An analysis of internationally bid World Bank contracts awarded since 2000 shows that when the bank issues loans for projects in China, almost all of the contract work goes to Chinese firms. The pattern is similar in many other countries that borrow from the World Bank, with locally registered companies winning a large share of bank contract dollars.
But Chinese firms also do well outside their borders. According to bank data, Chinese registered companies have won more than 20 percent of the bank’s internationally bid business — more than double that of any other country.
The bank’s 30-year engagement with China began soon after the United States restored diplomatic ties with the communist nation in 1979. It is often trumpeted by bank officials as one of their more important success stories. China’s rapid development has been central to the drop in extreme poverty around the world. Bank officials, including Kim, say that they are uniquely positioned to help China with ongoing problems such as pollution and climate change — and that China’s success on those fronts is important to the world.
But as China has become more powerful and sophisticated, the bank’s role there has occupied an increasingly gray area.
Is the World Bank there because China needs help? Or because loans to China provide a hefty profit that pays the bank’s salaries and administrative costs? Does helping China reduce its carbon use justify bank support for programs that may have damaged industries in other countries? Are Chinese contractors simply more willing than most to work in difficult parts of the world for a cheaper price?
China is the bank’s third-
largest borrower, with nearly $56 billion in loans since 1980, and 107 programs underway. In the early years, that included support from the International Development Association (IDA), the branch of the bank that provides low-interest loans or grants to the poorest countries, and whose lending is subsidized by contributions from wealthier nations, including the United States.
That cut-rate lending stopped more than a decade ago when China passed the income threshold set by the bank for IDA borrowers. But some in the United States argue that China — a nuclear power with a space program and $3 trillion in cash reserves — should not get any help from an organization whose money and energy could be better directed at countries with less ability to help themselves.
In the drive to encourage growth, the bank “doesn’t care if you do that in a zero-sum or negative way . . . by dumping products around the world,” said Robert Atkinson, president of the Information Technology and Innovation Foundation. Atkinson has been particularly critical of World Bank loans to China’s Export-Import Bank, which financed energy-efficiency improvements so Chinese companies could be more competitive exporters.
The dynamic between China, the United States and the World Bank is complex. The United States is the largest capital contributor to the institution, has the largest voting share on the bank’s board and has traditionally appointed the bank’s president. Along with being a major borrower, China over time has occupied a large share of the bank’s intellectual attention as it grapples with issues such as climate change and how to build more efficient cities.