Capacity Building for Poverty Alleviation Institutions through the Implementation of the World Bank’s Projects - the Case of China Paper presented at 2014 Australasian Aid and International Development Policy Workshop Enjiang Cheng Centre for Strategic Economic Studies Victoria University Xiaojun He International Poverty Reduction Centre in China February 2014

CONTENTS Introduction Institutional Capacity Building for Poverty Reduction in China Success Factors Lessons for other LDCs

1. Introduction (1) –With a population of 1.3 billion, China recently became remains the 2 nd largest economy in the world. But China remains a developing country with large number of the poor. In 2012, China’s national income per capita was USD 6091, ranked 90 th on the World. About 128 million people still lives in poverty (below the poverty line of CNY 2300 (USD1.8 a day). The Income disparity measured by Gini coefficient. Challenges on sustainable development: environment, growth model, population aging, etc.

1. Introduction (2) The Bank’s Projects in China China Began its partnership relationship with the Bank in 1980, poverty and agriculture has been the focus of the Bank’s projects in China. So far five large poverty reduction projects Poverty 1-V have been implemented, in preparation for Poverty VI: the Agricultural Development in China’s Poor Areas The focus of this paper is on capacity building for poverty reduction projects in China A large country case with the major resources for poverty reduction from the government sector, so how have the Bank’s projects impact on the domestic poverty reduction institutions and projects? the pathways?

1. Introduction (3) The main part of this study was undertaken at IPRCC IPRCC itself is an agency set up by the Chinese Government, with the support from UNDP, the World Bank, ADB, and DFID to summarize the lessons on China’s poverty reduction and development and to work on south-south cooperation. –Study Methods Extensive Interviews with the government officials at the central, provincial and the county levels, project managers, project consultants and others.

2. Capacity Building (1) The World Bank’s Poverty Project in China –Southwest Poverty (1) was initiated in The capacity building for China’s Poverty Reduction started in 1991, much earlier than the launch of the Poverty I.

2. Capacity Building (2) By participating in the World Bank’s projects and through a process of ‘learning by doing’, the Chinese implementing staff have improved their capacities in a number of ways: –A Change in the overall Approach for poverty reduction in China: From specific project approach to a more comprehensive poverty alleviation plan and intervention; project targeting moving from the poor counties to the poorer/poorest townships, villages, and households, with an emphasis on the ethnic minority groups; from a top down approach to active community participation in the project planning, designing and implementation; from environment benign to environment-friendly poverty project approach.

2. Capacity Building (3) An Integrated Approach for Poverty Reduction: –the World Bank has adopted an integrated approach in its poverty reduction projects in China. Its large poverty projects cover rural infrastructure, agricultural development, enterprise development, as well as education and public health. The Government has learnt from the Bank’s projects and initiated its own integrated village development programs with active community participation. Improvement in Project Management : –the World Bank has established and standardized procedures in project management, including project designing, monitoring and appraisal. Improved Capacities in Poverty Policies Making and Implementation –the Government staff has learnt from the Bank in the following two manners: (a). by taking the policy advice made by the Bank directly; (b). by participating in the procedures for the formation of policy advise organized by the World Bank. E.g. “China Rural Poverty Reduction and Development Program ( )” incorporated policy advices from the World Bank and other donor agencies.

2. Capacity Building (4) Personnel development/training –government staff from the national, provincial and county PMOs have worked together with the World Bank specialists in project designing, monitoring and evaluation. They have learned by participating and doing, becoming poverty specialists themselves. Introducing Poverty Monitoring System – With the active participation of the World Bank and other relevant government departments, a standard poverty monitoring system has been developed and applied by several government departments. Prior to that, there was disagreement as to whether China should have such a monitoring system due to cost considerations.

3. Success Factors (1) Leadership and commitment by the Government Incentives for Capacity Building –Many PMO staff who were first trained in EDI/WBI course since 1991 and then engaged in the World Bank poverty alleviation projects in China have been promoted, because of their project experience and their improved capacities through the implementation of the Bank’s poverty projects in China. According to incomplete statistics, about project managers were promoted to the director general level. This practice, on the one hand, provided great incentive for the government staff to work on the Bank’s projects, which helped to ensure the success of the projects, and on the other hand, it has acted to transfer the knowledge and lessons obtained from the project implementation to China’s domestic poverty programs and other donors’ programs in China. It is noted that more than half of the officials at the Director General level at the LGOP system have participated in the implementation of the World Bank’s poverty projects in China. Effective and continuous training –Since 1991, a good number of training and study tours have been conducted in and out of China to enhance the capacities of the project management staff at different levels (from the national PMO to the county PMOs).

3. Success Factors (2) Local Initiatives: –Local project officials, especially those at and below the county level have shown great enthusiasm in learning from the bank’s projects in China. Support from the World Bank including EDI/WBI. –As early as 1991, experts from the World Bank (EDI) led a staff training program for China’s poverty reduction officials. The trainings on poverty theory, policies and methodologies were provided to the officials mainly from the poverty offices at the national and provincial level. The trainings, provided in and outside China, include project management, poverty reduction tools, poverty analysis methods and training methodologies, monitoring and evaluation, and impact analysis, as well as the new ideas, concepts and methods in poverty reduction, such as community participation, rapid project appraisal, training of trainers, and interactive training methods, etc. Cooperation strategies Taken by the Bank: –The World Bank has adopted a flexible, innovative strategy to implement poverty alleviation projects in China, tailored to the specific socio and economic environment in China.

4. Lessons for Other LDCs （ 1 ） capacity development is a mutual and interactive process and it takes all actors to take actions for a long period of time (10-20 years). It cannot be achieved overnight. the success of China’s poverty alleviation projects is largely attributable to the special characteristics of China’s development model such as, the strong leadership and the presence of a “developmental state”, openness to learning and experimentation, an incremental and pragmatic reform approach (rather than the shock therapy) and the “self-help” spirit on the ground. the replicability of this model highly depends on the particular country’s circumstances, preconditions, and the degree of openness to learn from external poverty alleviation programs, and then selectively adopt and internalize these strategies, approaches, and processes.