Senator John Barrasso (R-WY) and 17 of his Republican colleagues have introduced legislation (S.2587) that would put an end to assistance to China by multilateral development banks. The logic behind the legislation is that China has grown enough economically that it no longer requires lending from development banks. As Senator Barrasso put it in a press release: "The World Bank and the Asian Development Bank were created to assist developing countries and help eliminate extreme poverty. Despite having access to capital and being one of the world’s largest economies, China is still receiving loans and assistance from both banks. ... There is no reason why China should still be receiving loans from the World Bank or the Asian Development Bank."
The legislation begins with a number of Congressional "findings," including the following:
- China is the world’s second largest economy and a major global lender.
- In February of this year, China's foreign exchange reserves totaled more than $3,200,000,000,000.
- The World Bank classifies China as having an upper-middle-income economy.
- President Xi Jinping has announced ‘‘complete victory’’ over extreme poverty in China.
- China utilizes state resources to create and promote the Asian Infrastructure Investment Bank, the New Development Bank, and the Belt and Road Initiative.
- The World Bank reviews the graduation of a country from eligibility to borrow from the International Bank for Reconstruction and Development once the country reaches the graduation discussion income. For fiscal year 2021, the graduation discussion income is a gross national income per capita exceeding $7,065. However, the IBRD and the Asian Development Bank (ADB) continue to make loans for projects in China even though the World Bank calculates China’s most recent year (2019) gross national income per capita as $10,390.
The bill then sets out the following statement of U.S. policy: "It is the policy of the United States to oppose any additional lending from the multilateral development banks, including the International Bank for Reconstruction and Development and the Asian Development Bank, to the People’s Republic of China as a result of the People’s Republic of China’s successful graduation from the eligibility requirements for assistance from those banks." In other words, because China is wealthy enough that it no longer meets the eligibility requirements for assistance, no additional lending is appropriate.
To give effect to this policy, the legislation states:
The Secretary of the Treasury shall instruct the United States Executive Director at each multilateral development bank to use the voice, vote, and influence of the United States—
(1) to oppose any loan or extension of financial or technical assistance by the bank to the People’s Republic of China; and
(2) to end lending and assistance to countries that exceed the graduation discussion income of the bank.
The legislation also requires annual reports from the Secretary of the Treasury to Congress on various aspects of this issue.
David Malpass, the current President of the World Bank and President Trump's pick to lead the Bank, is a long-time critic of the Bank's lending to China, and his presence there may increase the possibility of changes on this front.