World Bank Plans to Stop Lending to China by 2031, Washington Approves: 'A Step in the Right Direction'

WASHINGTON (CNA) - The World Bank will phase out loans to China by 2031, three people familiar with the matter said, a move that reflects China's status as the world's second-largest economy after years of declining lending.

The World Bank's board is expected to consider the plan in the week of July 20, though it does not require a formal vote, according to one of the sources. The arrangement is part of the World Bank's five-year "Country Partnership Framework" with China.

The adjustment, first reported by the Financial Times, would cap World Bank lending to China at $2 billion by 2031, after which all related loans would cease.

"China has made incredible progress in development over the past few decades, with support from the World Bank and other institutions. Now, our partnership is entering a new phase," said a World Bank official familiar with the matter, who spoke on condition of anonymity.

"The World Bank's role is shifting from a lender to a knowledge partner, which also aligns with China's development path," the official said.

Lending to China has been shrinking in recent years amid its rapid economic growth and improved poverty indicators. Loans peaked at about $2.4 billion in 2017 and have declined annually since, with projections showing a reduction to $750 million by 2025.

China has not been eligible for loans from the World Bank's International Development Association (IDA), which targets the poorest countries, since 2000 and became a donor country in 2007. In the latest round of IDA fundraising, China contributed $1.5 billion, making it the fifth-largest donor.

U.S. President Donald Trump, who took a tougher stance against China, a major economic rival, had called for an end to all World Bank lending to China during his first term. While maintaining the same stance in his second term, he did not explicitly reiterate this demand.

In response to the World Bank's latest move, a spokesperson for the U.S. Treasury Department praised it as "a step in the right direction," stating, "As the world's second-largest economy, China should no longer receive aid from multilateral institutions."

A senior U.S. official also called on institutions such as the Asian Development Bank (ADB), the International Fund for Agricultural Development (IFAD), and the United Nations to also terminate their development financing to China, considering its economic scale.

The Chinese Embassy in the United States has not yet responded. (Compiled by Tsai Chia-min) 1150701