The World Bank (WB) has decided to end development finance loans to China after 2031. The decision reflects a judgment that China's economic power has surpassed developing-country levels, making it ineligible for financial support. Analysts say the move accepts demands from the administration of Donald Trump, which has called for a halt to loans to China.
According to the Financial Times (FT) on Sunday, the World Bank is pursuing a plan to cap loans to China at a total of $2 billion through 2031 and then end new lending afterward. The plan is set to be discussed at the World Bank board meeting to be held this month. If finalized, China would formally relinquish its status as a World Bank borrower.
The World Bank said the measure "opens a new chapter in its relationship with China," explaining that "when this strategy period ends, China will graduate from being a World Bank borrower." It added, "We recognize China's development process and judge that it has now reached a stage where it no longer needs to depend on funding from development finance institutions such as the World Bank."
The World Bank's lending to China has declined steadily in recent years. Annual loan volume shrank from $2.4 billion in 2017 to $750 million last year.
The measure is interpreted as reflecting the U.S. government's position that China can no longer be viewed as a target for financial support. The U.S. Treasury said, "It is not appropriate for China, the world's second-largest economy, to effectively receive support from multilateral development finance institutions," adding, "The World Bank's decision is a step in the right direction, and we expect other international development finance institutions to take the same action."
The World Bank had earlier prepared a transition plan to end development finance loans to Poland by 2031. However, in Poland's case, it included provisions exceptionally allowing funding for Ukraine support and nuclear-related projects, while no such exception was made for China. A U.S. government official assessed that "the plan concerning China is the most stringent among the World Bank loan termination measures drawn up in recent years."
