The People's Republic of China (PRC) has experienced rapid growth in recent years,. "The PRC is one of the fastest growing economies, with an average annual growth rate of over 9.0% since the 1980s. The government's 12th Five-Year Plan, 2011-2015, targets annual gross domestic product (GDP) growth of 7.5%. Despite impressive growth, the PRC is facing a number of urgent development challenges. The PRC is experiencing skill and labour shortages. National labour market data from 91 cities in 2012 showed that demand exceeded supply in almost all technical and skilled categories. The PRC's comparative advantage in low-skilled labour-intensive production is expected to decline, with the economy shifting to more skill-intensive products and production technologies."  It was incumbent on policymakers to support that move to skill-intensive production in parts of the PRC where such a workforce was most needed.
One such area is Hunan, a province of some 70 million inhabitants, situated in the south of the PRC. "The
GDP per capita of Hunan in 2011 was USD4,742, below the national average of USD5,583. In 2011, 9.08
million people, or 15.9% of the rural registered population in Hunan lived below the national poverty
line, higher than the national average of 13.4%." It was an appropriate province to focus on because of the nature of its economy. "The structure of Hunan's economy is undergoing fundamental transformation. The Government of the PRC''s policy of geographical rebalancing of economic growth towards inland provinces has led to Hunan''s emergence as an important industrial base, requiring a large and multi-skilled work force."
The nationwide approach was to raise skill levels through education and training. "In 2010, the central government identified Technical and Vocational Education and Training (TVET) as the key target for educational expansion to develop a skilled workforce, and approved the National Long-Term Strategy on Education, 2010-2020. The education plan sets up goals and reforms to better align the education system with the demands of economic and social development."
Because the demand for skilled workers in Hunan exceeded supply, the PRC government looked to partner with the Asian Development Bank (ADB) in developing its strategy on TVET for Hunan province and "has requested a loan of USD50 million from the ADB's ordinary capital resources to help finance the project".  The Hunan Technical and Vocational Education and Training (TVET) Demonstration Project was initiated in 2013. It was agreed that "the ADB will be responsible for administering the ADB-financed components of the project and jointly with the Hunan Provincial Government(HPG) and Hunan Education Department (HED) to supervise project implementation".
The public impact
The intended impact was that "skilled human resources contribute to inclusive growth and social development in Hunan province" and the intended ouitcome was the "strengthened capacity of the TVET system to meet labour market needs".
The means to achieving this impact was fourfold:
"Improved quality and relevance of TVET system.
"Upgraded facilities and learning environments.
"Strengthened industry involvement in TVET.
"Project management support [being] established."
However, the impact thus far has been impeded by delays in implementation. "As of 1 June 2016, nearly 35 months (50%) of implementation period have elapsed but the cumulative contract awards are about USD11.56 million (23.1%) while cumulative disbursements are USD8.1647 million (16.3%), which includes the initial payment to the project's imprest account."
Public Confidence N/A
Our researchers were not able to gather sufficient publicly available information or evidence to comment and rate this case study on this indicator. We welcome information and references on this aspect of the study.
Stakeholder Engagement Strong
There is strong stakeholder engagement of both internal and external actors, principally the PRC government, the ABD, who financed the project, the HPG, the HED and the TVET establishments. "Project implementation involves multiple government agencies at the provincial, municipal and county level, as well as the 13 project TVET institutions who will be the main implementation agencies." The other stakeholders are the Hunan citizens studying TVET courses in order to develop their job-related skills.
The HED also established various committees to streamline the functioning of the project, for example:
- "HED will establish an inter-agency labour market information system (LMIS) Coordination Committee...
- "HED will establish a Project Review Committee comprising key stakeholders, and with membership and terms of reference to be agreed by ADB, within 3 months of loan effectiveness. The committee will be led by HED, supported by the TVET Research Institute, and tasked with validating project outputs including curriculum standards and guidelines, recommendations of policy studies, teacher training standards, teacher training and management training modules and other activities defined in the TOR."
Political Commitment Strong
The PRC government is committed to TVET as a means of training a highly skilled workforce, as part of its overall, long-term educational strategy (see The Initiative above). "While the ADB has provided significant funding, the government will finance civil works (the balance of costs not ADB-financed), equipment, some capacity building, project management costs, and financial charges during the construction period." 
The HPG also has a long-term commitment to TVET: "since 2007, HPG has been actively pursuing reforms in the TVET sector and increased investments in TVET infrastructure and supported quality improvements". 
Clear Objectives Fair
The objectives of the Hunan TVET Demonstration Project are to "provide targeted support to 13 public TVET institutions in Hunan to strengthen the capability to deliver demand-driven quality programmes related to priority industries".
These programmes were focused on skill development. "To foster partnerships between 13 project TVET institutions and employers to:
"Jointly develop the skills needed in the workplace, and prepare graduates who are able to adjust to changing demands in the labour market quickly;
"Modernise the curriculum by developing competency based curriculum (CBC) in priority areas;
"Upgrade the instructional capacity of vocational instructors and build TVET management capacity;
"Strengthen market-oriented programme planning through improved LMIS;
"Upgrade equipment and facilities in selected TVET institutions."
The need for the Hunan TVET Demonstration Project was evident from the fact that the PRC was in need of more skilled workers and that Hunan province was a prime example of this shortage. Since 2007, the HPG had been actively pursuing reforms in the TVET sector, so the initiative was a timely one.
The fact that ADB had not lent to a TVET project before meant that there was no evidence of previous success. However, the partnership of the PRC and the ADB in the Hunan project demonstrated a clear strategic fit. "The project is the first ADB-financed lending project for TVET in the PRC and is envisaged to play a demonstration role for TVET development in the country. Because worker skills and education are viewed as a constraint on the PRC’s inclusive growth, ADB involvement in the TVET sector is strongly justified. The project supports ADB’s education policy and education sector strategies and ‘Strategy 2020: The Long-Term Strategic Framework of the Asian Development Bank 2008–2020’."
The financial feasibility was guaranteed by the ADB loan of USD50 million. The Hunan Provincial Finance Department (HPFD) was the overall financial supervisory authority and a financial management assessment was conducted for the project in accordance with ADB's Guidelines for the Financial Management and Analysis of Projects.
The project structure also addressed the logistical feasibility. "The Hunan Education Department (HED)/project management office (PMO), and the 13 project TVET institutions in their role as the implementing agencies for the project."  Feasibility studies were conducted for the project's human resourcing and a plan defined a schedule for hiring therelevant resources. Overseas training sessions were organised in 2015 "on the subjects of logistics, education philosophy and teaching management, education and teaching ability of elite teachers, software technology and research of Dual system vocational education personnel training mode in the US, Germany and Singapore".
There were several bodies involved in the management of the Hunan TVET Demonstration Project, and the tasks were clearly defined and distributed between them. However, there were delays in the implementation of the project, indicating that the management was not functioning with full effectiveness.
The ADB managed the contractual issues and the methods of dealing with potential corruption:
- "ADB reserves the right to investigate, directly or through its agents, any violations of the Anticorruption Policy relating to the project.
- "All contracts financed by ADB shall include provisions specifying the right of ADB to audit and examine the records and accounts of the executing agency and all project contractors, suppliers, consultants and other service providers." 
The management structure within the HED was specified in detail. "The HED on behalf of HPG [has] the overall responsibility for coordinating project implementation in the project schools and organising provincially managed activities. A Project Coordination Group (PCG) has been established jointly by the HED, the Provincial Finance Department , and Development & Reform Commission to oversee the preparation and implementation of the project and to provide overall guidance for the project... A Project Management Office (PMO) has been established in HED to direct project preparation and implementation activities, manage social and environmental impacts, monitor project progress and project impacts, and facilitate the communication and coordination with the ADB."
In order to measure and monitor the project, a proper team and plan were prepared, and the relevant parameters and indicators were incorporated in the project. The progress and results of the monitoring process is published in reports that are available on public websites. Several bodies (HED, ADB, TVET institutions, etc.) cross-checked and agreed on these plans before their implementation. There were plans laid out to analyse the gender gaps and sustainability, for example, and each plan and function had its own monitoring parameters.
The design and monitoring framework (DMF) for the project was agreed between the ADB, the HPG, the HED, and the participating TVET institutions. "The PMO, supported by the implementing agencies and their project implementation units (PIUs), will be responsible for monitoring and reporting on the performance of the project. The basis for performance monitoring will be the DMF... The DMF identifies the principal performance targets for the impact, outcomes and outputs of the project. By collection of data from the sources identified in the DMF, the PMO will be able to report on a semiannual basis the performance of the project."
THe ADB and the PRC government are responsible for reviewing progress on project implementation at least once a year. "In addition, ADB and the government will undertake a comprehensive midterm review two years after the start of project implementation to have a detailed evaluation of the scope, implementation arrangements, achievement of scheduled targets, and progress on the agenda for policy reform and capacity-building measures.."
The project supports the ADB’s education policy and education sector strategies and ‘Strategy 2020: The Long-Term Strategic Framework of the Asian Development Bank 2008–2020’. It aligns with the ADB’s PRC country partnership strategy (2011–2015) and supports the PRC’s 12th Five-Year Plan.
The ADB and the PRC cooperated well with the HPG and the HED, the main representatives of Hunan province, and ensured that the implementation progressed well under their oversight. The project also enhances the capacity of the TVET institutions to forge stronger partnerships with local industries in both the public and private sectors. These partners were also able to offer the education and training that enabled graduates to acquire the necessary skills to meet industry needs and develop their own careers.