Source : Perth Now news
The World Bank will phase out its lending to China by 2031 after years of declining loans, reflecting the country’s rise to become the world’s second-largest economy, three sources familiar with the plan say.
The World Bank’s board will review the plan during the week of July 20, although no formal vote is needed, one of the sources said. It was agreed by the World Bank and China as part of its five-year “country partnership framework”.
The change, first reported by the Financial Times, would limit the multilateral development bank’s lending to Beijing to $US2 billion ($A2.9 billion) between now and 2031, ending it thereafter.
World Bank lending to China has declined steadily, dropping from $US2.4 billion ($A3.5 billion) a year in 2017 to $US750 million ($A1.1 billion) in 2025.
China exited eligibility for loans under the World Bank’s International Development Association facility for the poorest countries in 2000. It began contributing to the facility in 2007 and is now the fifth-biggest 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 US and other countries have long pushed the World Bank to stop lending to China, given its growing economic power.
China’s continued borrowing from the World Bank and other institutions has been an irritant for the Trump administration since its first term.
The World Bank this month agreed to a similar change for Poland, ending development loans to the country after 2031.
A US Treasury spokesperson called the move “a step in the right direction” and said Washington looked forward to other institutions following suit.
“As the second-largest economy in the world, China should not be receiving handouts from multilateral institutions,” the spokesperson said.
