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November 2nd, 2016
Infrastructure • Finance

New railway in Yunnan creating opportunities for thousands

Lijiang is a ancient and beautiful city in a remote and mountainous region of China's Yunnan province. Before the Dali-Lijiang railway project was opened in January 2010, the journey time on public transport was eight hours by bus. This was reduced to two hours by the train, which connected the inhabitants of Lijiang to both Dali and the provincial capital, Kunming. It had a positive impact on the region's inhabitants - who could travel more easily -on the environment, and on the economy, particularly by providing better links to the rest of the country and by attracting many more tourists to the city.

The initiative

In order to improve the lives of its citizens, reduce greenhouse gas emissions from road transport, and to promote economic development (including tourism), the government funded the "construction of 167 km of single-line standard size track between Dali and Lijiang".[2]

The project was cofinanced by the Asian Development Bank (ABD) and the Agence Française de Développement (AFD). "For a total project cost of €456.7 million, the AFD has been called upon, through a loan of €33.5 million, to finance the civil engineering part of the project. Currently, €19.16 million have been disbursed." [3]

The project was estimated to take three-and-a-half years. "Line construction began in December 2004 and completion was set for June 2008. Complex terrain and repeated revisions of the plan, including a decision to use electric power for traction instead of diesel-powered locomotive"[4] made this difficult to achieve, but nonetheless it began operating in January 2010. "Now people can travel between Dali and Lijiang in under 2 hours at half the cost of the bus. The trip from Kunming now takes just 9 hours."[5]

It was hoped that the visual and cultural splendour of the region would attract a significant number of tourists. "Along the railway, the region is mainly inhabited by ethnic minorities, and has many cultural relics, tourist sites, and natural resources."[6]

The challenge

Yunnan province is a remote regionof the People's Republic of China (PRC), largely rural and bordering Laos, Myanmar and Vietnam, although with a population of more than 45 million. About 1.25 million of these people, three-quarters of them ethnic minorities, live in the city of Lijiang in the northwest of Yunnan. It has always been relatively inaccessible. "The only way to get there used to involve an arduous 17-hour bus trip from the provincial capital of Kunming and a further 8 hours by road between the cities of Dali and Lijiang. This discouraged tourists and left the region cut off from mainstream development."[1] The pressing issue for the national and provincial governments was to improve links between Lijiang and the main cities of Yunnan.

The public impact

The Dali-Lijiang railway has had significant positive public impact:

  • "The railway project has been a powerful catalyst for economic growth. During 2004-2011, per capita rural incomes increased by 66% in the project area and poverty incidence fell from 30% in 2002 to 9% in 2010.
  • "Many local people benefited from jobs during construction, which generated 88,000 person years of work.
  • "The project has shown that with careful planning and execution, cultural preservation, economic development, and increased tourism can successfully coexist and benefit all.
  • "Revenues from tourism have risen by 35 times. The project has lowered the cost of living for people in Lijiang and improved the availability of products. Wu Juan and her husband opened a 10-room hotel in Lijiang in 2010. Due to the larger numbers of tourists, their business has grown to 26 rooms and they have hired four staff."[7]

Stakeholder engagement

The main stakeholders engaged in financing the project were "the Government of the PRC, the ADB, and the AFD [who] funded the Dali–Lijiang Railway Project to link the two cities".[8] They worked with the other major stakeholders, including the Yunnan provincial government, the Lijiang Municipal Tourism Development Commission, the Kunming Railway Bureau, and the inhabitants of Lijiang. "ADB assistance promoted training on ethnic arts, and restoration and protection of cultural relics. Funding allowed local government officials, artists, academicians, and village residents to exchange ideas on practical strategies to harmonise cultural preservation with tourism development."[9]

Political commitment

The PRC government, working principally through its Ministry of Railways, demonstrated its commitment to the project, as did the provincial government of Yunnan, by part-funding the USD669 million project. These political actors were motivated by the desire to provide Lijiang and other parts of the province with a greater connection to the rest of China and the continent. "'The completion of Dali-Lijiang railway is of great significance for Yunnan to expand its rail network and increase contacts with interior areas of China and with countries in south and southeast Asia,' said Song Xiude, chief of Kunming Railway Bureau."[10]

Public confidence

There is a great deal of public confidence in the project, as different members of the community indicate:

  • "Hong Jumei, a woman of the Naxi ethnic group in Lijiang, was overjoyed at the completion of the Dali-Lijiang railway. 'We Naxi people have been dreaming of seeing a train at the foot of the snow-capped Mount Yulong and now finally we have it in real life,' said Hong. 'I also think travel by train is safer, cheaper, and faster, and it will be very convenient to travel around in the future.'"[11]
  • "Grocery store owner Yang Yubao says cheaper rail freight charges save him about CNY10,000 (about USD1,530) a year. 'I only need to arrange delivery from the railway station, instead of hiring trucks to pick up the rice from suppliers,' he adds."
  • “'The railway is comfortable and convenient for local people,' says Duan Jianlin, director of Heqing station. 'The train has shrunk the distance between them and the outside world.'”[12]

Clarity of objectives

The objectives were clear. The primary objective was to connect the cities of Dali and Lijiang with a 167 km railway. The secondary objectives were also clear, for example: to reduce journey times, to improve living standards, and to promote economic development, including the tourism industry. These were maintained throughout the project and some were measurable , such as the journey times, passenger feedback, and revenue from tourism (which increased by 35 times after the implementation of the project).

Strength of evidence

Policymakers gathered evidence for the feasibility and value of the railway by consulting with stakeholders and conducting a survey to assess its likely effectiveness. "Extensive consultations were held with over 4,000 stakeholders, including various ethnic minority groups (Bai, Naxi, Tibetans, Mosuo, Yi, and Lisu), NGOs, affected people, potential beneficiaries, monks, village leaders, local ethnic bureaus, and local governments in the project area and the seven neighbouring counties." [13]

There were detailed surveys of public opinion in the province. "Over 75 village surveys and 800 household surveys were carried out to: (i) understand public opinion about the proposed railway, (ii) provide inputs for the environmental and social assessments, and (iii) prepare the resettlement plan and EMDP. Public opinion surveys were conducted with local residents, tourists, and other stakeholders."[14]

There was also an analysis of the probable effect on the ecology of the area. "Environmental impact assessment (EIA) consultation workshops were held in Dali and Lijiang."[15]


All the major factors - technical,  economic, financial, social and environmental - were evaluated at the outset of the project:

  • "At the engineering level, review and validation of all rail engineering aspects of the feasibility study, including the cost estimates for rail infrastructure and operations, and prepared a list of contract packages for procurement and an overall procurement plan.
  • "At the environmental level, review, strengthening and completion of the environmental impact analysis, including additional meetings with stakeholders and production of a summary environmental impact analysis.
  • "At the resettlement level, carrying out of substantial additional field surveys to comply with ADB requirements and based on field survey results, review and strengthening of the resettlement plan." [16] The resettlement of local inhabitants did not meet with universal approval in the press, however "the ADB claims that there is a 'special' resettlement plan ... that will give the [people] 'preferential' treatment for employment during construction, allocation of commercial space near railway stations, and job training."[17]
  • "At the economic level, review, strengthening and completion of the economic evaluation, including traffic forecasts for freight and passenger and preparation of a poverty impact analysis as well as a risk analysis."[18]
  • In terms of financial feasibility, the funding was provided by a combination of the ABD, the AFD, the PRC government, and the Yunnan provincial government.


At the beginning of the project, policymakers analysed relevant data such as population of Liniang, the region's levels of pollution, and the number of jobs of to be created. "On average 27,670 person-years of work was created per year during construction. Of this, about 60% will be for unskilled labourers, of which 50% or more will be targeted to poor ethnic minority households. Priority was given to women and resettlement-affected people."[19]

The PRC's Ministry of Railways (MOR) and the local rail company "recruited qualified consultants for monitoring and evaluation, for example from the French firm Canarail, to help establish the monitoring and evaluation system, and train local staff of the West Yunnan Railway Company in its use."[20]

The MOR also sought to ensure that:

  • "A supervisory body was established for prevention of undue interference in business practices, and adequate resources were made available for its effective operation.
  • "A leading group of officials from the Discipline Unit and Supervision Department of the MOR were located in offices involved in the bidding, construction and other operational activities under the project.
  • "Briefings between MOR and the Prosecutor's Office were held on a regular basis with respect to sharing of information on or warning about detected corrupt practices."[21]


Policymakers measured the effectiveness of the project through their regular monitoring and evaluation system. "The indicators will be reviewed at the start of project implementation and will include: (i) economic development and socioeconomic indicators for the DLR, (ii) transport costs and times for passenger and freight services, (iii) transport services offered and transport charges, (iv) accident rates, (v) financial sustainability, (vi) county/village incomes, (vii) access to social services, and (viii) jobs created in construction and maintenance." [22]

The central and local railway organisations were both involved. "The MOR and the WYRC will recruit qualified consultants for monitoring and evaluation to help establish the monitoring and evaluation system, and train staff of WYRC in its use. The main sources of data include (i) secondary data from government sources, (ii) household socioeconomic sample survey, and (iii) participatory rapid appraisal. A report summarising the key findings of monitoring at inception, completion, and 3 years later will be submitted to ADB."[23]

Passenger numbers were also measured regularly to assess the railway's success. “The number of daily passengers at our station [Dali] has gone up from about 100 when the line opened in 2010 to about 2,000 today. The number of staff working at our station has increased from 25 in 2010 to 65, and 70% of them are women.”[24]


There was a clear alignment of interests between all the actors to instigate and run the project, and all the actors were sufficiently motivated to complete the railway successfully. The ADB, AFD, and the PRC and Yunnan governments cooperated effectively on the funding, while the ADB worked extensively to promote the interests of local people apart from providing financing.

The ADB also "helped introduce the AFD to PRC officials, and this is the first railway project in the PRC to be cofinanced by AFD."[25] The PRC government, principally the MOR, collaborated with the WYRC, for example in the recruitment of monitoring and evaluation consultants.

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