Gravitas: Why is China Borrowing From World Bank?
World Bank approves over $ 1 billion annual lending plan for China
World Bank approves low-interest loan aid plan for China in the amount of $ 1 to $ 1.5 billion annually through June 2025, despite objections from U.S. Treasury Secretary Stephen Mnuchin.
Mnuchin told the House Financial Services Committee that a Treasury spokesman on the bank’s board of directors objected to the plan, adding that he wanted the World Bank «excluded» China from its concessional lending programs for low and middle income countries.
The new five-year plan calls for a gradual reduction in lending from the previous five-year average of $ 1.8 billion.
The new plan was released Thursday after the World Bank board «expressed broad support» participation of creditors in the development of structural and environmental reforms in China.
World Bank lent China $ 1.3 billion in fiscal 2019 ended June 30, up from $ 2.4 billion in 2017.
«Lending rates can fluctuate up and down from year to year», – says the new World Bank plan.
He stated that Beijing has applied for ongoing funding from the World Bank’s International Bank for Reconstruction and Development division. «as a platform for reform, institution building and knowledge transfer».
But the credit crunch is not happening fast enough for Mnuchin, who argues China is too rich for such international aid when it provides hundreds of billions of dollars to poor countries through its infrastructure. «Belts and Roads».
US lawmakers are also increasingly concerned that US taxpayer funds lent to China through the World Bank will contribute to human rights abuses and unfair economic competition with the United States..
In his Senate speech Thursday, Senate Finance Committee Chairman Charles Grassley referred to alleged human rights abuses in Xinjiang related to Muslim Uyghur detention camps in criticizing the World Bank’s lending plan.
«The World Bank, using US tax dollars, should not lend to rich countries that violate the human rights of their citizens and try to dominate weaker countries militarily or economically.», – said Grassley.
China defends its partnership with the World Bank.
«We are ready to make efforts and work together (with the bank) to take stock and share China’s successes and experiences in fighting poverty with other developing countries in order to realize the long-term sustainable development of these countries.», – Foreign Ministry spokeswoman Hua Chuning said. told the briefing on Friday.
Although the United States has veto power over major World Bank board decisions, such as capital increases and executive appointments, China’s latest lending plan did not require an official vote..
Mnuchin told lawmakers he expects World Bank lending to China to fall below $ 1 billion in the current fiscal year, and Chinese lenders will pay back more than they borrow..
World Bank Says Five-Year Plan Loans Will Go To Advance Market And Fiscal Reforms, Foster Growth, And Increase Citizens’ Access To Health And Social Services.