A Closer Look at the World Bank’s Sizable China Portfolio

Scott Morris is a senior fellow and director of the US Development Policy Initiative at the Center for Global Development  
Gailyn Portelance is an MA candidate at Stanford University.

By Scott Morris and Gailyn Portelance
WASHINGTON DC, Jan 10 2019 (IPS)

China continues to borrow an average of $2 billion a year from the World Bank, making it one of the Bank’s top borrowers—despite being the world’s second-largest economy and itself a major global lender, according to our study released today. By doing a project-level analysis of recent World Bank loans to China, we found that the World Bank’s International Bank for Reconstruction and Development (IBRD)—which offers loans to middle-income and credit-worthy lower-income countries—has loaned more than $7.8 billion to China since the country surpassed the bank’s “graduation” income threshold for lending in 2016. The World Bank’s current threshold to trigger IBRD country graduation discussions is $6,895 in gross national income (GNI) per capita.

Lending to countries above this threshold has been controversial, with the United States particularly critical of ongoing lending to China. Critics have pushed for strict graduation standards that would make wealthier borrowers ineligible for bank loans (i.e., “graduation”). Under the 2018 agreement, World Bank shareholders agreed to limit loans to countries above the threshold to only projects that focus on:

• global public goods (projects that benefit the world at large); and,
• capacity-building (projects that help the countries “graduate” away from World Bank lending).

As shown in the figure above, less than half of China’s lending has gone to either of the approved categories, by strict definitions of these categories, since China crossed the income threshold in 2016. Capacity-building projects contribute to only 5 percent of its portfolio, and global public goods make up 38 percent of China’s borrowing portfolio.

However, a broader conception of capacity-building, which focuses on the allocation of resources to the poorest provinces within China improves that picture. Fifty-eight percent of lending to China has been directed to provinces with per capita incomes below the graduation income threshold.

And with a third of the portfolio supporting the reduction of carbon emissions in the country, the bank is meeting a clear global public good mandate. As the world’s largest polluter, China will need to make sizeable investments in climate-friendly finance if we are to make meaningful progress on this critical agenda.

The world has a lot to gain from a sustainable and productive China-World Bank relationship. To lower political heat from the United States and other critics, the Bank should request more from China in terms of interest charges on loans and ensure that all project lending adheres to the 2018 standards.

Walking Miles In Their Shoes

A Rohingya couple, Mohammad Faisal and his wife Hajera, pose for a photo with their child at their camp at Teknaf Nature’s Park, Bangladesh. Some refugees had to walk 60 miles on foot to reach the safety of Bangladesh Credit: Farid Ahmed/IPS

By Tharanga Yakupitiyage
UNITED NATIONS, Jan 10 2019 (IPS)

In light of the millions of refugees escaping persecution in search of a safer, more prosperous future, a new campaign aims to raise awareness of the difficult journeys such populations take around the world.

Launched by the United Nations Refugee Agency (UNHCR), the 1 Billion Miles to Safety raises awareness of the long, precarious journeys that many refugees take and calls on the public to amp up support.

“Every day, we are inspired by the acts of kindness from people who are doing their very best to improve life for refugees: the activists, the communities hosting refugees, businesses, donors, volunteers,’” said UNHCR Deputy High Commissioner Kelly T. Clements.

“This campaign will encourage people to support refugees through something they are already doing – walking, cycling, running,” she added.

According to UNHCR, people who are forced to flee travel approximately 1 billion miles every year to reach the first point of safety.

In 2016, South Sudanese refugees travelled over 400 miles to reach Kenya while Rohingya refugees in Myanmar travelled up to 50 miles in search of safety in Bangladesh.

Later aided by the U.N. agency, Alin Nisa and her family were forced to flee from Myanmar to Bangladesh after an armed group attacked the village and abducted community members.

Crossing mountains and rivers, Nisa carried her two young children while her husband carried his mother who could not walk.

They travelled 60 miles on foot, finally reaching the Kutupalong refugee settlement in Bangladesh.

Similarly, Zeenab and her family fled Syria after their home was destroyed and travelled over 90 miles to Jordan’s za’atari refugee camp.

“We’re grateful. Winter here is difficult, but it’s still better than Syria,” she told UNHCR.

And how better to understand refugees’ plight than actually walking in their shoes and covering the same distance?

Clements highlighted the importance of remembering refugees’ very real and dangerous journeys, especially as misconceptions continue to be spread about them.

Secretary-General Antonio Guterres echoed similar sentiments upon the adoption of the Global Compact for Migration (GCM) in December, stating: “There are many falsehoods about the world’s migrants. But we must not succumb to fear or false narratives. We must move from myth to reality.”

Such narratives have been most apparent in the United States which has seemingly shut the door on refugees.

The Trump administration first implemented a 120-day refugee ban, followed by a ban on refugees from “high-risk” countries including South Sudan and Syria.

In January 2017, the U.S. government cut the refugee quota by more than half, which led to only 22,000 refugees being resettled in the country in 2018, the lowest rate since 1980.

Most recently, the administration has deployed troops at the U.S.’ southern border in an effort to prevent refugees and migrants who have travelled across Central America from entering the country or seeking asylum.

Anti-refugee rhetoric has also been on the rise in Europe, including Belgium which has seen violent riots against the country’s participation in the GCM.

People across 27 countries will take part in the 1 Billion Miles to Safety campaign, and UNHCR hopes to raise over 15 million dollars to support refugees with registration, food, water, shelter, and healthcare.

UNHCR’s funding requirements for 2019 amount to a record 8.5 billion dollars and has thus far received 926 million dollars in pledges.

Though the GCM is a stepping stone towards awareness and action, there is still much left to do.

U.N. Special Representative for International Migration Louise Arbour expressed such views in her closing remarks at the GCM conference, stating: “To the millions who have left their homeland, either recently or a long time ago, most of them in full compliance with the law, we have much more to offer: whether an opportunity to return home, after years abroad, taking back with them their skills and the fruits of their labour, or whether an increased chance to see their children having a better future in a country that they will be proud to call their home.”

Globally, over 68 million have been forcibly displaced. Of this, 25 million are refugees, a figure that has increased by almost 3 million within just one year.