China and the World Bank in the Early Reform Period

Abstract

In 1980 the People’s Republic of China (PRC) joined the World Bank after months of negotiations between Beijing and the institution that under the Presidency of Robert McNamara saw the birth of new borrowing policies called “structural adjustments”, loans conditioned to macro-economic reforms that compelled several Third World Countries into the spiral of unsustainable debt burdens during the 1980s. Firstly, this paper argues that China always represented a case on its own for the World Bank. It maintains that not only Beijing never received structural adjustments loans but also, more importantly, was never subjected to the economic thinking behind these new borrowing polices. Instead, balancing both China’s internal economic outlook and the Bank’s peculiar guiding ideas with regards to the PRC, this paper spotlights the causes and the consequences that China’s membership brought to the international economic system from the late 1970s until August 1983, when the World Bank published its first study on the PRC economy. Finally, this paper sheds new light on the convergence of the post-Bretton Woods global economic changes brought about by the World Bank and the onset of China’s economic reforms, two trends that have wrongly been treated separately by scholars of the field. This convergence, this paper argues, is instead necessary to assess the degree to which China began its gradual re-integration inside an international economic system it had denigrated for 30 years.