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China abandons bid for US$40M World Bank loan

China has given up on its efforts to secure a US$40M World Bank loan to build an irrigation and hydro dam and resettle thousands of Chinese farmers in Tibet. The Chinese government has declared its intention to go ahead with the project using its own resources. The total cost of the project is estimated at US$160M.

The move came after the World Bank’s 24-member board refused to endorse the loan until the project was studied further. The board said more research was needed to gauge the project’s environmental and social impact on Qinghai province, a region inhabited by Tibetan and Mongolian herders.

The World Bank had approved a US$40M loan in June 1999 to help China build the dam to irrigate fields in Dulan, a sparsely inhabited county populated for centuries by Mongolian and Tibetan herders. The Chinese government planned to move 58,000 poor farmers into Tibet from China. When the loan was approved the US and Germany opposed the project. Other donor governments only agreed to the loan if China allowed an independent review of the project.

Reports say the World Bank appointed team of experts which inspected the project has criticised the project’s significant social and environmental impacts on the potentially affected populations, including Tibetans and other ethnic minorities.