China Interior Regions Telecommunications Network Expansion Project External Evaluator: Yuko Kishino Field Survey: October 2004 1. Project Profile and Japan’s ODA Loan Mongolia Inner Mongolia 内蒙古自治区Autonomous Region 新疆ウィグル自治区Xinjiang Uygur North Korea Autonomous Region Beijing 青海省Qinghai 寧夏回族自治区Ningxia Huizu Province Autonomous Region South Korea China 甘粛省Gansu Province Shanghai Bhutan Bangladesh Guizuhou貴州省 Province Taiwan Myanmar Hong Kong Vietnam Macao Projectプロジェクトサイト site Earth station in Xinjiang Uygur Project site location map Autonomous Region 1.1 Background Since China adopted the reform and open-up policies in 1978, development and improvement of infrastructure in various fields have been implemented in order to facilitate the transition from a planned economy system to a socialist market economy. In the field of telecommunications, based on the idea that it is essential to collect accurate economic information and establish a system of utilizing such information, construction of communication facilities was included in priority policies of the Eighth 5-Year Plan (1991-1995), and the telecommunication capacity has been remarkably improved by digitization. On the other hand, the telephone density1 in urban areas in china was only 3.1 as of the end of 1992, and communication facilities were still insufficient. Also, there was a large gap in telephone density between the eastern urban area experiencing rapid economic growth and the western urban area, in which telephone densities were 4.1 and 2.3, respectively. 1.2 Objectives The project’s objective was to improve the poor communication condition and cope with the expected increase in demand in the future by expanding and modernizing local telephone communication networks in 6 provinces and autonomous regions in the interior regions of China, and thereby contribute to the promotion of economic development through the improvement of the investment environment. 1 The number of telephone per 100 persons 1 1.3 Borrower / Executing Agency Government of People’s Republic of China / Ministry of Posts and Telecommunications (at appraisal), Ministry of Information Industry (at evaluation) 1.4 Outline of Loan Agreement Loan Amount / Disbursed Amount 15,003 million yen / 13,482 million yen Exchange of Notes / Loan Agreement December 1996 / December 1996 Terms and Conditions - Interest Rate 2.3% - Repayment Period (Grace Period) 30 years (10 years) - Procurement General untied Final Disbursement Date June 2002 Contractors Beijing International Switching System (Civil Works and Equipment) Corporation Ltd.(China) Consultants - Feasibility Study (F/S), etc. Chinese Government (1996) 2. Results and Evaluation 2.1 Relevance In China’s Ninth 5-Year Plan (1996-2000), communication networks were mentioned as important infrastructure. In particular, expansion of telephone networks in the interior regions as a measure to promote the development of regional economy and reduce the disparity between these regions and the coastal regions was one of the priority objectives of the plan. This project was intended to improve communication conditions in the interior 6 provinces and autonomous regions, which were particularly underdeveloped in China, and therefore was highly important for regional economic activities in the regions. Thus, the relevance of the project at the time of appraisal is fine. Modernization of the information infrastructure including the establishment of communication networks is also an important policy of the Tenth 5-Year Plan (2001-2005), and establishment of communication networks in the interior regions remains an important issue to be tackled in order to reduce regional disparity. In the China Western Development Plan (2001-2010), construction of infrastructure in 12 provinces2and autonomous regions including the 6 covered by this project is listed among priority projects. The strategy contains the 2 Gansu Province, Shaanxi Province, Qinghai Province, Xinjiang Uygur Autonomous Region, Ningxia Huizu Autonomous Region, Sichuan Province, Yunnan Province, Guizhou Province, Tibet Autonomous Region, Chongqing City, Inner Mongolia Autonomous Region and Guangxi Zhuangzu Autonomous Region 2 objectives of improving trunk transmission networks such as fiber optic and micro transmission lines and the satellite communication system, as well as constructing a fixed telephone network in the target provinces and autonomous regions. This project is consistent with these objectives and therefore remains relevant today. 2.2 Efficiency 2.2.1 Output This project was to increase the capacity of local switches and construct intra-provincial transmission lines in 6 particularly underdeveloped provinces and autonomous regions in China: Xinjiang Uygur Autonomous Region, Gansu Province, Qinghai Province, Ningxia Huizu Autonomous Region, Guizhou Province, and Inner Mongolia Autonomous Region (Fig.1). The ODA Loan covered the entire foreign currency portion listed below. Fig. 1 Six Provinces and Autonomous Regions in Interior China Xinjiang Uygur Autonomous Region Inner Mongolia Autonomous Region Ningxia Huizu Autonomous Region Gansu Province Qinghai Province Guizhou Province Table 1 Comparison of Output (Plan/Actual) Province / Plan Actual Autonomous Region ① Local switches: ① As planned 510,000 circuits ② Xinjiang Uygur Satellite communication ② As planned Autonomous Region network: construction of 3 earth stations and installation of additional equipment at 5 existing earth stations 3 ① Local switches: ① Mostly as planned 140,000 circuits ② Fiber optic cable ② - ④ Fiber optic cable transmission lines: 13 sets transmission lines: 26 sets of of STM1)-1 equipment, 4 sets STM-1 equipment, 51 sets of of STM-4 equipment STM-4 equipment (total length: 1,051.35km) (total length: 4,926km) ③ Microwave transmission lines (in urban areas) Gansu Province 24 sets of STM-1 equipment (total length: 463.8km) ④ Fiber optic cable transmission lines or Microwave transmission lines (local lines in rural areas): 235 sets of STM-1 equipment and 20 sets of PDH2)34Mb/s equipment ① Local switches: ① Local switches: 100,000 circuits 123,000 circuits ② Fiber optic cable ② Fiber optic cable Qinghai Province transmission lines: 42 sets of transmission lines: 49 sets STM-1 equipment of STM-4 equipment (total length: 2,445km) (total length: 2,326km) ③ Subscriber circuits: 3,800km ③ Subscriber circuits: 3,109km ① Local switches: ① As planned 310,000 circuits Ningxia Huizu ② ② As planned Autonomous Region Fiber optic cable transmission lines: 13 sets of STM-4 equipment Guizhou Province Local switches: 330,000 circuits As planned ① Local switches: ① Local switches: As planned 100,500 circuits ② Fiber optic cable ② Fiber optic cable transmission lines: 80 sets of transmission lines: 40 sets Inner Mongolia PDH34Mb/s equipment of PDH34Mb/s equipment Autonomous Region (total length: 2,000km) (total length: 2,000km) ③ No. 7 type command ③ No. 7 type command network3): LSTP4) equipment network: LSTP equipment at 11 locations at 5 locations Note 1) STM stands for Synchronous Transport Module, an international standard of transmission mode classified by transmission capacity. STM-1 has a capacity of 155Mb/s（worth approximately 2,000 circuits） and STM-4 has 4 times the capacity of STM-1. Note 2) PDH stands for Pre Synchronous Digital Hierarchy, the existing transmission mode. Note 3) A common signal mode that transmits information for the control and connection of circuits within the network of communication service providers. It allocates optimum capacity to the exchange of service management information so as to make the most of the capacity of the transmission line. Note 4) LSTP stands for Local Signal Transfer Point, the station that exchanges or relays signal messages in the No.7 type command network. 4 The planned output was achieved in Xinjiang Uygur Autonomous Region, Ningxia Huizu Autonomous Region, and Guizhou Province. In 3 other provinces and autonomous regions, some changes were made to the plan at the appraisal time such as the increase in the number of local switches and changes in the length of transmission lines and transmission modes (see the shaded columns of Table 1). In Gansu Province, it was planned to construct fiber optic cable transmission lines in limited areas and microwave transmission lines in the remaining areas due to budget restrictions. However, at the stage of basic design after appraisal it turned out to be possible to construct fiber optic cable transmission lines in the entire target region, and the plan was changed. Also, with the change of the main transmission mode from PDH to SDH (Synchronous Digital Hierarchy), a high-speed digital system with a huge capacity, planned introduction of PDH in rural areas were cancelled, and SDH was introduced in all areas with a view to enhancing reliability and quality of communication services. In Qinghai Province, the length of fiber optic cable transmission lines and subscriber circuits was shortened based on the result of the up-to-date demand survey in prefecture-level city and prefectures in the province, and the saved funds were used to increase the highly needed local switches. As a result, the capacity of local switches was increased by 23,000 circuits, and the length of fiber optic cable transmission lines and subscriber circuits was respectively reduced by 119km and 691km from the original plan. In Inner Mongolia Autonomous Region, as the signing of L/A took place much later than expected, 40 sets of PDH34Mb/s equipment for fiber optic cable transmission