As trade negotiations between the U.S. and China continue, Hayman Capital’s Kyle Bass (Trades, Portfolio) said on Wednesday that he supports an effort by a U.S. lawmaker to limit World Bank lending to China.
In an interview with CNBC’s “Squawk Box,” the Dallas-based hedge fund manager, who is known for being an outspoken critic of the Asian powerhouse, explained that a bill being spearheaded by Representative Anthony Gonzales, a Republican from Ohio, would curb World Bank funding to China by graduating the country from its International Bank for Reconstruction and Development program. The program is designed to offer financial aid to “middle-income and creditworthy low-income countries.”
“We’re lending money to the country that’s the second-largest in the world,” Bass said. “That’s putting up quantum-based satellites, that’s the largest consumer of Patek Philippe watches, Rolls-Royce, Chateau Lafite Rothschild. And the U.S. consumer — the U.S. taxpayer — is the guarantor of World Bank loans.”
In addition to lending $3 billion to $4 billion to China per year, Bass said the country “has infiltrated the World Bank” as it has created positions within the organization, including the managing director and the head of human relations. He also noted that the head of ethics is a member of the Chinese Communist Party.
While he is short the yuan, Bass said he has no other positions in any Chinese companies.
Gonzales’ bill is scheduled to be discussed on Thursday morning. In a statement released in November, the congressman criticized the World Bank’s continued financing of China despite it exceeding the economic threshold for the IBRD program.
“The United States cannot afford to give the World Bank a blank check as long as they continue to make cloudy investments and misuse taxpayer dollars by providing loans to countries that do not and should not qualify for them,” Gonzales said. “I cannot stand by and allow my constituents’ taxpayer money to go to China while they continue to abuse this nation and suppress democracy as we have seen in Hong Kong.”
On Tuesday, the Dow Jones Industrial Average dropped as much as 450 points after President Donald Trump suggested he would be willing to wait to strike a deal with Beijing after the 2020 election, causing investors to worry that the multiyear spat could be drawn out even longer.
On Wednesday morning, U.S. market indexes recovered a bit after a report said the two nations are nearing an agreement on the amount of tariffs that will be rolled back in order to help ease pressure on trade heading into the holiday season.
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