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The Asian Development Bank (ADB) plans to increase its support to China and lend up to US$1.5 billion annually over the next three years, according to the Country Strategy and Programme (CSP) for 2004-06.

Endorsed by ADB's board of directors, the programme aims to promote economic growth among the poor by giving them greater access to opportunities for prosperity and re-emphasizing the need to reduce regional disparities.

Despite consistently high overall national economic growth, the per capita gross domestic product (GDP) in the interior regions is less than half of that in coastal areas.

There are also wide gaps in health and education, as well as in the level of infrastructure such as roads, railways, communications and water and power supplies.

Challenges that need to be overcome include income and regional inequalities, rising urban unemployment, the slow growth of rural incomes, mounting environmental pressures, fiscal reform, financial sector reform and the reform of State-owned enterprises.

"Since the last ADB strategic programme for China was prepared in 1997, the country has made exceptional economic progress," said ADB Vice-President Joseph Eichenberger.

"With this progress have come new challenges and new opportunities. ADB's engagement can help encourage growth in poor areas that is broadly shared and environmentally sustainable."

About 84 per cent of the lending is expected to be for projects located in the central and western regions where most of China's poor live.

Bruce Murray, country director at ADB's Resident Mission in China, said: "For ADB to remain a significant development partner of China, we need to ensure that our assistance has a strategic impact and is focused in areas where ADB has a comparative advantage.

"We will work with the government to find new niches where ADB can add value and broaden our portfolio," he said.

The transport sector dominates the lending programme, accounting for 61 per cent of the total.

It reflects the government's high priority in developing an extensive and integrated transport network at this stage of China's development - the poorer interior areas need to be linked to markets.

Environmental protection projects will account for more than one-quarter of the lending.

ADB will also support projects to clean up supplies of drinking water, address water pollution and reduce urban pollution.

In the energy sector, there will be more of an emphasis on renewable and environmentally friendly sources of energy and making power more accessible in rural areas.

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