World Bank to End China Lending by 2031 Following Decline
The World Bank is set to discontinue its lending to China by 2031, following a trend of decreasing loans. This decision underscores China’s emergence as the world’s second-largest economy, according to three sources acquainted with the plan, who spoke on Tuesday. The World Bank’s board is set to evaluate the plan in the week of July 20, according to one of the sources, although a formal vote is not required. It was agreed upon by the World Bank and China as part of its five-year “country partnership framework.” The alteration, initially disclosed by the Financial Times, would restrict the multilateral development bank’s lending to Beijing to $2 billion from now until 2031, concluding thereafter.
World Bank lending to China has experienced a consistent decline, decreasing from $2.4 billion annually in 2017 to $750 million projected for 2025. China ceased to qualify for loans from the World Bank’s International Development Association, which is designed for the poorest nations, in 2000. It commenced its contributions to the facility in 2007 and has since ascended to become the fifth-largest donor. “China has made significant development advances over the past several decades,” said one World Bank official familiar with the matter. “Now we are reaching a new phase of our relationship, reflecting that reality.” The United States and various nations have persistently urged the World Bank to cease its lending activities to China, in light of the latter’s expanding economic influence.
China’s ongoing reliance on borrowing from the World Bank and various institutions has posed a challenge for the Trump administration since its initial term. The World Bank this month reached an agreement to implement a comparable modification for Poland, concluding development loans to the nation post-2031. A US Treasury spokesperson characterised the move as “a step in the right direction” and expressed anticipation for other institutions to adopt similar measures. “As the second-largest economy in the world, China should not be receiving handouts from multilateral institutions,” the spokesperson said.
A senior US official stated that China should not qualify for development funding due to the scale of its economy, and urged for the cessation of assistance to China from other entities such as the Asian Development Bank, the International Fund for Agricultural Development, and U.N. agencies. China’s finance ministry stated on Wednesday that the gradual decline in World Bank loans to China is a natural outcome of shifts in domestic demand and the evolution of cooperation between the two parties, aligning with international practices. China will persist in enhancing collaboration with the World Bank to tackle global challenges, as stated by the finance ministry.
