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World Bank Helps Inner Mongolia Facilitate Cross-border Trade Through Improved Transport Infrastructure

The World Bank's Board of Executive Directors approved on Tuesday a loan of US$100 million loan to the People's Republic of China to help finance the Inner Mongolia Transport and Trade Corridor Project, which will promote and sustain the development of China's cross-border trade between China on one hand and Russia and Mongolia on the other by improving transport infrastructure and logistics. These improvements, in turn, will lower transport costs, increase income from external trade, and raise incomes in Inner Mongolia, the country's third-largest province and one of the poorest provinces of the western region.

The objective of the project is designed to maximize the use of transport infrastructure to promote international trade through Inner Mongolia in general and Hulunbeier League in particular. It will help accelerate the general development of Hulunbeier League, preparing it to cope with the increasingly important role the central government has assigned to it to be the country's main contact point for trading with Russia. In so doing, the project aims to: (i) improve the capacity of transport infrastructure and network planning to handle the significant increase in the volume of international freight traffic along China's northeastern border; (ii) develop a freight transfer and trade facilitation program to meet the growing demand for cross-border trade; and (iii) provide technical assistance to the Inner Mongolia Communications Department (IMCD) and Hulunbeier to build their capacity to plan, facilitate, and manage increasing demand for transportation of international trade traffic.

"The task team from the Bank and our colleagues in Inner Mongolia and Hulunbeir Leagues are excited about the project which is the first in China that is comprehensive in dealing with the logistic and trade aspect of the transport issue, apart from the transport infrastructure itself," said Supee Teravaninthorn, World Bank Task Manager for the Project. "China shall struggle to improve not only its transport infrastructure, but its trade logistics in order to effectively lower its cost and increase its competitiveness in the post WTO entry.  The project is designed to do just that."

The Inner Mongolia Transport and Trade Facilitation Project includes the following components:

· Component 1 -- Hailar–Manzhouli Highway. Expansion of highway capacity by upgrading or constructing about 177 km of Hailar–Manzhouli Highway.

· Component 2 -- Border Roads for Trade. Upgrading and rehabilitation of about 435 km of the highway network, sections identified either as key links for international trade facilitation at smaller border crossings with Russia and Mongolia, or as critical missing links in the highway network. The component aims to improve transport access to four other seasonal land ports between China and Russia and China and Mongolia.

· Component 3 -- Cargo transfer terminal and trade facilitation program. Development of facilities and trade regime designed mainly for China's import and export trade with Russia and Mongolia, but also meeting the requirements of potential trade in transit shipped through Chinese seaports to other countries. The primary purpose of the cargo transfer terminal is to facilitate the consolidation, distribution, and trucking of cargo. The component is composed of: (i) construction of a transfer station in Hailar housing facilities for transferring cargo between transportation modes (rail and road) and between Chinese and Russian trucks as well as for warehousing; and (ii) carrying out of a diagnostic study on measures to promote cross-border trade between China and its land-locked neighbors. 

· Component 4 -- Institutional strengthening and training. Various technical assistance and training aiming to improve the quality of development zone planning, trade promotion, and transportation efficiency, as well as project management, environmental monitoring, and supervision of highway construction.

The loan for the Inner Mongolia Transport and Trade Corridor Project has a maturity of 20 years, including a five year grace period.

( February 16, 2005)

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