The World Bank has decided to aid China with $1-billion to $1.5-billion loans annually in low interests. The period for which the help will be provided from the world body is up to June 2025. The US Treasury Secretary Steven Mnuchin and several other US lawmakers have highly criticized the move saying China is already too wealthy to be provided such aid.
Mnuchin told a Financial Services Committee objected to the decision of the World Bank and said that instead of aiding China it should look to provide such low-interest loans to the African countries.
The decision was taken from the World Bank to support the structural and environmental reforms in China as it expressed broad support for the Asian economic giant. China had taken a $1.3-billion loan from World Bank in 2019 till 30th June. In 2017, it had taken a loan of $2.4 Billion. The new plan will see the lending gradually decline over a period of five years to the last five year average of $1.8 Billion.
Although the World Bank has said that the lending rates would fluctuate due to the pipeline management and the readiness of China’s megaprojects. It also told that China had already requested the world body to provide continued financing from the World Bank’s International Bank for Reconstruction and Development Division.
Lawmakers in the US had also expressed concerns that the tax paid by the American citizens that would be ultimately loaned to China through the World Bank would create unfair economic conditions and competition within the US.
Although the US holds veto power on major decisions of the world body like capital increases and appointments of leaders the latest decision to aid China financially did not require a vote. The World Bank said that lending to China would help to create reforms in the fiscal policies and a transformation to eco-friendly ways to reduce pollution and also help the startups in China.
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