LOAN NUMBER 9213-CN LOAN NUMBER 9214-CN LOAN NUMBER 9215-CN Project Agreement (China Food Safety Improvement Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and SHANDONG PROVINCE PROJECT AGREEMENT AGREEMENT between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (“Bank”) and SHANDONG PROVINCE (“Project Implementing Entity”) (“Project Agreement”) in connection with the Loan Agreement (“Loan Agreement”) of the Signature Date between PEOPLE’S REPUBLIC OF CHINA (“Borrower”) and the Bank, concerning Loan Nos.9213-CN, 9214- CN and 9215-CN. The Bank and the Project Implementing Entity hereby agree as follows: ARTICLE I — GENERAL CONDITIONS; DEFINITIONS 1.01. The General Conditions (as defined in the Appendix to the Loan Agreement) apply to and form part of this Agreement. 1.02. Unless the context requires otherwise, the capitalized terms used in this Agreement have the meanings ascribed to them in the Loan Agreement or the General Conditions. ARTICLE II — PROJECT 2.01. The Project Implementing Entity declares its commitment to the objectives of the Project. To this end, the Project Implementing Entity shall carry out its Respective Parts of the Project in accordance with the provisions of Article V of the General Conditions and the Schedule to this Agreement, and shall provide, promptly as needed, the funds, facilities, services and other resources required for its Respective Parts of the Project. ARTICLE III — REPRESENTATIVE; ADDRESSES 3.01. The Project Implementing Entity’s Representative is its Governor or Vice-Governor. 3.02. For purposes of Section 10.01 of the General Conditions: (a) the Bank’s address is: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America; and (b) the Bank’s Electronic Address is: Facsimile: 1-202-477-6391 3.03. For purposes of Section 10.01 of the General Conditions: (a) the Project Implementing Entity’s address is: No.3 Jida Road Shizhong District Jinan Shandong Province; and (b) the Project Implementing Entity’s Electronic Address is: Facsimile: E-mail: 0531-51769807 zwjrsd@163.com AGREED as of the later of the two dates written below. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By _____________________________________/ps1/ Authorized Representative Mara Warwick Name: __________________________/pn1/ Country Director. Title: __________________________ /pt1/ 14-Mar-2024 Date: __________________________/pd1/ SHANDONG PROVINCE By _____________________________________/ps2/ Authorized Representative Li Feng Name: __________________________/pn2/ Director General of Shandong DOF Title: __________________________ /pt2/ 15-Mar-2024 Date: __________________________/pd2/ 2 SCHEDULE Execution of Project Implementing Entity’s Respective Parts of the Project Section I. Implementation Arrangements A. Institutional Arrangements 1. For the purpose of carrying out its Respective Parts of the Project, the Project Implementing Entity shall, and shall cause Yantai Municipality to maintain, and cause to be maintained, the following entities with composition, powers, functions, staffing, facilities and other resources acceptable to the Bank: (a) a steering group to be supported by DARA at the provincial level, responsible for overall direction, coordination and policy dialogue among relevant provincial agencies; (b) the Municipal Project Leading Group responsible for providing overall policy, financial, and institutional guidance on Project implementation and facilitating coordination among different implementing agencies within its jurisdiction; (c) the Municipal Project Management Office responsible for implementation, coordination, reporting, management, and monitoring and evaluation of the activities under its Respective Parts of the Project, including the preparation of the Project Annual Work Plans and semi-annual progress and financial reports for submission to the Borrower and the Bank; and (d) such other implementation entities or units as may be agreed from time to time with the Bank, subject to arrangements acceptable to the Bank and set out in the Project Operations Manual. B. Annual Work Plans and Project Operations Manual 1. The Project Implementing Entity shall, and shall cause Yantai Municipality to: (a) prepare and furnish to the Bank by October 31 in each year, beginning in 2024, a draft Annual Work Plan for review and comment, summarizing the implementation progress of the Project for the said year and the activities under its Respective Parts of the Project to be undertaken in the following calendar year, including the proposed annual budget for its Respective Parts of the Project; (b) taking into account the Bank’s comments, finalize and furnish to the Bank no later than December 31 in each year, beginning in 2024, the Annual Work Plan, acceptable to the Bank; and (c) thereafter ensure the implementation of the Project during the following calendar year in accordance with the Annual Work Plan agreed with the Bank and in a manner acceptable to the Bank. The Project Implementing Entity shall, and shall cause Yantai Municipality to, not amend, suspend, abrogate, or waive said Annual Work Plans or any provision thereof without the prior written agreement of the Bank. 2. Throughout the implementation of its Respective Parts of the Project, the Project Implementing Entity shall, and shall cause Yantai Municipality to apply, the Project Operations Manual in a timely and efficient manner acceptable to the Bank. The Project Implementing Entity shall, and shall cause Yantai Municipality to, not amend, suspend, or waive said Project Operations Manual or any provision or schedule thereof, without the prior written agreement of the Bank. In the event of any inconsistency between the provisions of the Project Operations Manual and those of this Agreement or the Loan Agreement, the provisions of this Agreement and the Loan Agreement shall 3 prevail. C. Safeguards 1. In carrying out its Respective Parts of the Project, the Project Implementing Entity shall, and shall cause Yantai Municipality to: (a) take all necessary actions to minimize to the extent possible any involuntary loss by persons of shelter, productive assets or access to productive assets or income or means of livelihood, temporarily or permanently, and the displacement of said people in the carrying out of the Project or any part thereof; (b) where the acquisition of land or assets or the displacement of people is unavoidable, before initiating the implementation of any works which would result in such acquisition or displacement, make available to such people compensation and, as applicable, relocate and rehabilitate the Displaced Persons in accordance with the RPF and any RAP prepared thereunder, and in a manner acceptable to the Bank; and (c) whenever required in terms of the RPF, and prior to the commencement of any works, proceed to have a RAP or RAPs: (i) prepared in form and substance acceptable to the Bank; (ii) except as otherwise agreed with the Bank, submitted to the Bank for review and approval; (iii) thereafter, adopted and publicly disclosed; and (iv) thereafter, implemented, or cause to be implemented, in accordance with their terms and in a manner acceptable to the Bank. 2. The Project Implementing Entity shall implement, and shall cause Yantai Municipality to implement, the Safeguards Instruments applicable to its Respective Parts of the Project in a manner and substance acceptable to the Bank. Without limitation on the foregoing, the Project Implementing Entity shall ensure, and cause Yantai Municipality to ensure, that each contract for works financed under the Project includes the obligations of the work contractors and any sub- contractor to comply with the relevant provisions of the Safeguards Instruments, as the case may be. 3. The Project Implementing Entity shall ensure, and cause Yantai Municipality to ensure, that all studies and technical assistance to be supported under the Project are carried out under terms of reference acceptable to the Bank, and that such terms of reference are consistent with, and pay due attention to, the Bank’s Safeguards Policies. 4. The Project Implementing Entity shall not, and shall cause Yantai Municipality not to amend, suspend, or waive the Safeguards Instruments applicable to its Respective Parts of the Project, or any provision thereof, without the prior written concurrence of the Bank. 5. The Project Implementing Entity shall maintain, and shall cause Yantai Municipality to maintain, policies and procedures adequate to enable them to monitor and evaluate, in accordance with guidelines acceptable to the Bank, the implementation of the Safeguards Instruments applicable to its Respective Parts of the Project. 6. Without limitation to the provisions of paragraphs 1 through 5 of this Section I.C, or the provisions of Section II.1 below, the Project Implementing Entity shall take, and shall cause Yantai Municipality to take, all measures necessary on their part to regularly collect, compile, and submit to the Bank, as part of the Project Reports, and promptly in a separate report whenever the 4 circumstances warrant, information on the status of compliance with the Safeguards Instruments applicable to its Respective Parts of the Project, giving details of: (a) measures taken in furtherance thereof; (b) conditions, if any, which interfere or threaten to interfere with the smooth implementation thereof; and (c) remedial measures taken or required to be taken to address such conditions. 7. In the event of any inconsistency between the provisions of the Safeguards Instruments and the provisions of this Agreement or the Loan Agreement, the provisions of this Agreement and the Loan Agreement shall prevail. D. Line of Credit General 1. For the purpose of carrying out Part 3.1 (a) of the Project, the Project Implementing Entity shall, and shall cause Yantai Municipality to: (a) select PFIs to participate in the line of credit facility under Part 3.1 (a) of the Project, in accordance with eligibility criteria acceptable to the Bank and set forth in Line of Credit Manual; (b) ensure that the PFIs select the Eligible Beneficiaries to receive Sub-loans in accordance with eligibility criteria acceptable to the Bank and set forth in the Line of Credit Manual; (c) deposit in local currency with the selected PFI(s) the equivalent of the proceeds of Portion C of the Loan (or such other portion of the Loan allocated from time to time to Category (3) in Section III.A of Schedule 2 to the Loan Agreement), under the terms of a Subsidiary Loan Agreement to be entered into between Yantai Municipality and the respective PFI, under terms and conditions acceptable to the Bank and set forth in the Line of Credit Manual, including, inter alia, the terms and conditions referred to in paragraph 2 of this Section I.D; (d) monitor the overall execution of Part 3.1 (a) of the Project in accordance with the provisions of this Agreement, ensure that the PFIs adhere to the provisions of their respective Subsidiary Loan Agreements in the implementation of Part 3.1 (a) of the Project, and not take or permit to be taken any action which would prevent or interfere with such performance; and (e) exercise its rights under every Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Bank and to accomplish the purposes of the Loan, and, except as the Bank shall otherwise agree, not assign, amend, abrogate or waive any such agreement(s) or any provision thereof. Terms and Conditions of the Subsidiary Loan Agreements 2. Each Subsidiary Loan Agreement shall contain provisions pursuant to which the respective PFI shall undertake to: 5 (a) follow sound commercial practices in making Sub-loans to Eligible Beneficiaries, solely to finance Food Safety Sub-projects, and that such loans will at all times be underwritten, priced, signed, documented, monitored and serviced in accordance with the relevant PFI’s credit guidelines and using its standard documentation, including, inter alia, the terms and conditions referred to in paragraphs 3 and 4 of this Section I.D; (b) (i) make Sub-loans to Eligible Beneficiaries under Part 3.1 (a) of the Project on the terms and conditions set forth in the Line of Credit Manual, including, without limitation, the terms and conditions set forth in paragraphs 3 and 4 of this Section I.D; (ii) exercise its rights in relation to each such Sub-loan in such manner as to protect its interests and the interests of the Borrower and the Bank, comply with its obligations under its respective Subsidiary Loan Agreement, and achieve the purposes of the Project; (iii) not assign, amend, abrogate or waive any of its agreements providing for Sub- loans, or any provision thereof, without the prior approval of the Project Implementing Entity; (iv) appraise and approve Sub-projects and supervise, monitor and report on the carrying out of Food Safety Sub-projects by the Eligible Beneficiaries, in accordance with the Line of Credit Manual; (v) screen proposed Food Safety Sub-projects and ensure that each Eligible Beneficiary prepares and carries out the appropriate Safeguard Assessments and Plans for each Food Safety Sub-project in accordance with the ESMF and the ESMS, and verify (through its own staff, outside experts, or existing environmental and social institutions) before approving a Food Safety Sub-project, that the Food Safety Sub-project meets – and thereafter ensure that it remains in compliance with – the environmental and social requirements of appropriate national and local authorities and the provisions of the ESMF and the ESMS; (vi) require each Eligible Beneficiary applying for a Sub-loan to furnish, upon request, evidence acceptable to the Bank showing that the Food Safety Sub-project in respect of which the application has been prepared is in compliance with the environmental and social requirements and procedures set forth in the ESMF and the ESMS; and (vii) ensure that: (aa) goods, works and services to be financed out of the proceeds of the Loan shall be procured in accordance with the provisions of the Line of Credit Manual; and (bb) such goods, services and works shall be used exclusively in the carrying out of the Food Safety Sub-project. (c) (i) exchange views with and furnish all such information to the Bank or the Project Implementing Entity, as may be reasonably requested by the Bank and/or the Project Implementing Entity, with regard to the progress of its activities under Part 3.1(a) of the Project, the performance of its obligations under its respective Subsidiary Loan Agreement, and other matters relating to the purposes of the Project; 6 (ii) prepare and submit to the Project Implementing Entity semi-annual reports on Sub- loan disbursements and repayments, and annual reports on the progress made in achieving the objectives outlined in the business plans submitted with the Sub-loan applications, including reports on the status of compliance with the social and environmental requirements and procedures referred to in sub-paragraph (b)(v) above; and (iii) promptly inform the Bank and the Project Implementing Entity of any condition which interferes or threatens to interfere with the progress of its activities under its respective Subsidiary Loan Agreement. (d) (i) maintain records and accounts adequate to reflect, in accordance with sound accounting practices, its operations and financial condition; (ii) furnish to the Bank such information concerning said records and accounts as the Bank shall from time to time reasonably request; and (iii) at the Bank’s or the Borrower’s or the Project Implementing Entity’s request, have its financial statements reflecting the operations, resources and expenditures related to the supported activities audited by independent auditors acceptable to the Bank, in accordance with consistently applied auditing standards acceptable to the Bank, and promptly furnish the statements as so audited to the Borrower, the Bank and the Project Implementing Entity. (e) except as the Bank and the Project Implementing Entity, through Yantai Municipality, may otherwise agree: (i) open and thereafter maintain on its books, in accordance with its regular financial practices and on conditions acceptable to the Bank, separate accounts to which it shall credit, as the case may be, each payment of interest or other charges on, or repayment of principal payments under, any Sub-loan; and (ii) utilize all amounts so credited to said separate accounts, to the extent they are not yet required to meet said PFI’s payment obligations to Yantai Municipality under its Subsidiary Loan Agreement, exclusively to finance additional Food Safety Sub- projects to further improve food safety at selected value chains; and (f) assume the credit risk of each Sub-loan. Terms and Conditions of Sub-Loans 3. The principal amount of each Sub-loan shall be made on financing terms and conditions, including those relating to, currency denomination, interest rate and other charges determined in accordance with the PFI’s investment and lending policies and practices and in accordance with requirements outlined in the Line of Credit Manual. 4. Sub-loans shall be made on terms whereby the PFI shall obtain, by written contract with the Eligible Beneficiary or by other appropriate legal means, rights adequate to protect its interests and those of the Borrower, the Bank and the Project Implementing Entity, including the right to: 7 (a) require the Eligible Beneficiary to carry out and operate the facilities financed under the Food Safety Sub-project with due diligence and efficiency and in accordance with sound technical, financial and managerial standards, the provisions of Anti-Corruption Guidelines applicable to recipients of loan proceeds other than the Borrower, and to maintain adequate records; (b) without limitation to the generality of the provisions of the preceding paragraph (a) require the Eligible Beneficiary carry out and operate the Food Safety Sub-project with due regard to applicable social impact, ecological, environmental and pollution control standards and in accordance with the provisions of the Line of Credit Manual, the ESMF and the ESMS; (c) for Food Safety Sub-projects which need a Safeguards Assessment and Plan, require the Eligible Beneficiary to carry out such assessment and/or plan in a timely manner in accordance with the Line of Credit Manual, the ESMF and the ESMS; (d) require: (i) that the goods, works and services to be financed out of the proceeds of the Sub-loans shall be procured in accordance with the Line of Credit Manual; and (ii) that such goods, works and services shall be used exclusively in the carrying out of the Food Safety Sub-project; (e) inspect, by itself or jointly with representatives of the Project Implementing Entity and the Bank, if the Project Implementing Entity or the Bank shall so request, such goods and the sites, works, plants and construction included in the Food Safety Sub-project, the operation thereof, and any relevant records and documents; (f) require the Eligible Beneficiaries to take out and maintain with responsible insurers such insurance, against such risks and in such amounts, as shall be consistent with sound business practice, including, without limitation, such insurance to cover hazards incident to the acquisition, transportation and delivery of goods financed out of the proceeds of the Sub-loan to the place of use or installation, any indemnity thereunder to be made payable in a currency freely usable to replace or repair such goods; (g) require the Eligible Beneficiaries to: (A) maintain a financial management system and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, both in a manner adequate to reflect their operations, resources and expenditures related to the supported activities; and (B) at the Bank’s or the Borrower’s or the Project Implementing Entity’s request, have such financial statements audited by independent auditors acceptable to the Bank, in accordance with consistently applied auditing standards acceptable to the Bank, and promptly furnish the statements as so audited to the Borrower, the Bank and the Project Implementing Entity; (h) obtain all such information as the Bank or the Project Implementing Entity shall reasonably request relating to the foregoing and to the administration, operations and financial condition of the Eligible Beneficiary and to the benefits to be derived from the Food Safety Sub-project; and (i) suspend or terminate the right of the Eligible Beneficiary to the use of the proceeds of the Sub-loan upon failure by such beneficiary to perform its obligations under its agreement with the PFI for the Sub-loan. 8 E. Financing Arrangements 1. For the purposes of carrying out of its Respective Parts of the Project, the Project Implementing Entity shall make available the proceeds of Portion B of the Loan and Portion C of the Loan to Yantai Municipality, under terms and conditions acceptable to the Bank, including the following principal terms: (a) The principal amount shall be made available in Dollars or any other Currency as Portion B of the Loan or Portion C of the Loan may be converted from time to time through a Currency Conversion (such principal amount determined on the date, or respective dates, of withdrawal from the Loan Account) of the value of the currency or currencies so withdrawn. (b) The principal amount so made available shall be recovered as follows: (i) when referring to Portion B of Loan, over a period of thirty (30) years, inclusive of a grace period of ten (10) years; and (b) when referring to Portion C of the Loan, through a bullet repayment due on December 1, 2040. (c) Interest shall be charged on such principal amount withdrawn and outstanding from time to time at a rate equal to the rate of interest applicable from time to time to the Loan pursuant to the provisions of Section 2.05 of the Loan Agreement. (d) A Commitment Charge shall be charged equal to one quarter of one percent (0.25%) per annum on the Unwithdrawn Loan Balance. 2. The Project Implementing Entity shall cause Yantai Municipality to: (a) manage, operate, monitor, transfer and reconcile the proceeds of the Loan made available to it pursuant to paragraph 1 above in accordance with arrangements and procedures acceptable to the Bank; (b) take all required actions, including provision of timely consents and approvals as may be necessary, to facilitate the utilization of said Loan proceeds and the implementation of the Project and, to enable the Project Implementing Entity to comply with its undertakings under the Project Agreement; and (c) maintain all relevant records and documents related to the Loan and the its Respective Parts of the Project and provide promptly such documents and records, including all other information, as may be requested by the Project Implementing Entity, the Borrower or the Bank from time to time. Section II. Project Monitoring, Reporting and Evaluation 1. The Project Implementing Entity shall, and shall cause Yantai Municipality to, monitor and evaluate the progress of its Respective Parts of the Project and prepare Project Reports for its Respective Parts of the Project in accordance with the provisions of Section 5.08 (b) of the General Conditions and on the basis of indicators acceptable to the Bank. Each such Project Report shall cover the period of one calendar semester, and shall be furnished to the Borrower and the Bank not later than sixty (60) days after the end of the period covered by such report. 2. Without limitation to the provisions of paragraph 1 above, the Project Implementing Entity shall, and shall cause Yantai Municipality to, prepare, under terms of reference acceptable to the Bank, and furnish to the Bank no later than April 1, 2026, a consolidated mid-term review report for its Respective Parts of the Project, summarizing the results of the monitoring and evaluation activities carried out from the inception of its Respective Parts of the Project, and setting out the measures recommended to ensure the efficient completion of its Respective Parts of the Project and to further the objectives thereof. 9 3. The Project Implementing Entity shall, and shall cause Yantai Municipality to, provide to the Borrower not later than three (3) months prior to the Closing Date, for incorporation in the report referred to in Section 5.08 (c) of the General Conditions all such information as the Borrower or the Bank shall reasonably request for the purposes of that Section. 10