The World Bank is set to change its lending model so that China will receive fewer loans as part of a deal with the Trump administration to secure Washington’s backing for a $13bn capital increase at the bank.
The compromise was reached between Jim Yong Kim, the bank’s president, and Steven Mnuchin, US Treasury secretary, in recent days. It is expected to dominate talks behind the scenes at this week’s spring meetings in Washington.
The bank has committed to lending to poorer economies in exchange for US backing for a plan by which shareholders would inject $7.5bn into the International Bank for Reconstruction and Development, the World Bank’s main unit, and a further $5.5bn into the International Finance Corporation, its private sector arm. Countries such as China would enter a new lending band charging higher rates for loans.