Asia & the Pacific Policy Studies

The World Bank and China: future prospects

By RALPH W HUENEMANN

The time has come (is arguably long overdue) to develop a new basis for the World Bank’s work in China. For nearly two decades, the Bank and China have been engaged in a mutual game of ‘let’s pretend’, because the annual increments to China’s foreign exchange reserves have been larger than the Bank’s annual loans to China since about 1994. Now China’s national income per capita measured on the purchasing power parity basis is rapidly approaching the high-income level at which China will ‘graduate’ (receive no further World Bank loans). In this context, two alternatives may usefully be discussed. First possibility: shift the qualification for Bank lending from national units to subunits like provinces. Second possibility: continue the Bank’s analytical and advisory activities even after the lending ceases.

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