05:57 GMT29 January 2020
Listen Live
    Opinion
    Get short URL
    2210
    Subscribe

    US President Donald Trump criticized the World Bank’s decision to lend more money to China and said it needs to stop giving it loans after the international financial institution approved a new plan to aid China with $1 billion to $1.5 billion in low-interest loans annually through June 2025.

    Trump took to Twitter to voice his frustration: "Why is the World Bank loaning money to China? Can this be possible? China has plenty of money, and if they don't, they create it. STOP!" the US leader tweeted on Friday following the World Bank's move.

    ​The US has argued that China has enough money and is capable of lending cash to other countries as it does under its "Belt and Road Initiative".
    But according to the plan, the lending is set to gradually decline. The World Bank has lent China an average of $1.8 billion per fiscal year in the last five years.

    Kevin Dowd, a professor of finance and economics at the University of Durham, has rebuked the Trump administration's policies with regard to the financial institution.

    "The World Bank lends to China to help the country advance desirable reforms, such as fiscal and monetary reforms, reforms to promote the private sector or promote health or social services. One should keep in mind that World Bank lending to China is low in absolute terms, and falling too, and is in keeping with the World Bank's policy that loans should be phased out as countries get richer. There is absolutely no justification for the US to be kicking up this kind of fuss", the scholar stressed.
    Chinese 100 yuan notes
    © AFP 2019 / FRED DUFOUR
    Chinese 100 yuan notes

    While the economist believes that the World Bank has by now "outlived any usefulness" he called the US pressure campaign "inappropriate".

    "The US is already the World Bank's biggest shareholder, and so already has the most influence on its policies. But this apparently is not enough for the Trump Administration, which wants to tell the World Bank that it should stop lending to China altogether", Dowd explained.

    As to why in his views the World Bank opposes Trump's policy on lending to China, given the fact that the US has the largest quota in its share capital, the professor noted: "Like the World Bank or not – and I do not – it should be left to go about its business without this kind of political meddling from the US".

    Dowd also pointed out that while it is possible that the US can somehow influence the World Bank's decisions due to its share ownership, it has no right to make these sort of demands:

    "If the US doesn't like those rules, then it should seek to use its shareholding to influence them, not drive a spoke through them by demands such as these", the academic concluded.

    The views and opinions expressed in the article do not necessarily reflect those of Sputnik.

    Tags:
    US-China relations, loan, World Bank, China, United States
    Community standardsDiscussion
    Comment via FacebookComment via Sputnik