How the US Can Reclaim the World Bank from China

Excerpt

The World Bank Group (WBG) is the mothership of international development. With the motto “Our dream is a world free of poverty” inscribed over its lobby, its ambitions match its power. Founded at the tail end of World War II, the West wanted to promote democracy and free markets as the antidote to economic catastrophe and conflict. It also pursued “enlightened self-interest,” believing a rising tide would lift all boats as new markets developed and international trade expanded. Yet over time, China has entrenched its influence in the bank and uses it to subsidize its Belt and Road Initiative (BRI), lock in Chinese technology and influence, and undermine Western allies. 

While the United Nations’ indulgence of dictatorships and antisemites attracts criticism, the rot at the World Bank is less remarked upon. Yet, compared to the UN’s roughly $4 billion budget, the World Bank Group has a $400 billion balance sheet. It doesn’t just move money; it sets the technical standards, norms, and frameworks that guide other multilateral development banks (MDBs). That gives it influence measured in the trillions of dollars. Although America is the largest shareholder (15 percent), with a de facto policy veto and power to elect the president, we are not using this power wisely or expeditiously.  

According to the Center for Global Development, Chinese firms have been the leading recipients of MDB contracts, winning 20 percent of all contracts and 29 percent of all contract funds between fiscal years 2013 and 2022. In comparison, US firms won 2.4 percent of funds, although they chose to bid on fewer contracts than their Chinese competitors. This dynamic stems from strategic, not financial, prowess. In 2013, China became the World Bank’s third-largest shareholder with 5.03 percent of voting power. Yet this far smaller investment relative to the United States has been leveraged through commercial contracting and leadership stakes; two members of the World Bank’s senior leadership are Chinese nationals.

US firms interviewed by the Government Accountability Office (GAO) in a 2024 survey reported that the bank preferred to evaluate proposals based only on the lowest cost, rather than considering both quality and cost—giving an advantage to Chinese state-owned enterprises that can operate at a loss on the bargain of cheap soft power and path-setting, Trojan horse investment structures. That means the beachhead afforded by concessional finance allows China to lock in its own technology (from Huawei to LOGINK) with path-dependent, lasting consequences. Even more concerning, it uses American tax dollars to subsidize dual-use infrastructure in its own backyard. All the US businesses interviewed raised concerns about procurement transparency and integrity and said their previous experiences deterred them from future bids.

Edmund Fitton-Brown is a senior fellow at the Foundation for the Defense of Democracies (FDD). His work focuses on Arabian Peninsula issues as well as terrorism and its enablers. Dr. Emily Brearley is a development economist and the founder and CEO of solution42, a development consultancy.