China has become the world’s largest development bank.
According to new research at Boston University’s Global Development Policy Center, the China Development Bank and the Export-Import Bank of China now provide as much financing to developing countries as the World Bank does.
Those are just the figures for China’s two national level development banks and does not include Chinese bilateral and multilateral development finance arrangements. China has negotiated close to $170 billion in bilateral and regional development funds across the world — such as the China-Africa Development Fund, which just received a Chinese pledge of another $60 billion. China also helped create the New Development Bank with Brazil, India, Russia and South Africa, and the Asian Infrastructure Investment Bank with nearly 80 countries in Asia and beyond.
China’s far-reaching financing carries considerable risks — for China and the borrowers alike. Rather than welcoming China and helping it learn the hard lessons learned by others, the United States is mistakenly shunning Chinese development finance around the globe.
Given the world economy’s need for development finance, China’s arrival on the scene couldn’t be more welcome. According to the McKinsey Global Institute and the World Bank, unmet global infrastructure needs until 2030 top more than $3 trillion annually if they are to be conducted in a manner that is low carbon and socially inclusive.
Western-led development finance from the World Bank and its counterparts has been largely stagnant for decades. The private sector has been even worse. The Global Infrastructure Facility, an initiative for public-private partnerships supported by the Group of 20 leading rich and developing nations and the World Bank, has attracted a mere $84 billion and committed just $37 million.
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