December 5, 2017 / 8:24 AM / 12 days ago

China coal cities secure $310 million ADB loan to revitalize economies

SHANGHAI (Reuters) - Four cities in northeast China have secured a loan of $310 million from the Asian Development Bank (ADB) to revitalize their economies, the bank said on Tuesday, two years after mass layoffs at local coal mines triggered unrest in the region.

The cities of Hegang, Jixi, Qitaihe and Shuangyashan - in northeast China’s Heilongjiang province - were the major casualties of a 2015 decision by state-owned Longmay Group to slash coal production, close depleted mines and lay off as many as 100,000 local workers, part of nationwide efforts to tackle overcapacity and shore up prices in the sector.

Thousands of miners marched through Shuangyashan early last year to protest against unpaid wages by the Longmay Group, which had been making losses since 2012.

The ADB loan to the four cities will be used in a project worth a total $1 billion that is designed to support the development of small- to medium-sized enterprises and help tackle environmental damage caused by decades of coal mining, the bank said in a statement.

The European Investment Bank will contribute $220 million to the project - scheduled to be completed in early 2023 - and local banks and government departments another $491 million.

Despite a dedicated “rejuvenation” project launched in 2003, China has struggled to breathe life into the northeastern rustbelt provinces of Heilongjiang, Liaoning and Jilin, which have depended on state-run heavy industries like coal mining, steel or electrical equipment.

Billions of yuan of state funds have been spent on revamping the region’s infrastructure, building high-speed rail, highways and airports, but the three provinces have remained one of China’s slowest growing regions. Efforts to stimulate the private sector have also been unsuccessful.

ADB said the Heilongjiang project would provide support when it comes to mobilizing domestic financing for small- to medium-sized businesses, allowing the private sector to create more jobs and play a bigger role in the local economy.

Reporting by David Stanway; Editing by Tom Hogue

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