How the World Bank scandal is linked to Xi Jinping regime’s growing sense of entitlement
As each week brings incremental news of the ongoing unravelling of same facet of China – either its overleveraged economy or its dictatorial politics or its repressed society – the façade that the Communist Party leadership had constructed in the forty years since Deng Xiaoping took charge of China looks ever more tatty. In this piece, Samir Saran & Mihir Sharma tear into how China basically rigged the World Bank’s “Doing Business Report” to position itself favourably in the eyes of global investors. So how did China do this? This is what Reuters has to say:
“The World Bank Group on Thursday said it ended publication of its “Doing Business” report on country investment climates after a probe of data irregularities cited “undue pressure” by top bank officials, including then-Chief Executive Kristalina Georgieva, to boost China’s ranking in 2017.
The World Bank said in a statement said that the decision came after internal audit reports had raised “ethical matters, including the conduct of former Board officials as well as current and/or former Bank staff” and a board investigation conducted by the law firm Wilmer Hale.
The Wilmer Hale report cited “direct and indirect pressure” from senior staff in the office of then-World Bank President Jim Yong Kim to change the report’s methodology to boost China’s score, and said it likely occurred at his direction.
It also said that Georgieva, now the managing director of the International Monetary Fund, and a key adviser pressured staff to “make specific changes to China’s data points” and boost its ranking at a time when the bank was seeking China’s support for a big capital increase.
China’s ranking in the “Doing Business 2018” report published in October 2017, rose seven places to 78th after the data methodology changes were made, compared with the initial draft report.”
Saran & Sharma say that China’s behaviour on this count is not very different from the way it has dealt with other multilateral institutions: “Two other institutional pillars of global governance have already been left powerless and have faced global ridicule as a consequence of Beijing’s actions. The World Trade Organisation (WTO) has lost the trust of the world in the two decades since the PRC’s accession; many of its members, developed and developing alike, feel that the PRC has not conducted the reforms that it had promised in order to join. As a result, it has retained an advantage in global trade that the WTO has been unable to rectify, leading to the institution itself being considered worthless. And then there is the World Health Organisation (WHO), which has been seen during this pandemic as prioritising Beijing’s sensitivities over warning the world about a deadly contagion—or even properly investigating its origins. The tight control of information by the Communist Party of China (CPC) means that questions remain unanswered about the virus’ origin, yet what is certain is that the pandemic’s initial spread is in no small part due to the CPC’s machinations and missteps, and the WHO leadership’s complicity with Beijing.”
Countries like India have historically not had the means to bend global multilateral institutions in the way China has done. However, other nations with greater means – countries like the US, the UK and Japan – were until recently willing to sit back and watch China do its thing (why they were willing to cede space to China is not an easy question to answer). Now that other nations seem to have woken up to the damage China can cause, it will be interesting to see how the next ten years play out for China.