Washington (United States) (AFP) – The World Bank on Thursday confirmed that it plans to phase out its lending to China by 2031, according to the organization’s new country partnership framework (CPF) for the world’s second-largest economy. AFP first reported that the multilateral lender would be making the move last month.
“IBRD lending will continue to phase down during the CPF period, not exceeding US$ 2 billion,” the World Bank Group (WBG) said in a post on its website, referring to lending through the International Bank for Reconstruction and Development. A CPF is a mutually agreed plan between the bank and a client country outlining development priorities for a multi-year period. “In principle, no further borrowing is expected from IBRD by the end of the CPF period.”
The WBG said the five-year CPF “marks a new phase in a 45-year partnership,” as China moves from needing financing to primarily requiring technical assistance and knowledge sharing. “As our partnership evolves, we are increasingly focused on knowledge, innovation and shared solutions,” said Anna Bjerde, World Bank managing director of operations.
World Bank lending to China has steadily declined in recent years as the Asian giant saw explosive growth and a reduction in poverty indicators. “As China tackles the challenges of an aging society, a shifting economy, and other development priorities, we will work alongside it to generate ideas that matter not just for China, but for emerging markets around the world,” said Bjerde.
China’s Deputy Finance Minister Liao Min said China would continue to deepen engagement with the World Bank, regardless of the changing relationship with respect to lending. The World Bank’s new five-year plan agreed with China focuses on delivering economic growth while also providing better jobs, social resilience, and a low-carbon economy.
In his first term in office, US President Donald Trump demanded that the World Bank stop lending to China entirely, as he adopted a more aggressive approach to Washington’s chief economic rival. Trump has maintained that tone in his second term, but has not specifically repeated that demand.
World Bank lending to China peaked at $2.42 billion in 2017 but had fallen to $750 million by 2025. China also contributes funds to the World Bank’s International Development Association (IDA) pool for the world’s least developed countries, with its $1.5 billion contribution under the latest replenishment round making Beijing the fifth-largest donor.
© 2024 AFP
