The new bill (pdf), S. 2587, would establish that it’s U.S. policy to oppose any additional loan, extension, or technical assistance from multilateral development banks to China.
Multilateral banks were created to assist developing countries and help eliminate extreme poverty, but the Chinese Communist Party (CCP) continues to receive low-cost loans and assistance from the World Bank and the Asian Development Bank despite overseeing the world’s second-largest economy, according to a release from the lead sponsor of the bill, Sen. John Barrasso (R-Wyo.).
“China is the second largest economy and the largest single creditor in the world,” Barrasso said in a statement. “There is no reason why China should still be receiving loans from the World Bank or the Asian Development Bank. As China obtains subsidized loans, it is engaging in predatory lending to developing countries across the world.
“We must refocus international efforts to ensure resources are going to developing countries that need assistance the most. Our legislation ensures the Chinese Communist Party can no longer take advantage of these low-cost loans subsidized by U.S. taxpayers at multilateral development banks.”
According to World Bank policy, countries are eligible to borrow from the International Bank for Reconstruction and Development (IBRD), an institution of the bank, until they reach a certain income threshold, which is called a graduation discussion income threshold.
China reached that threshold in 2016 and was expected to reduce its borrowing from the bank since then. However, the CCP has only seen further assistance since 2016, with the IBRD having approved $8.93 billion for 16 projects in China, and the Asian Development Bank approving $7.6 billion in loans and assistance, and $1.8 billion in non-sovereign commitments in China in the same time frame.
The World Bank shareholders agreed in 2018 that loans to the CCP would fall below $1 billion per year. But IBRD data show that the CCP has continued to receive more than $1 billion in annual financing every fiscal year since 2016.
The GOP senators’ proposed legislation would require the Treasury secretary to instruct the U.S. executive director at each of the multilateral development banks to oppose any lending to China and to halt lending to any other country that exceeds the criteria for graduating from lending at the bank.
The bill would also require an annual report to be delivered to Congress. The report would, in part, assess the status of China’s borrowing from the banks and document China’s voting power, shares, and representation at the respective banks. It would also describe efforts from the United States to end lending to countries once they exceed the eligibility requirements.
“China is no longer a developing nation in need of development loans. America’s foreign policy should treat the Chinese Communist Party for what it is: a genocidal regime determined to remake the world in its own authoritarian image. We cannot continue to allow Beijing to exploit international organizations to achieve its objectives,” co-sponsor Sen. Marco Rubio (R-Fla.) said in a statement.
Sen. Cynthia Lummis (R-Wyo.), another co-sponsor, said in a statement, “The Chinese Communist Party’s efforts to influence and infiltrate institutions and governments around the world is troubling, and the World Bank and other multilateral development banks should not support China’s nefarious One Belt One Road campaign through favorable lending agreements.”
Other cosponsors include Sens. Chuck Grassley (R-Iowa), Rick Scott (R-Fla.), James Lankford (R-Okla.), Jim Inhofe (R-Okla.), Tom Cotton (R-Ark.), Thom Tillis (R-N.C.), Mike Braun (R-Ind.), Ben Sasse (R-Neb.), John Cornyn (R-Texas), John Boozman (R-Ark.), Marsha Blackburn (R-Tenn.), Tommy Tuberville (R-Ala.), Jerry Moran (R-Kan.), Josh Hawley (R-Mo.), and Mike Rounds (R-S.D.).
Earlier this year, Republican senators introduced similar legislation that would prevent China or other countries that exceed the graduation threshold from receiving loans from the World Bank.
Emel Akan contributed to this report.