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World Bank Press Release on China Western Poverty Reduction Project

​China to Implement Qinghai Component of the China Western Poverty Reduction Project with its Own Resources

To read the Inspection Panel Report and the Management Response,

seeDocuments Relating to the China - Western Poverty Reduction Project

WASHINGTON, July 7, 2000- The Chinese authorities announced today that they intend to use their own resources to implement the Qinghai Component of the China Western Poverty Reduction project.

The decision came after a discussion at the World Bank's Board of Executive Directors, representing its 181 member countries, during which the majority of the Executive Directors did not agree to adopt Management's recommendations as originally formulated.

Despite broad support for the actions proposed by World Bank Management and agreed with Chinese authorities in response to the Inspection Panel's findings, the Board could not agree to support these recommendations without further Board review and approval after the proposed studies were completed. As indicated in the statement of the Chinese Executive Director, which is presented below, any additional conditions to Management's original recommendations proved unacceptable to his authorities.

Commenting on the decision,James D. Wolfensohn, President of the World Bank, told the Board,"We accept the decision by the Chinese Government. We note that the project will be implemented by them. We look forward to a continuation of our long-standing relationship with China in the context of other projects."

Here follows the statement read to the Board by theChinese Executive Director, Zhu Xianon behalf of his authorities."China accepts no conditions beyond Management's original recommendations that had been agreed between Management and my authorities. We appreciate Management's efforts, particularly your insistence Mr. President, that only economic considerations be taken into account in Bank decision making as reflected in your recent letter to Board Members and your remarks at yesterday's Board meeting. It is unacceptable to my authorities that other Bank shareholders would insist on imposing additional conditions on Management's recommendations - namely coming back to the Board for approval again for a project that was already approved last year. If that is the case, China will therefore turn to its own resources to implement the Qinghai Component of the project, and in its own way. Our efforts in fighting poverty will not be interrupted because of this development. We regret that because of political opposition from some shareholders the World Bank has lost a good opportunity to assist some of the poorest people in China, probably in the world, after so much effort by World Bank management and staff.

Mr. Chairman, we are greatly concerned about what has become clear in this process - and which constitutes a great challenge facing this institution. Namely the fact that compliance policies have been interpreted by some to an extreme and used for political purposes. By such action the Bank's mission - particularly its development effectiveness - has been jeopardized. We call for discussion on this as soon as possible.

From the very start, the whole process has been under enormous political pressure. We believe therefore it is once again necessary to bring to our shareholders attention the importance in this institution of separating economic considerations from politics".

The Board decided to release the Inspection Panel's Report, Management's Report and Recommendation, and the Chinese Government's statement as soon as possible.

The issues raised by the Chinese Executive Director as well as in the Institutional Issues paper will be discussed by the Board at an early stage.