Overview

Since initiating market reforms in 1978, China has shifted from a centrally planned to a market based economy and experienced rapid economic and social development. GDP growth averaging about 10 percent a year has lifted more than 500 million people out of poverty. All Millennium Development Goals have been reached or are within reach.

With a population of 1.3 billion, China recently became the second largest economy and is increasingly playing an important and influential role in the global economy.

Yet China remains a developing country (its per capita income is still a fraction of that in advanced countries) and its market reforms are incomplete. Official data shows that about 98.99 million people still lived below the national poverty line of RMB 2,300 per year at the end of 2012. With the second largest number of poor in the world after India, poverty reduction remains a fundamental challenge.  

Rapid economic ascendance has brought on many challenges as well, including high inequality; rapid urbanization; challenges to environmental sustainability; and external imbalances. China also faces demographic pressures related to an aging population and the internal migration of labor.

Significant policy adjustments are required in order for China’s growth to be sustainable.  Experience shows that transitioning from middle-income to high-income status can be more difficult than moving up from low to middle income.

China’s 12th Five-Year Plan (2011-2015) forcefully addresses these issues. It highlights the development of services and measures to address environmental and social imbalances, setting targets to reduce pollution, to increase energy efficiency, to improve access to education and healthcare, and to expand social protection. Its annual growth target of 7 percent signals the intention to focus on quality of life, rather than pace of growth. 

 

Last Updated: Mar 25, 2015

Building on a cooperative relationship spanning over 30 years, the World Bank Group’s Country Partnership Strategy (CPS) for fiscal years 2013 through 2016 is aligned with China’s 12th Five-Year Plan. It is also informed by the joint study, China 2030, prepared by the World Bank and the Development Research Center of the State Council. To support China’s goal of a harmonious society, the Bank Group focuses on three main areas of engagement:

  • Supporting greener growth, by helping China shift to a more sustainable energy path; enhancing urban environmental services; promoting low-carbon urban transport; promoting sustainable agriculture practices; piloting sustainable natural resource management approaches; demonstrating pollution management; and strengthening mechanisms for managing climate change.
  • Promoting more inclusive development, by increasing access to quality health services and social protection; strengthening skills development programs, including for migrant workers; enhancing opportunities in rural areas and small towns; and improving transport connectivity for more balanced regional development.
  • Advancing mutually beneficial relations with the world, by supporting China’s South-South cooperation and China’s role as a global stakeholder.

In addition, the Bank will provide client-driven knowledge services that help underpin reforms needed to reenergize the drivers of growth.

The Bank Group’s most valuable contribution in China remains its role in bringing and applying ideas, innovation, and knowledge. The CPS emphasizes knowledge sharing and cooperation through advice and analytical products and through investments at the provincial level that introduce and demonstrate new approaches.

As of June 30, 2014, Bank cumulative lending (IBRD and IDA) to China was about $54 billion for 376 projects. The portfolio is concentrated in environment, transportation, urban development, rural development, energy, water resources management, and human development. 

In line with the government’s increased emphasis on growth that is balanced with social and environmental concerns, the focus of the Bank’s activities in China has shifted significantly.

Today, more than 70% of the Bank’s portfolio has environmental objectives, many with global implications. The Bank also pays particular attention to the western and central provinces, where poverty rates are significantly higher than in coastal provinces.  About two-thirds of active projects are in lagging interior provinces.

New approaches are also being introduced to finance investments to improve energy efficiency, pilot and expand the use of innovative renewable energy sources, and rehabilitate and modernize urban district heating systems. Urban environmental management is being strengthened to help cities meet challenges such as rapid motorization.

As China develops, collaborative research and analysis are becoming an important part of the Bank’s engagement. For example,  China 2030: Building a Modern, Harmonious, and Creative Society, a joint research report by the World Bank and the Development Research Center of China’s State Council, lays out six strategic directions for China’s future: completing the transition to a market economy; accelerating the pace of open innovation; going “green” to transform environmental stresses into green growth as a driver for development; expanding opportunities and services such as health, education and access to jobs for all people; modernizing and strengthening its domestic fiscal system; and seeking mutually beneficial relations with the world by connecting China’s structural reforms to the changing international economy.

Urban China: Toward Efficient, Inclusive, and Sustainable Urbanization, also a joint research report by the World Bank and the Development Research Center of China’s State Council, recommends that China curb rapid urban sprawl by reforming land requisition, give migrants urban residency and equal access to basic public services, and reform local finances by finding stable revenues and by allowing local governments to borrow directly within strict central rules.

To meet growing demand from other developing countries to learn from China, the Bank also plays the role of knowledge broker to support China in sharing its development experience.

International Finance Corporation (IFC)

China is IFC’s fifth largest portfolio country. Since its first investment in 1985, the IFC has invested about $9 billion (combined IFC's own account and mobilization) in around 300 projects in China. In fiscal year 2014, IFC invested more than $1.6 billion in 28 projects.

IFC’s strategic priorities in China focus on climate change, including renewable energy, energy efficiency, water efficiency, clean tech, green policy and green credit; balanced rural and urban development, including a focus on frontier regions, food safety, scaling up microfinance outreach and capacity, and agricultural linkages; and China’s outbound investment, including partnerships with Chinese firms to invest in other emerging economies, particularly in Africa, mobilizing capital, syndication loans, and sharing knowledge and standards.

Last Updated: Mar 25, 2015

China’s dramatic progress in reducing poverty over the past three decades is well known. More than 500 million people were lifted out of poverty as China’s poverty rate fell from 84 percent in 1981 to 13 percent in 2008, as measured by the percentage of people living on the equivalent of US$1.25 of less per day in 2005 purchasing price parity terms.

Substantial progress was made in human development indicators as well, contributing to global efforts to achieve the Millennium Development Goals.

China began its partnership with the Bank in 1980, just as it embarked on its reforms. Starting as a recipient of support from the International Development Association (IDA), the Bank’s fund for the poorest, China graduated from IDA in 1999 and became a contributor in 2007. It became the third largest shareholder in the World Bank upon completion of the capital increase approved in 2010, the 30th anniversary year of its partnership. 

Throughout this time, the nature of the Bank’s activities in China changed to meet the country’s rapidly evolving needs. Initially, the Bank provided technical assistance to introduce basic economic reforms, modern project management methodologies, and new technologies. Later, the focus shifted to institutional strengthening and knowledge transfer. The Bank now encourages knowledge sharing to enable the rest of the world to learn from China’s experience.

Here are some recent results of the World Bank-supported Projects in China:

More results

Last Updated: Mar 24, 2015


LENDING

China: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments