The ADB said the proposed project, for which the TA will help with a feasibility study, is the middle segment of Xuzhou-Lanzhou main passenger trunk line, running from Zhengzhou in central China to Xi'an in northwest China.

According to the ADB, in the project area, about 2.6 million people live on incomes below the national or provincial poverty line and most of the 3,300 poverty-stricken villages do not have access to highways, electricity, telephones or clean drinking water.

Passing through 16 counties of Henan and Shaanxi provinces, including five poor counties, the project will build 455 kilometres of a passenger-dedicated double-track electrified railway line suitable for speeds of more than 200 kilometers per hour, and 10 new railway stations, the ADB said.

"Inadequate transport has hindered the economic growth necessary to reduce rural poverty in the project area. The railway is therefore a key investment in creating jobs and income-generating activities for the people," said Manmohan Parkash, an ADB transport specialist.

"The project will lower transport costs and bring goods and services closer and more affordable, giving the local people opportunities to sell their products to broader markets, and an opportunity to improve their standard of living," Parkash said.

As primary mode of transport for long distance travel and bulk transport in China, the country's railway system has gained significant growth in the past two decades, but the capacity still lags behind demand, with bottlenecks in the system posing a major constraint to economic growth, the ADB said.

The current practice of transporting both freight and passengers on the same line also limits speed and restricts the flow of traffic, it added.

However, the proposed project will be the main passenger link between the prosperous eastern region and the poorer western region.

The ADB is the third biggest source of external financing for China's railway sector after Japan and the World Bank.

Focusing on railway development in the country's more deprived inland provinces, the ADB has provided 11 loans totaling US$2.06 billion to finance the construction of about 1,737 kilometers of railways, operated as joint ventures with the Ministry of Railways, and 4,138 kilometers of new railway lines under four national railway projects.

(China Daily October 7, 2004)