US Treasury Secretary Steven Mnuchin confirmed late Thursday that Trump's administration rejects the new low-interest loan program for China by the World Bank, which earned more than $1 billion a year from the lender.
The World Bank is expected to release its new cooperation program report for China, which details its borrowing intentions to the second-largest economy in the world.
Mnuchin, under pressure from lawmakers, told the House Financial Services Committee on Thursday that China should be excluded from World Bank loan program.
Key reductions
"The World Bank's Treasury Department has initiated major cuts in China's borrowing," Mnuchin said. In fiscal 2019, World Bank loans to China fell from $2.4 billion in 2017 to $1.3 billion.
Several lawmakers expressed concern over what they identified as unannounced World Bank plans to keep lending to China amid rapid growth in per capita income in the country. Mnuchin pointed out that the Treasury Department filed an objection to the latest plans.
Chuck Grassley, Chairman of the Senate Finance, an Iowa Independent, said Thursday that Congress would interfere in the activities of the World Bank.
"China is now the second-largest economy in the world and its per capita income is well above the rate at which countries are supposed to 'graduate' from the need for assistance from the World Bank," Grassley said in a prepared statement before Senate members.
The U.S. is the biggest contributing member to the World Bank and the spending bill sponsored by the bank includes a provision for its large capital infusion. "This is a chance for Congress to step in and we should consider it," Grassley said.
Proposed takeover
Mnuchin urged US President Donald Trump to propose earlier this year to former Treasury official and Trump campaign strategist David Malpass to take over the World Bank.
As Mnuchin's undersecretary for international affairs at the Treasury, one of his "key goals" was to collaborate with the World Bank to make an exclusion for China from the loan program, he said.
Mnuchin acknowledged that the Chinese government no longer qualifies and should be excluded from such loan program. The U.S. is the world bank's largest contributor, offering low-interest loans for low-income countries.
The World Bank's lending facility is in conjunction with financial amounts signed by Congress and the Treasury Department, sources with knowledge of the matter disclosed. This financing initiative, sources added, decreases funding to China while pushing for market-oriented reforms in the nation.
