The World Bank has officially confirmed that it will end its financing of China by 2031 as initially reported by Agence France-Presse (AFP). The change is outlined in the organization’s new Country Partnership Framework (CPF), a five-year plan that is agreed upon by the organization and the second-largest economy.

The structure of the funds from this bank will be phased out and be limited to a maximum of $2 billion. The organization is expecting no more IBRD borrowing from the Beijing during CPF period.

This change of direction is a significant milestone in a partnership of 45 years and reflects a move away from giving financial aid to providing technical support and co-creating global solutions. The partnership is growing more focused on innovation and knowledge sharing, says Anna Bjerde, the organization’s managing director of operations. The partnership will work to come up with ideas that will benefit both Asia’s biggest power and other emerging markets around the world as both countries face the problems of an aging population and a changing economy.

Evolving Financial Dynamics and Diplomatic Relations

Multilateral borrowing has naturally declined as China has made huge strides in a relatively quick economic growth and poverty reduction. World Bank loans to China rose to a high of $2.42 billion in 2017 but will decline to $750 million by 2025.

However, China is very active in international finance, even if its role is diminished. The country has just donated $1.5 billion in the latest round of replenishment to the International Development Association (IDA), the specialized fund for the world’s least developed countries, and is the fifth largest donor to the IDA.

Whether it’s in the process of borrowing or lending, China’s Deputy Minister at the Ministry of Finance, Liao Min, reiterated Beijing would further deepen its involvement in the institution. The new agreement will finally be about achieving sustainable economic development, creating decent work, and moving towards a low-carbon economy.

The lending phase-out also matches worldwide geopolitical dynamics. When U.S. President Donald Trump took office, he had an aggressive position on Washington’s main economic competitor, wanting to end all these World Bank loans. Trump hasn’t been as hard on China during his second term, but hasn’t reaffirmed the specific request to stop the lending program.