World Bank Lends China A Helping Hand Despite US Displeasure

The US is going all out to throttle its biggest trade rival, China. This time, Mr. Donald Trump has asked the World Bank not to lend any money to Beijing. This is one day after the UN-led lending institution opted for a lending plan for China.

The World Bank had planned to help out China through the financial loan of $1 billion to $1.5 billion in low-interest loans annually through June 2025. The plan calls for lending to “gradually decline” from the previous five-year average of $1.8 billion. This appeal and caustic remark from Trump comes through his favorite social media tool, the twitter in which he said China has plenty of money, and if they don’t, they create it. STOP!”

It does seem jarring that by lending to a country that is already rich, there is a sense of imbalance in the world economy. The reasons for taking a financial loan via the World Bank are not clear as of now.

According to media sources, Beijing had requested earlier for continued financing after a huge amount lent to it in 2019. China took money from World Bank’s International Bank for Reconstruction and Development division “as platforms for reform, institution building, and knowledge transfer. This time again, it has plans to ‘advance market and fiscal reforms to encourage private sector development; promote greener growth by reducing pollution and reducing carbon emissions; and increase its citizens’ access to health and social services.’

Several other US lawmakers including U.S. Treasury Secretary Steven Mnuchin objected to the plans of lending to China on the pretext that they felt, it was a progressive rich nation that didn’t need money. The general thought was that the World Bank should “graduate” China from its concessional loan programs and concentrate more on low- and middle-income countries. While the United States holds effective veto power over major board decisions such as capital increases and leadership appointments, this lending plan for China did not require a formal vote.

Maybe this is the reason that all the unpleasantness around the lending by the US officials isn’t being taken seriously.

The World Bank is a part of the World Bank Group that is a part of the United Nations system but retains its independence. It has a formal agreement with the UN.