Jin Liqun (third left), President of the Asian Infrastructure Investment Bank (AIIB), attends a panel discussion at the Harvard College China Forum in Boston, the U.S., on April 13 (COURTESY PHOTO)
"In this digital era, I'm very much puzzled by the lack of communication among humans," Jin Liqun, President of the Asian Infrastructure Investment Bank (AIIB), said when he was asked what the AIIB is, the first question at a panel discussion during the Harvard College China Forum in Boston on April 13.
Jin said he was puzzled because since he was appointed inaugural president and chairman of the Beijing-based multilateral development bank in January 2016, he has spent a lot of time explaining what it is.
In three years, the bank's members have increased from 57 to 93, the second largest global membership after the World Bank. The members have expanded from Asia to the rest of the world. The AIIB has provided financial support worth $7.5 billion for infrastructure projects in 13 countries and earned a triple A credit rating from major rating agencies.
A smart angle
The other major question Jin was asked was why China set up the AIIB since the World Bank and the Asian Development Bank are already there.
His answer was that the AIIB was established to promote infrastructure development. "China, from its own development experience, understands how important it is to improve infrastructure," he said. "Infrastructure bottlenecks are the serious problems of development."
According to a report by the National Bureau of Statistics last year, China's infrastructure achieved leapfrog development from 1978 to 2018, with new roads growing 4.4 percent annually and high-speed railways developing fast to account for more than 60 percent of the world's total today.
The high-speed rail has spurred the economic development of the regions along the way, like the Beijing-Tianjin-Hebei region and the Yangtze River Delta economic circle that encompasses Shanghai and three provinces, Jiangsu, Anhui and Zhejiang.
The AIIB's birth can be traced back to 2013, when Chinese President Xi Jinping announced during his Southeast Asia visit the decision to launch a multilateral development bank to advance infrastructure investment. The bank aims to provide financing to developing countries whose growth has been seriously limited by bottlenecks in infrastructure investment.
"I think the AIIB has chosen a very smart angle, which is infrastructure, because China is truly a global expert on that," Liu Qian, Managing Director of The Economist Group in Greater China, said during the panel discussion.
Representatives attend the signing ceremony for an air quality improvement project financed by the AIIB in Beijing in March 2018 (XINHUA)
Another new feature of the AIIB is that its board is structured in such a way that members have more opportunity to participate directly in the work of the board. The number of board positions has been increased to broaden the voice of smaller members in AIIB governance.
China, as one of the players, also follows the rules strictly because that's the only way to make China credible, Jin stressed.
Louis Kuijs, head of Asia economics at Oxford Economics, an economic advisory organization, supported him, saying loans have to go through strict procedures to be approved. "I would say in terms of standards, these are international," he said.
Kuijs also pointed out a common factor between the AIIB and the World Bank: "China, by now, has become quite a large contributor to the World Bank, which is a remarkable shift," he said. "China is run by a very pragmatic government and there is a lot of learning going on. It is in China's interest for this arrangement to work."
Jin explained that though the AIIB and the Belt and Road Initiative were both proposed by Xi in 2013, the functions of the two are very different. "The Belt and Road Initiative, in my understanding, is a platform for all participating countries to work together, including on connectivity. Connectivity is important for economic development and regional development, and of course for world peace and prosperity," he said.
The initiative, consisting of the Silk Road Economic Belt and the 21st-Century Maritime Silk Road, is building policy, infrastructure, trade, financial and people-to-people links along and beyond the ancient Silk Road routes. So far, more than 150 countries and organizations have signed cooperation agreements with China to develop the initiative.
Asked whether the AIIB would support projects in Belt and Road countries, Jin said, "We can support those projects as long as they meet our three criteria—financial sustainability, environmental improvement and social acceptance." He also said there is already a relationship between the two because both have "the purpose of improving connectivity."
Panelists discussed the so-called "China threat" perceived by some nations due to China's rapid development.
"I don't think the United States and China would fall into this trap," Jin said, referring to the phrase coined by former U.S. Assistant Secretary of Defense Graham Allison, indicating an established power's fear of a rising power, which could lead to war. "The Peloponnesian War told us nobody got anything good out of it," he added, referring to the protracted ancient war fought by Sparta and Athens. "I hope people can learn from history."
The Harvard College China Forum developed from an academic journal in 1997. Today it has grown into a leading student-run China-focused conference in North America, providing a platform for professionals from different industries to address China-related issues. The annual forum was held in Boston from April 12 to 14.
(Reporting from Boston, Massachusetts)