Jin Liqun is on a mission – to establish the Asian Infrastructure and Investment Bank, or the AIIB, as the world’s leading investment bank.
With 57 founding countries in all continents on board and 20 more soon to join, they’re hoping to gear up infrastructure throughout the world – especially in Asia.
Our reporter in Sweden, Ric Wasserman spoke with AIIB bank president Jin Liqun in an exclusive radio interview for Asia Calling:
“It’s certainly very much different from a commercial bank and to a certain extent it’s also different from the existing NDBs [New Development Banks] because we focus exclusively on infrastructure.”
That’s Jin Liqun, the former Chinese vice-minister of finance, now head of the AIIB.
The newly formed AIIB – with Chinese state backing – aims to create a massive influx of funds for infrastructure projects.
For big projects like setting up communications links in Indonesia, a nation made up of thousands of islands, and home to more than 240 million people.
“It’s [an] archipelago,” he says, “What about the connectivity? Sometimes it would not be a very good idea to build bridges across all of these islands. In terms of telecommunication I would say a marine cable linking all of these islands would be very important for the people’s connectivity, for telecommunication. But who’s going to do it?”
Infrastructure is sorely lacking across Asia and the AIIB says it could vastly improve that.
In the case of Indonesia, it’s a question of cooperative, multilateral financing.
“Google or Facebook, and other ITs would be very keen. But if you tell them to do it they won’t do this kind of thing,” says Jin, “That is why different institutions can do different things.”
The US refuses to join the AIIB – more a question of retaining economic hegemony and power.
As the Nobel laureate in economics Joseph Stieglitz has said: The problem is a financial system that has excelled at enabling market manipulation, speculation, and insider trading, but has failed at its core task: intermediating savings and investment on a global scale.
The AIIB welcomes cooperation with what could be termed their competition – The Asian Development Bank and the World Bank.
In contrast to the Word Bank, which funds projects aimed toward poverty reduction, the AIIB will stick to its mandate – to support infrastructure development only.
And Lijun says that we should be aware of the role smaller counties, especially in Asia, will play in future.
“Twenty or 30 years from now the existing developing countries economic weight will be bigger than that of developed counties,” he points out, “Is this alarming? I don’t think so. But we have to be prepared for the changes in relative strength between countries.”
Here he seems to be alluding to China – without naming it.
China’s well known “one belt – one road” policy – connecting China to its neighbours by land and maritime improvements, has attracted criticism.
“Some people suspect that China intends to dominate the development – economic and financial affairs in this area, which is certainly not true,” he says.
But the infrastructure building, while helping regional markets to expand, will clearly provide a mode for increased sale and distribution of cheap Chinese goods.
But nothing will be pushed on China’s neighbours, says Liqun.
“No projects in the “One belt – one road” could be a success without being fully embraced by the particular countries in the area,” he adds.
It's an ambitious plan the AIIB has set out to achieve. If they can convince the US they don’t pose a threat to western financial institutions, but are an equal development partner.
China has a 25% stake in the bank, followed by the UK and Brazil. Indonesia is the fourth largest shareholder and has pledged 3.3 billion US dollars.
Here’s Liqun again.
“Those countries provide financial resources and like Nordic countries they are very generous in providing official development assistance,” he explains, “In return, the development in the countries they support would benefit the European and other developing countries – so this is a win-win.”
Hopefully, the US will come to accept that it no longer can take for granted its hegemony over decision-making power concerning multi-billion dollar financing in low and middle income countries.