and that households with income at or below the poverty line could not sustain the loss of income until the trees mature, then 16.5%, 9.7% and 15.9% of Project area households in Gansu, Shaanxi and Xinjiang respectively would be not be able to participate in the Project.

However, the income group just above the poverty line (those with per capita annual net income between 1,200 to 1,500 Yuan) would likely fall into poverty if they participated in the economic trees planting and loan activity. If so, this would result in 29.3%, 17.6% and 21.5% of rural households in the Project areas of Gansu, Shaanxi and Xinjiang respectively not being able to participate in the Project through the household economic tree planting model. Moreover, as Project implementation is targeted at poverty counties, an even greater proportion of households are poor than shown in Table 4 and, therefore, the percentage of households unable to participate would be even higher.

Without the participation of poor households the Project's direct impact on poverty reduction will be minimal and limited to benefits from employment through the enterprise model (which is only being implemented in Xinjiang and not in Gansu and Shaanxi). Indeed, without very careful consideration of how household borrowers are identified the Project could increase poverty in the Project areas. One the characteristics of poverty in western China is the degree to which people fall in and out of poverty and the Project must ensure that it does not impact negatively on this phenomenon.

Preparing the FEDP in Three NWP of PRC: Draft EMDP

APPENDIX 3

Village Descriptions in Hejing County

The Project area in Hejing County is located in Harmodun Township of the Mohuchahan region east of the Xintiandi Industry Park. The selected Project sites in Hejing County are close to Chahanwusu village of Erlezitewulu and Xiaermudun village in Harmodun Township.

Hejing County

Chahanwusu village of Erlezitewulu Township was founded only on in January 2008 in a response to the appeal for people to move off the surrounding Bayanbulak Grasslands in order to protect this area from further degradation, where it had become increasingly difficult for herding family to survive. Thus, all of the villagers are herdsmen households resettled for ecological protection reasons under the direction of the local government during 1988, 1999 and 2001.

Almost all residents in the village are Mongolians (2,079 residents or 99 percent of the village population). There are four non-Mongolian households; Uyghur, Han, Tibetan and Hui ethnic groups. The village consists of 563 householders, 2100 residents (3.7/hh), of which 987 (1.7/hh) are active in the labor force. The village has 14,000 mu cultivated land and 20,000 mu of uncultivated land. When the herdsmen were resettled each household was provided with 0.5 ha free of charge.

The village remains as one of the poorest in the region. According to village statistics, the annual average per capita income of the village was only 390 CNY in 2007 and 600 CNY in 2008, much lower than the absolute poverty line of 786 Yuan per capita set by the government in 2008. Thus 100 percent of the population is below the absolute poverty line.

Chahanwusu village has very poor natural conditions with mostly sandy land which is only marginally suitable for growing crops. Thus the initial poverty of the relocated herding families has been compounded the lack of natural resources, lack of capital, low technological inputs for crop cultivation. The households living in this village mainly rely on government assistance to survive. They lack of development awareness and capacity of herdsmen and are poorly educated.

Their basic livelihood is farming together with working as migrant workers or in local townships. The income from providing labor accounts for about 60-70 percent of total income. The economic crops grown include mainly cotton, melon seeds and pepper. In 2004, some families planted apricot trees, but these tress have not matured and have not provided fruit yet.

The people from this village will benefit by supplying labor to two enterprises participating in the Project, one that will plant 210 hectares of apricot and another that will plant 210 hectares of grapes. In addition, labor will be required for 40 hectares of the shelter belt.

Local district officials are most keen for the project implementation and noted that this village will be targeted in the provision of labor for the project.

Xiaermudun village in Harmodun Township is located close to Chahanwusu village, and also near project sites in Hejing County. The village was founded in 1975 and consists of 561

Preparing the FEDP in Three NWP of PRC: Draft EMDP

householders, 2187 residents of which 623 (28.4%) are Han Chinese, 1313 (60%) are Uyghur, 249 (11.4%), are Mongolians and Hui (less than 1%). There are six teams in the village including five agricultural teams, a livestock unit (the 6th team).

Residents of teams 1 to 5 are mainly engaged in planting cotton, melon seeds, pepper and other economic crops and trees such as apricot and grape while some households run businesses. Residents of the 6th team (the animal husbandry group) are all Mongolians who are mainly engaged in cattle and sheep grazing on the mountains for more than ten months each year returning to the lowlands in October.

Compared with Chahanwusu village, Xiaermudun village has much improved economic development, due in part to its longer establishment but also the village has relatively good conditions, including arable land, well-developed non farming businesses and exposure to new ideas and opportunities. The average per capita income in this village is 7,054 CNy.

Preparing the FEDP in Three NWP of PRC: Draft EMDP