The money will be used to improve water supplies, drainage systems, used water and waste treatment areas and to promote the efficient use of energy.

Construction Vice Minister Qiu Baoxin said the loans over the next 10 years will greatly assist China's urbanization process.

"Our ministry will actively recommend promising infrastructure projects for the bank to meet its investment demand," Qiu said at a signing ceremony at the weekend.

Qiu's ministry is responsible for China's overall urbanization planning, city and town construction and management.

"The bank's investment will produce long-term returns as it follows China's urbanization trend," he said.

China's urbanization development has progressed rapidly in recent years, with almost 38 percent of the population being classified as urban by the end of 2001, up 7 percentage points from 1998.

China has 662 cities and 20,358 towns, with a total urban population of 481 million.

A week ago, Construction Minister Wang Guangtao said the Chinese Government is planning to speed up the urbanization process, while considering an urban development model with Chinese characteristics.

He told a national construction conference that China needed to effectively develop urbanization to resolve issues concerning agriculture, rural areas and farmers.

Urban construction has boomed in recent years, with large cities matching those in developed countries, but living standards in rural areas - especially in central and western areas - are still lagging far behind.

Statistics show the average net income of farmers in 2002 was 2,470 yuan (US$298), while the average disposable income of urban residents exceeded 7,500 yuan (US$906).

Wang said speeding up the urbanization process will boost urban economies and produce more job opportunities for rural residents.

To this end, China must integrate urban development with new industries to help readjust its economic structure and reduce the differences between urban and rural areas.

(Xinhua News Agency January 21, 2003)