World Bank to phase out China lending by 2031
UPSC / SSC current affairs note · Economy
Why in news
The World Bank confirmed its plan to phase out lending to China by 2031 under a new Country Partnership Framework (CPF). This marks a shift in the 45-year partnership as China transitions from borrower to knowledge partner.
Background
World Bank lending to China has declined steadily from a peak of $2.42 billion in 2017 to $750 million by 2025. The move aligns with China's reduced need for financing due to its economic growth and poverty reduction.
Key facts
World Bank confirmed phase-out of lending to China by 2031 under new CPF.
IBRD lending will not exceed $2 billion during the CPF period.
No further borrowing from IBRD expected by end of CPF period.
China moves from needing financing to requiring technical assistance and knowledge sharing.
World Bank lending to China peaked at $2.42 billion in 2017, fell to $750 million by 2025.
China contributed $1.5 billion to IDA, making it the fifth-largest donor.
US President Donald Trump had demanded World Bank stop lending to China entirely.
New CPF focuses on economic growth, better jobs, social resilience, and low-carbon economy.
Prelims pointers
- World Bank Group (WBG) includes IBRD and IDA.
- IBRD: International Bank for Reconstruction and Development.
- IDA: International Development Association (concessional loans to poorest countries).
- Country Partnership Framework (CPF): mutually agreed plan between World Bank and client country.
- China is world's second-largest economy.
- World Bank headquarters: Washington, D.C.
Mains angles
- GS2: Role of multilateral development banks in global economic governance.
- GS2: India-China relations and implications for developing countries.
- GS3: Economic development and changing role of international financial institutions.