The World Bank said on Wednesday its Board of Executive Directors approved a 20 million US dollar loan to support China's economic reform.

The bank said the China Economic Reform Implementation Project aims to significantly increase the adoption and use of sound reform and development strategies, policies and plans in China.

This will be achieved through institutional capacity building through a series of technical assistance sub-projects tailored to address specific challenges facing the government at the national and sub-national levels, the bank said in a statement.

The project has a strong focus on learning of new knowledge as well as on replication and scaling up efforts that work, according to the statement.

Chunlin Zhang, World Bank task manager for the project, said the project is designed to assist government decision makers who are determined to implement a reform and development agenda in their departments or regions, but face a lack of technical knowledge and capacity.

The bank said that sub-projects will focus on a range of objectives reducing poverty, inequality and social exclusion; improving public and market institutions; managing scarce resources and environmental challenges; financing sustained and efficient growth; integrating China into the world economy; or promoting achievement by China of the Millennium Development Goals.

The Department for International Development (DFID) of the British government has approved a grant of 5.71 million British pounds to co-finance this project, which aims to support sub-national governments implementing projects focused on poverty reduction and the achievement of the Millennium Development Goals.

Chris Athayde, DFID's deputy representative, said DFID grant funding will enable the poorer parts of China to benefit from the access to external expertise this project will support, and so help promote achievement of the more equitable and harmonious society that is the objective of the new 11th Five Year Program (2005-2010).

The project will be implemented by the Chinese Ministry of Finance (MOF). Central government departments and local governments can apply for sub-project funding from MOF any time during the period of project implementation (2006-2011).

It said the proceeds of the loan and grant will finance consulting services, workshops, training, study tours and other capacity building activities.

The bank said the MOF will issue detailed guidelines for preparation of sub-project proposals, and sub-projects will be required to produce "strategies, policies, implementation plans and mechanisms" that may significantly contribute to the achievement of a project objective, and to be clearly defined in light of the practical challenges that the sub-project is designed to address.

The 20 million US dollar loan from the International Bank for Reconstruction and Development is repayable in 20 years with a five-year grace period.