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10 Oct, 2013

US$200 million ADB loan to Upgrade Major Highway in China’s Inner Mongolia

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Asian Development Bank, 10 Oct 2013 – A major highway and rural roads in a remote northern area of the People’s Republic of China (PRC) will be upgraded to support increased movement of goods and people, through a $200 million loan from the Asian Development Bank (ADB).

A $200 million loan will upgrade a major highway and rural roads in Inner Mongolia Autonomous Region, a remote northern area of the People’s Republic of China.

ADB’s Board of Directors approved the loan to upgrade the provincial highway and rural roads in Hulunbeier, one of the fast-growing areas in Inner Mongolia Autonomous Region. The project will also install road markings, signage, and speed-controlled junctions to improve safety conditions of the highway.

“The impact of the project will be the efficient, and safe movement of people and goods in Inner Mongolia, and across the borders of the Russian Federation and Mongolia,” said Sharad Saxena, Senior Transport Specialist at the ADB’s East Asia Department.

The highway starts at Manzhouli city, which hosts a busy border crossing with the Russian Federation where 60% of its overland trade with the PRC is transacted. A new industrial park south of the city is expected to further boost traffic along the highway, which also connects to two cross-border points with Mongolia.

Despite its critical links in cross-border trade, the highway is currently narrow and in poor condition, and cannot support movement of heavy trucks. Highway freight traffic in Inner Mongolia has increased from 510 million tons in 2005 to more than one billion tons in 2011. Aside from the highway, the loan will also upgrade and rehabilitate rural roads in Hulunbeier, and improve the cross-border points to facilitate trade between the PRC and Mongolia.

Inner Mongolia Autonomous Region (IMAR) is the third largest administrative region of the PRC in terms of land area and is well endowed with natural resources. As a result of mining, IMAR’s economy has been growing rapidly, with gross domestic product increasing at 18% per annum from 2003 to 2011. The proposed project is located in Hulunbeier, one of the fast growing areas of IMAR. Hulunbeier is a vast area of 253,000 square kilometers which is very sparsely populated (fewer than 4 million inhabitants). It borders PRC’s Heilongjiang province, the Russian Fedeatin, and Mongolia. Its economy depends heavily on resource extraction industries (coal, oil, and various minerals), animal husbandry, trade with the Russian Federation and to a lesser extent Mongolia, and a developing tourism industry.

Hulunbeier is home to Dalai Lake, one of the five largest freshwater lakes in the PRC. The Dalai Lake National Nature Reserve has large grassland and wetland ecosystems that are attracting a growing number of tourists. As part of the highway project, ADB will help develop an eco-cultural trail to enable tourists to experience grasslands, wetlands, and traditional ethnic Mongolian lifestyle.

ADB is also providing a $500,000 grant to help restore wetland habitats in the reserve of more than 30 square kilometers. The technical assistance is financed by the Multi-Donor Trust Fund under the Water Financing Partnership Facility, which is administered by ADB, and supported by the governments of Australia, Austria, Norway, Spain and Switzerland.