World Bank to phase out China lending by 2031

The World Bank will phase out loans to China by 2031 after years of declining lending, three sources familiar with the plan said, reflecting the country’s rise to become the world’s second-largest economy.

The World Bank board will review the plan the week of July 20, but a formal vote is not required, one of the sources said. This was agreed by the World Bank and China under a five-year “country partnership framework”.

The change, first reported by the Financial Times, will cap the multilateral development bank’s lending to Beijing at US$2 billion ($A2.9 billion) between now and 2031, after which it will end.

World Bank lending to China has steadily decreased, falling from US$2.4 billion ($3.5 billion) annually in 2017 to US$750 million ($1.1 billion) in 2025.

In 2000, China ceased eligibility for loans under the World Bank’s International Development Association loan facility for the poorest countries. He began contributing to the facility in 2007 and is now the fifth largest donor.

“China has made significant progress in development over the past few decades,” said a World Bank official familiar with the matter.

“We are now reaching a new phase in our relationship that reflects this truth.”

The United States and other countries have long pressured the World Bank to stop lending to China, given China’s growing economic power.

China’s continued borrowing from the World Bank and other institutions has troubled the Trump administration since its first term.

The World Bank this month adopted a similar change for Poland, ending development loans to the country after 2031.

A US Treasury spokesman called the move “a step in the right direction” and said Washington looked forward to other institutions following suit.

“China, the world’s second largest economy, should not receive assistance from multilateral institutions,” the spokesman said.