China's GDP per person is lower than that of Poland, Turkey, Malaysia and 15 other potential borrowers from the World Bank
islands of St. Kitts and Nevis are known for luxury tourism , pricey citizenship , and a sprint world champion . But despite the country’s many assets it is eligible for loans from the World Bank, an institution dedicated to eradicating extreme poverty.
America had objected to the new framework, Mr Mnuchin said. But it cannot have surprised him. In a deal struck last year, America agreed to an increase in the bank’s capital, in return for which the bank agreed to charge its richer borrowers higher interest rates, lend to them more sparingly and encourage more of them to “graduate” .
The bank will, however, lend to China more selectively. The country now owes it about $14.7bn. Over the next five years, it envisages lending $1bn-1.5bn a year, 15-40% less than it averaged in 2015-19. The new money aims to encourage fiscal reforms, private enterprise, social spending and environmental improvements. If the bank can help nudge China towards cleaner growth that will benefit everyone, including China’s geopolitical rivals.
In theory, its donor governments could do all this more cheaply and simply themselves. They could issue an equivalent amount of low-yielding sovereign bonds, buy higher-yielding emerging-market securities and donate any profits to low-income countries. But that is not what critics of China’s lending are proposing.
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