China has too much debt and that needs to change, World Bank President David Malpass said Thursday.
China’s gross external debt surged nearly 41% between 2016 and 2018, according to data from the country’s State Administration of Foreign Exchange. The sharp growth in Chinese debt comes as the country tries to keep its economy growing at a strong pace. However, economic growth in China slowed down to its slowest pace in nearly three decades last year.
The country has also borrowed billions of dollars from the World Bank despite being the second largest economy in the world and surpassing the bank’s income threshold for low-cost loans in 2016.
“China recognizes that its role as a borrower in the bank needs to diminish,” Malpass said. “They want to work on it. They want to see a better relationship with other countries and be part of the world system.”
He also noted that World Bank loans to China have been decreasing, adding he expects this to continue over the next three years.
Malpass was elected to his post last Friday. Before joining the World Bank, Malpass served as under secretary of international affairs at the Treasury Department.