World Bank backtracks on China criticism

BEIJING: The World Bank today refuted claims that it withdrew a report critical of China's financial sector under pressure from the Chinese government and said the economic fundamentals of the country are sound despite the recent equity market volatility.

Addressing a press conference here, World Bank President Jim Yong Kim also played down any rivalry between the World Bank and China-led Asian Infrastructure Investment Bank in which India and 56 other countries have joined despite criticism from the US and Japan.

Denying that a section of the Bank's China Economic Update report calling on Beijing to accelerate reforms of the state controlled financial sector was withdrawn under pressure from Chinese government, Kim said that the section was "simply an error".

"It did not go through the regular clearance mechanisms within the World Bank Group and when we found that it had been put up without going through the regular processes we took it down," he said, winding up his three-day to China.

"There was no pressure or communication with the Chinese government at all," Kim, who met Chinese premier Li Keqiang yesterday, said.

"We think that the commitment to reforms and the fundamentals of this economy are very promising and that we will continue to work closely," he said.

The Financial Times earlier reported that on July 3, the World Bank redacted a section of its latest update on China's economy.

Kim said China's economic fundamentals are sound despite the recent equity market volatility leading to loss of USD 3.2 trillion capital.

"It's important to remember that this is a relatively young stock exchange. In situations all over the world, governments have taken different measures to reduce volatility in their stock markets," he said.

Referring to his meeting with Jin Liquin, Chinese nominee to be the President of the AIIB, he said the World Bank welcomes the AIIB's establishment given the overwhelming need for global infrastructure investment.

He also spoke of prospects of the two banks co-investing in projects.

He said officials of the two Banks will hold a meeting later this year in Washington to discuss specific projects in which both will co-investors.

On Chinese economy he said, "China has built the world's second largest economy and it has undertaken significant reforms aimed at providing all of its citizens with an opportunity to enjoy greater prosperity," he said.

China has strong resolve in continuing to adopt fiscal and financial reforms to transform its growth model, he said.