To support this goal, the Asian Development Bank's (ADB) Board of Directors approved a $100 million loan for a demonstration sector project targeted at key centers in Hebei Province, which has a rural poverty rate well above the PRC average. The aim is to improve infrastructure and urban services in about ten small cities and towns, providing an environmentally sustainable development model that can be replicated elsewhere.

“The Government of PRC is committed to developing small cities and towns to foster economic growth, generate employment and narrow the urban-rural income gap, and this project which targets improved urban services will help attract rural migrants,” said Theresa Villareal, Senior Urban Development Specialist in ADB's East Asia Department.

Activities include water supply and sewer network upgrades, river, wastewater and solid waste management improvements, and the introduction of recycling and composting facilities. Work will initially be carried out in Bazhou City, Zhaoxian County and Zhengding County, with further sub-projects to follow in other centers.

Hebei province includes many capital intensive state-owned resource processing industries that generate limited employment and are heavy polluters. The deterioration of the environment and perception amongst rural residents that there are more opportunities in major cities, such as the national capital Beijing, has left the region underdeveloped.

By improving water, waste facilities and river quality in small towns and cities, the project will attract investment in labor intensive industries and services that can provide jobs for rural migrants, easing some of the pressures on bigger centers. Around 1.2 million people are expected to directly benefit from better health and living conditions, while over 1,500 jobs will be created for construction and operations work in the first phase alone.

A key feature of the project is its replication potential, with knowledge hubs and forums established amongst small city and county governments to share information and experiences that can then be tapped by other centers to plan and deliver sustainable urban services.

ADB's loan from its ordinary capital resources covers about 42% of the total project cost of $235.9 million. The loan has a 26-year term, including a grace period of six years, with interest determined in accordance with ADB's LIBOR-based lending facility. Other major contributors are county governments who are providing a combined $135.6 million.

The Water Financing Partnership Facility's Multi-Donor Trust Fund, administered by ADB, will provide a grant of $250,000 to support improved governance and financial management of water and wastewater service providers. The Governments of Australia, Austria, Norway and Spain are the contributors to the Facility. Hebei Provincial Government is the executing agency for the project, which is due for completion around December 2015.#