Asian Development Bank loan project

Since 2001, the forestry system has implemented a total of 2 Asian Development Bank loan projects, with loans of 22 million USD and tying up the Global Environment Facility grant of 12.46 million USD. At the same time, in line with the western development strategy, the Chinese government, the Global Environment Facility and the Asian Development Bank have collaborative developed the national planning framework on combating land degradation in arid ecosystems, with the planning of investing 1.5 billion RMB from 2004 – 2013 and using the integrated ecosystem management approach to solve the problem of land degradation (Table 7-2).

Foreign government loan projects

As of the end of 2004, the forest industry has used the foreign government loans of 6.9 billion USD, of which the use of Japanese government loans reaches 540 million USD, mainly for creating a comprehensive management of public forest and eco-comprehensive treatment projects, the use of Germany, Kuwait, Sweden, Finland and other countries government loans of 1.51 million USD, mainly for wood-based panel plants.

Investment direction and areas of forestry use of foreign loans

Forestry use of foreign loans should be mainly for ecological construction and meanwhile, taking into account the need of repayment, the ecological construction and industrial development could be properly combined. The investment areas include public eco-forest (bamboo) creation, trees (bamboo, flowers) seed cultivation, natural forest protection, forest cultivation and management, desertification prevention and soil and water conservation, eco-comprehensive treatment of ecological environment and small watershed management, wildlife conservation, construction of natural protected areas and forest parks, high yield plantation (bamboo) construction, multi-functional economic forest and shrub-grass construction.

The principles of forestry use of foreign loans

a. Foreign loans with a higher degree of preference will be used for forestry ecological construction projects, such as creating ecological forests, combating desertification, wildlife protection and construction of nature reserves. Foreign loans with less preference can be used for industrial construction projects related to the ecology, such as fast growing forest, economic forest and sand industry, etc. Such loans can be mixed used with a number of grants (such as the Global Environment Facility grant, etc.), the grant part will be used limitedly for public welfares of ecology and capacity building.

b. Alternative projects should focus on six forestry projects, and complement and promote the existing forestry production and construction, maintaining the continuity of projects and reflecting the relative integration. It is strictly prohibited to have the redundant construction with the domestic and foreign funded projects.

c. Project provinces (autonomous regions) should have the counterpart funds and the repayment ability.