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The World Bank's mission is to lift countries out of extreme poverty. Few would say China fits that description these days. It's technically eligible for World Bank loans. But as NPR's Jason Beaubien reports, some people question whether China really needs the money.
JASON BEAUBIEN, BYLINE: China has cash reserves of some $3 trillion, yet continues to borrow significant amounts of money each year from the World Bank. Under the bank's rules, once a nation's per capita income tops $7,000, they're supposed to get weaned off the World Bank's subsidized loans. China passed that threshold in 2016.
ESWAR PRASAD: From a pure economic vantage point, there is no good reason for the World Bank to continue making loans to China.
BEAUBIEN: That's Eswar Prasad, a professor of economics at Cornell University. The World Bank's pool of capital is limited. A dollar lent to China is a dollar that's not available for a project somewhere else in the world. China is now the second-largest economy in the world, yet in 2017, it was the bank's largest borrower, securing access to $2.4 billion in loans. At the same time, China was also passing out 10 times that amount in development grants and loans to low-income countries around the globe. But Prasad says the World Bank isn't rushing to cut off China.
PRASAD: The risk the World Bank faces is that if it only lends to very poor countries, it might end up not having much of a role to play in the large and fast-growing, emerging market economies.
BEAUBIEN: The World Bank has specific issues that it's trying to influence globally, and one of them is climate change.
SCOTT MORRIS: China's the world's largest polluter today, and the biggest single category of expenditures for the World Bank is in this area.
BEAUBIEN: That's Scott Morris, a senior fellow at the Center for Global Development and the lead author of a new report on World Bank lending to China. He found that 38 percent of loans to China over the last three years were focused on what the bank calls global public goods, issues that extend beyond China's borders such as climate change, smokestack emissions and other industrial pollution. The fear is that if the World Bank disengages, China will scale back some of these environmental efforts. Morris says China recently has also turned to the bank for money for a wide range of projects involving education, agriculture and roads. It borrowed $200 million for a port and shipping container logistics park on the Yangtze River. There was even a loan to support heritage-based sustainable tourism.
MORRIS: There are clearly some weaknesses. There are areas where I don't think the lending to China is justified. But we would all be much worse off actually, if we consider the question of climate change alone, if the bank were to withdraw from China.
BEAUBIEN: Bert Hofman, the World Bank's country director in China, says that the amount of money China is borrowing from his institution is just a small fraction of what the country is investing each year in domestic programs. And he agrees with Prasad that China isn't borrowing just for access to capital.
BERT HOFMAN: The reason they still borrow is because they feel that the expertise of the World Bank is valuable to them.
BEAUBIEN: World Bank loans come with experts and auditors who help implement and monitor the bank-funded projects. China gets access to international experts. The World Bank gets to see how its programs play out on a grand scale in a middle-income country. Hofman sees it as a win-win, but he also says lending to China is likely to decrease in the years to come.
HOFMAN: Going forward, we have a more focused program that increasingly focuses on the global public goods. But it also still helps China in developing its institutions for sustainable development. So it's a good relation.
BEAUBIEN: Last week, President Trump nominated a top Treasury Department official, David Malpass, to be the next president of the World Bank. Malpass has been particularly critical of the institution's continued lending to China. But China is the third-largest shareholder in the bank, giving it a significant say in who will be the next leader of the financial institution. Jason Beaubien, NPR News. Transcript provided by NPR, Copyright NPR.