Yang Shengfu: learning from World Bank to build China’s road network

For Yang Shengfu, former chief engineer of the Ministry of Transport, the past forty years have witnessed great changes in the country’s road network.

Yang, who worked as the chief supervisor engineer for the Beijing-Tianjin-Tanggu expressway, the project was an important milestone: it was the first time that China has used World Bank loans on a large scale.

“We’ve achieved all our goals: the construction was in high quality; engineers have learned advanced technologies through working with the World Bank, and a scientific management model has been built to promote infrastructure reform. It paved the way for a nationwide expressway system,” the 81-year-old recalled.

Giving road transportation a higher priority

Three decades before reform and opening up, railway was the focus of China's transport development. Other models, especially road transportation, were on the slow side.

By the end of 1978, the total length of roads nationwide was less than 900,000 kilometers, and those up to the second-class standards were only 10,000 kilometers. More than one third of the towns and villages did not have access to roads.

“For instance, the bamboos in Jinggangshan, Jiangxi, rotted in mountains； black fungus in the mountainous Ankang area in Shaanxi could not be shipped out so that the farmers had to make them into bed mattresses,” Yang Shengfu recalled receiving all kinds of complaints from local governments those days. “Villagers joked they still had to beg even with a golden bowl in hands.”

The reform and opening up led to dramatic increase in agricultural products in the rural areas, but without roads, farmers were not able to ship their products out. Without roads, freight goods transported through water ways were also stuck at ports.

“The narrow ways going in and out of large and medium-sized cities were seriously congested; roads connecting major ports along the coastline were in poor condition and resulted in serious delays of freight loading/unloading; coal produced in Shanxi province was also stuck there; foreigners who came for the Great Wall usually left in disappointment due to the poor road condition,” Yang said.

In early 1980s, there were debates among policy makers what is a better way to improve transport condition: some maintained that priority should still be given to railway, while others argued for an integrated transport system featuring various choices.

“I joined in the discussion as a road specialist, and provided an analysis that how focusing on railway alone had contributed to the deterioration of congestion. I argued for the second choice that we should build comprehensive transport system,” Yang said. He later published a series of articles that in support of developing China’s road transport system.

It took another several years before the policy makers reached a consensus to develop a comprehensive transport system for the country. And it was since then that China’s road construction starting to gather pace.

Diversified Funding Sources

Before the reform and opening up, funding for road construction came from the State Planning Commission. Yet in an era when all sectors demanded funding for development, where would the money come from?

Yang said the Ministry of Transport learned from the success of rural reform. Without cash, they had to reimburse farmers who participated in road construction with cotton-padded jackets and blankets, as well as some crops, because those were what the country had in the warehouses.

From 1982 to 1984, this policy greatly mobilized the enthusiasm of farmers. In the following two years, the ministry asked for bicycles and radios that were in stock to reimburse the farmers, which helped accelerating the construction of rural roads.

Yet this approach could only solve the problem of building rural roads, but not the expressways. The ministry made a series of suggestions to increase investment in road construction, including raising road maintenance fee charges, raising fund through loans, tolling, and levying fuel tax and tire tax, etc.

These suggestions were met by a lot of questions. But Yang said once the roads are built, car owners could also benefit from improved road conditions.

In December 1984, State Council approved measurements to boost road construction, including levying vehicle purchase surcharge, and roads with loans and repaying loans with tolls.

At the same time, the Ministry of Transport proposed other means of fundraising, including issuing bonds, IPO, and and transferring management rights. In 1995, the ministry also held an international seminar to study how to attract foreign investment.

“These policies underpinned the rapid development of China's road construction, especially the expressways in recent decades,” Yang said.

Introducing FIDIC Clause into China

Once the funding issue was solved, China found itself in need of breakthrough and innovation in road construction management.

In 1984, the Ministry of Transport introduced the FIDIC Clause into China through a project it conducted together with the World Bank. At that time, many people were very skeptical about whether the project management model based on the idea of private property ownership under capitalism would work in a socialist country.

With great caution, the ministry selected a road linking Xi’an in Shaanxi and Shandong as a pilot, to “cross river by feeling the stones”. The ministry set up a dedicated loan office for the World Bank under its highway bureau for coordination and project management. The ministry also invited foreign engineering consulting companies as consultants to help prepare bidding documents in line with international standards, and to implement project supervision.

The practices proved that the project management model was a success: it improved the construction quality and reduced the costs. The ministry then decided to fully implement the supervision system in the construction of Beijing-Tianjin-Tanggu Expressway, one of the second batch World Bank projects in China.

The expressway projects involved two municipalities and one province. Officials from the three regions as well as the ministry formed a joint company to obtain the loan, construct the road and to redeem the loan. This model was later popularized in the country.

The practice was a complete change from the old command-control management model, as it put restraints on ministry officials as well as contractors.

Yet it was supported by Zou Jiahua, then chairman of the country’s development planning body, who on an inspection trip in April 1989, urged the joint company to fully abide by the rules of the World Bank.

“Everyone gradually understood and adapted to the FIDIC Clause. The relationship between the supervisor and the owner and the contractor were gradually smoothed, and the project quality, construction progress, and project cost were effectively controlled," Yang said.

In September 1993, the Beijing-Tianjin-Tanggu Expressway was opened to the public. The high standards and construction quality won the prestigious National Prize for Progress in Science and Technology. The World Bank also highly recognized this project, laying a solid foundation for the subsequent projects and loans.

This was a starting point for popularizing the “Project Supervision System” in the country, which also set a benchmark for numerous constructors and project managers, the creators of a 4.7 million-kilometer road network around the country.