How the US Can Reclaim the World Bank from China By Edmund Fitton-Brown, and Emily Brearley

How the US Can Reclaim the World Bank from China By Edmund Fitton-Brown, and Emily Brearley

China extracts a sweet deal from a global financial institution just a few blocks from the White House.
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.

There was a moderate win for common sense and Western interests recently, when the bank agreed to finally graduate upper-income China from receiving loans meant for poor countries. However, the final push won’t come until 2031, and the bank can still lend China up to $2 billion through that period. A bank that should be an American alternative to Belt and Road effectively subsidizes that program in developing countries and undermines our soft power.

Though mechanisms to fix these international institutions exist—especially given the United States’ financial contributions—political will has been absent or inconsistent. America has not demanded a robust quid pro quo for its slated $3.2 billion contribution to the bank’s International Development Association (IDA) lending window (IDA-21, to be appropriated over three years, 2025–2028). And although Treasury Secretary Scott Bessent has emphasized broad rules of engagement (that the World Bank should prioritize affordable energy investments, regardless of the technology; stop lending to countries that have graduated from developing country status; and reform procurement policies to prioritize transparency and value), without sticks, there will be no progress.

To make the bank a high-quality, transparent alternative to Chinese lending, the United States should take reform seriously and stay focused. First, it must ensure that it has an America First team in place, commensurate with its financial contribution. It must finalize the Senate confirmation of Secretary Bessent as US governor of the World Bank (pending since April 2025); nominate candidates for alternate governor, executive director, and alternate executive director; and ensure competent, supported vice presidents and their staff are in place to take reform seriously.

There is no shortage of blueprints for taking the bank back to its more impactful factory settings, from top American economists on either side of the political aisle, including Jennifer Nordquist and Jessica Einhorn; Paul Romer and Bill Easterly. Europeans would back moves that improve overall effectiveness while cutting 80 years of mission creep and poor loan performance in some sectors.

Implementing existing procurement reforms currently sitting on a shelf and gathering dust could enable a profound pro-West reset of all the MDBs. The United States should also insist on full compliance with its own laws, such as the Taylor Force Act, and use procurement as a strategic tool to ensure preference to home-shoring. Consideration should also be given to procurement that gives equal weight to national security, diversification, and resilience—an economic trend that is now mainstream in the West as the downsides of globalization have become ever more apparent.

The United States and its allies have the combined voting power and aligned economic interests to bring the World Bank back into line with its original purpose—though perhaps with less hubris and more realism. Concessional finance that promotes democratic values and economic development that benefits the poorest is a critical tool of soft power—but only when wielded with continued effort and vigilance.

About the Authors: Edmund Fitton-Brown and Emily Brearley
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. Edmund joined the UK Foreign Service in 1984. He served in Finland, Egypt, Kuwait, Saudi Arabia, Italy, and the United Arab Emirates, finishing this phase of his career as British ambassador to Yemen in 2015-2017. He then joined the United Nations for five years, serving as coordinator of the Security Council team responsible for sanctions and threat assessment on ISIS, al-Qaeda, and the Taliban. Edmund’s work has been published in West Point’s CTC Sentinel, FDD’s Long War Journal, The New York Times, the BBC, The Times, The Telegraph, The Daily Mail, El Mundo, Al-Sharq al-Awsat, and The National.

Dr. Emily Brearley is a development economist and the founder and CEO of solution42, a development consultancy. She came to the United States on a Fulbright scholarship in 2002. She joined the World Bank in 2003, where she spent 20 years as a senior economist designing and implementing projects across key economic sectors in Latin America, Africa, Southeast Asia, and the Balkans. She also advised the Inter-American Development Bank vice president on debt relief and hydrocarbons. Her latest book, Aid Inferno, distills decades of economic literature on why aid has failed, argues that systemic challenges are the cause, and offers a modest proposal for how to fix it. She works with international companies in frontier markets to de-risk and scale up investments to replace aid with trade. Dr. Brearley holds a PhD and MA in economics from Johns Hopkins University.

SOURCE: https://nationalinterest.org/feature/how-the-us-can-reclaim-the-world-bank-from-china