ADB to Help Generate Rural Employment in Shanxi

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The FINANCIAL — The Asian Development Bank’s (ADB) Board of Directors has approved a $90 million loan to help Shanxi province in the People’s Republic of China (PRC) diversify its coal-dependent economy by strengthening value chains of locally specialized agricultural products to generate employment for low-income people in rural areas.

“As Shanxi tries to move away from its dependence on coal, ADB is looking forward to helping the province reduce poverty and urban-rural income disparity by building a broad-based economy that creates jobs for the low-income population in rural areas,” said Takeshi Ueda, an ADB Principal Natural Resources and Agricultural Economist.

Shanxi, one of the poorest provinces in the PRC, is also the country’s second-largest coal producer. Coal fueled much of Shanxi’s economic growth in the last three decades, but the low coal prices since 2011 made Shanxi’s coal industry financially unfeasible and forced the province to substantially reduce production, which resulted in unemployment in rural areas in some part of the province, according to ADB.

In response, the government is taking steps to move the economy beyond coal. With 45% of the province’s population relying on agriculture as a source of income, the government aims to improve the agriculture sector by promoting value addition to locally specialized agricultural products including fruits, vegetables, and meat.

The project will also pilot an “inclusive business” mechanism, through which 19 agribusiness companies and cooperative supported by the project will create jobs for the low-income population. More than 200,000 people, 49% of whom women and 54% low-income earners, are expected to benefit from this measure.

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In addition, ADB approved a $300,000 technical assistance loan for capacity building and project implementation support. ADB will also provide a portion of the project’s climate mitigation and adaptation costs, at $3.9 million and $8 million, respectively.


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