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Country Partnership Strategy (CPS)

Available in: 中文

cps coverThe Country Partnership Strategy (CPS) is the detailed report on the World Bank's priority areas to assist client countries with their own development programs. It describes all of the World Bank's planned operations in China, including lending, studies, and other technical assistance The latest strategy covers fiscal years 2006-2010.

Press Release (May 23, 2006)
Full text (1.16m pdf)
Access the previous China Country Assistance Strategy (2003-2005) 

Pick up a copy of the Country Partnership Strategy at the local Public Information Center.


Country Context

China has grown rapidly since 1978, when it began to reform. Over the past 27 years, it has shifted from a centrally-planned to a market economy, maintained GDP growth of about 9% per annum, and lifted 400 million people out of poverty. With a population of 1.3 billion, China recently became the world's fourth largest economy and third largest trading nation. Even so, China remains a developing country, with GDP per capita about $1,740 and more than 135 million people living on less than $1 a day. It also faces daunting challenges in maintaining rapid growth; managing the resource demands and environmental consequences of growth; and addressing the resulting inequalities in income and opportunity, which could otherwise undermine the consensus needed to undertake growth-oriented policy reforms.

To succeed in meeting these challenges, China will need to shift its growth strategy from one that relies heavily on industry and investment to one that encourages development of the services industry and reduces barriers to labor mobility. Growth that is more balanced between industry and services as well as between capital accumulation (on one side) and urban employment and productivity growth (on the other) will result in higher employment growth, a more economic and sustainable use of energy and primary commodities, and less environmental degradation. The Government of China (GoC) will encourage this shift in implementing its 11th Five Year Program (FYP), which is a "people-centered" strategy aiming to achieve a "harmonious society" that balances economic growth with distributional and ecological concerns.

The Bank Group continues to play an important development role in China. Through a combination of AAA and knowledge embedded in its limited lending, the Bank has supported innovations that, scaled-up, have provided benefits far exceeding the direct benefits of the original projects. These spillover benefits include, for example, key policy or institutional reforms, upgraded technologies, and stronger human resource capacity in local governments. Innovations typically draw on the Bank Group's international experience and emerge from a long-term GoC-Bank Group partnership founded on trust, shared commitment, and pragmatic cooperation aiming to bring a sustainable solution tailored to a pressing development problem.

Given China's financial circumstances and its appropriate development program,
the Bank Group aims to be a client-driven knowledge institution that uses lending and other operations to pilot reforms and support institutional development. This Country Partnership Strategy (CPS) focuses on five thematic areas of engagement that build on the Bank Group's international expertise while maximizing the creation and dissemination of knowledge of China's development processes inside and outside China. In particular, the Bank Group aims to help:

  • Integrate China into the world economy, by deepening its participation in
     multilateral economic institutions, reducing internal and external barriers to trade
     and investment, and contributing to its overseas development efforts (pillar 1);
  • Reduce poverty, inequality and social exclusion, through promoting balanced
     urbanization, sustaining rural livelihoods, and expanding access to basic social
     and infrastructure services, particularly in the rural areas (pillar 2);
  • Manage resource scarcity and environmental challenges, through reducing air
     pollution, conserving water resources and optimizing energy use (partly through
     pricing reforms), improving land administration and management, and observing
     international environmental conventions (pillar 3);
  • Deepen financial intermediation, by expanding access to financial services
     (especially among SMEs), developing the capital markets, managing systemic
     risks, and maintaining financial stability (pillar 4); and
  • Improving public and market institutions, by improving firm competitiveness,
     reforming public sector units, and rationalizing intergovernmental fiscal relations
    (pillar 5).

The Bank Group will support GoC activities in these areas through a variety of
instruments. IBRD AAA and lending will apply international expertise to helping the GoC to complete the transition to a market economy, improve the welfare of the poor and near-poor, and develop and implement sustainable resource-management practices. In an increasingly important role, IFC investments will support China's structural transition by helping the GoC to strengthen financial institutions and shift assets into the private sector while also helping the private sector to adopt international practices. In parallel, MIGA guarantees will support infrastructure development through FDI, in areas where investors perceive significant noncommercial risk and with a focus on lagging regions. In general, Bank Group interventions will aim to complete standard-setting model projects or transactions that promote innovation, create demonstration effects, and achieve best practices.

Bank Group AAA will remain a large part of the program, supporting in particular
pillars 1, 4, and 5, where opportunities for lending and investment are limited. IBRD lending—which will also aim explicitly at learning - will support pillars 2 and 3 and, to a modest extent, 4. IFC investments and TA will focus on pillars 4 and 5, with selective contributions to pillars 1, 2, and 3 as well. MIGA guarantees and TA will support pillars 1, 2, 3, and 5, while WBI learning and capacity-building activities will support pillars 1, 3 and 5. Over the CPS period, it is expected that the Bank Group's overall exposure to China will remain stable or grow slowly. IBRD lending is expected to range over $1.0 billion to 1.5 billion a year; IFC investments to grow from about $400 million to about $700 million a year; and MIGA guarantees to remain at about $50 million in coverage a year.

The key risks to the Bank Group's development effectiveness in China are stagnation in the reform process, financial sector difficulties, an external shock, a health epidemic such as the avian flu, or social instability leading to an economic slowdown. Each risk is being carefully monitored, and the GoC is taking measures to address each of them.

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