The World Bank has agreed to phase out its lending to China by 2031 under a new five-year country partnership framework, according to reports from Reuters and Financial Times. The World Bank's board will review this plan during the week of July 20, with no formal vote required. The change was agreed upon by both the World Bank and China as part of their strategic partnership approach, marking a significant shift in their development cooperation relationship. As reported by Financial Times, a source familiar with the matter confirmed the development on Tuesday, corroborating earlier reports. A World Bank official who spoke on condition of anonymity told Financial Times that 'China has made significant development advances over the past several decades' and that 'now we are reaching a new phase of our relationship, reflecting that reality.' The official emphasized that 'The World Bank's role is shifting from lender to knowledge partner, in line with China's development trajectory.'
World Bank lending to China has experienced a steady decline over the past decade, dropping from $2.4 billion annually in 2017 to $750 million in 2025, as reported by Reuters. China exited eligibility for loans under the World Bank's International Development Association facility for the poorest countries in 2000, but began contributing to this facility in 2007 and is now the fifth-biggest donor. The new framework would limit World Bank lending to Beijing to $2 billion between now and 2031, after which lending would end completely. According to Financial Times, this decline reflects China's economic transformation and growing capabilities that no longer require multilateral development assistance. The move would cap World Bank lending to China at around $2 billion between now and 2031 before ending new development loans altogether.
The decision comes amid long-standing pressure from the US and other countries who have advocated for ending World Bank lending to China due to its growing economic power, according to Reuters. A US Treasury spokesperson called the move 'a step in the right direction' and expressed that Washington looked forward to other institutions following suit. The spokesperson stated that 'as the second-largest economy in the world, China should not be receiving handouts from multilateral institutions.' A senior US official urged institutions including the Asian Development Bank, the International Fund for Agricultural Development and United Nations agencies to end development assistance for China, arguing that such funding should instead be directed towards poorer countries. As reported by Reuters, the move aligns with broader US policy objectives to reduce multilateral support for economically advanced countries. During his first term, US President Donald Trump called on the World Bank to stop lending to China, arguing that the country no longer required development financing, though he has not publicly renewed that specific demand in his second term.
China's finance ministry responded on Wednesday, stating that the gradual decline in World Bank loans to China is a natural result of changes in domestic demand and the transformation of cooperation between the two sides, as reported by Reuters. The ministry emphasized that this decline aligns with international practices and that China will continue to strengthen cooperation with the World Bank in addressing global challenges. This official response suggests China views the transition as a natural evolution rather than a restriction, with the ministry noting that 'China has made significant development advances over the past several decades' and that 'now we are reaching a new phase of our relationship, reflecting that reality.'
The World Bank has implemented similar changes for other countries, including Poland, where it agreed to end development loans after 2031 this month, according to Reuters. The planned withdrawal from China underscores the World Bank's evolving focus on directing scarce development finance towards lower-income nations with greater funding needs, while transitioning wealthier economies away from borrowing from the institution. The move signifies a shift from lender to knowledge partner in the relationship with China. As reported by Financial Times, this represents a natural evolution in the relationship as China's economic status has changed significantly since the original lending arrangements were established. Despite receiving loans, China also contributes to the World Bank's International Development Association (IDA), the fund that supports the world's poorest countries, with Beijing pledging $1.5 billion under the latest replenishment round, making it the fifth-largest donor to the IDA.
