MIM Notes 191 August 1 1999

U.$.-China contention crystallizing

For the first time in World Bank history, the United 
$tates objected to a proposed loan and lost. On June 24, 
the World Bank approved a $160 million loan to China 
despite the opposition of both the United $tates and 
Germany.

"Urged on by Congressional Democrats and Tibetan 
advocacy groups," the United $tates "threw its full 18 
percent of the vote against the project." The project 
places 58,000 farmers on Tibetan land.(1)

The World Bank is an international institution that 
makes loans for economic development. It is supposed to 
make the large loans that no private banks will make for 
infrastructure development, especially to the poorest 
countries. In reality, it is yet another outlet for 
capital with no place to go. It relieves the private 
banks with capital sitting around of having to find yet 
more loans to make. 

The United $tates has 18% of the votes, because the 
United $tates is supposedly the largest contributor of 
loan capital to the World Bank. Each country gets a 
different share of the vote. China managed to obtain 19 
out of 24 votes, but we do not know which ones.

World Bank President James Wolfensohn defended the 
project starkly: "'These are some of the best projects 
in the Bank. I've seen barren areas transformed to look 
like they are as lush as Switzerland.'"(2)

At the same time, Wolfensohn said no money would be 
disbursed for the controversial part of the project 
until after a three-member panel has reviewed it. That 
is a political compromise that the bank called 
"unusual."

The project is of note because it pits poor farmers 
needing land against the Dalai Lama and his various 
admirers in the West. Tibet is sparsely populated. 

The conflict over the loan is proof of the inherent 
instability of capitalism. Even MIM did not expect the 
severity of the current U.$-China conflict and that is 
testimony to the dialectical nature of reality.

China has officially rejected U.S. diplomats' 
explanation of the bombing of the Chinese Embassy in 
Yugoslavia. The diplomats had blamed poor maps and 
defective internal government communication. China 
maintains it was an act of war. 

The Chinese government has also frozen talks on joining 
the World Trade Organization (WTO).(3) The United States 
Government had been holding out the WTO to China as a 
carrot and stick. Being a full member carries benefits 
regarding trade tariffs and the like. Uncle Sam had 
sought to wring concessions out of China on politics and 
how trade is conducted to allow China into the WTO, 
which is the highest body concerning world trade. 

Ordinarily the leaders of China would be very interested 
in joining the imperialist world order. Now there is 
starting to be some stress amongst members of the 
Chinese ruling class--those willing to have China take a 
more independent route and those seeking to be part of 
increasing "globalization."

Notes: 

1. Financial Times 25June99, p. 1. 

2. WBLN0018.WORLDBANK.ORG/NEWS/DEVNEWS.NSF 

3. Financial Times 25June99, p. 4.