|Jin Liqun, AIIB|
Three quarters of AIIB’s lending to date has been in partnership with other multilaterals, usually the World Bank and ADB, and it is tempting to wonder if this is a matter of policy or just because AIIB does not yet have the institutional capacity for proper risk assessment.
Jin, who is clearly pleased at having been able to cooperate – “It shows that we measure up to the same standard,” he says – paints it as more an issue of financial, rather than professional, capacity.
“Infrastructure investments by their nature are very, very large,” he says. “It’s not possible for one bank to pour all of the money into one project.”
He cites the example of a pipeline from the Caspian Sea through Azerbaijan into Turkey; the total cost is $8.6 billion; the World Bank put in $800 million, AIIB $600 million and the ADB has a related project worth $1 billion.
The European Bank for Reconstruction and Development and the European Investment Bank are in there too.
“There is a need for cooperation among MDBs to promote infrastructure. That is the reality.” And, he says: “Early in the first stage, when we have limited manpower, this is particularly important for us. In looking forward, I would say there is still vast space for us to have this kind of cooperation. This could be pretty common practice.”
AIIB has said $2 billion to $2.5 billion of lending is likely for the bank’s second year, which still seems small when compared, for example, with the ADB’s $27 billion in 2015. All development institutions start small, Jin says, and he quotes early numbers for the EBRD and ADB to show how they gradually escalated.
“Because we have the privilege of working with them, we can move a little faster,” Jin says. “This year, we will try to do a little bit more, but the number is not that important. I told the staff: Don’t aim at quantity, quality is what matters.
“However, you must still have a certain amount, otherwise there’s no impact,” he says. “We would build all the way up and may cruise up to the level of $10 billion beyond, let’s say, five or six years’ time. But we don’t try to be the biggest. If people say you are not doing a lot, I am not worried about that.”
What Jin does care about is how the AIIB is perceived. If Jin has one message he wants to put across about AIIB, it is about inclusion and that is probably because the AIIB’s formation took place against a backdrop of considerable suspicion.
Launched as a means of channelling badly needed money into Asian infrastructure, the AIIB was seen as an instrument of Chinese policy, in a practical sense as an agent of the One Belt One Road initiative boosting Chinese export markets, and in a philosophical sense demonstrating China’s financial and political importance in world affairs. The US, even under Obama, wanted nothing to do with it and voiced its objections when the UK joined.
“From the very beginning I was aware of the concerns. We said that in the early years China was willing to provide up to 50% of the capital for the bank, but that with new countries joining, Chinese shares will be reduced. The media picked up on the first part of the sentence, they didn’t pick up on the second,” Jin says.
AIIB already has 57 member countries, and another 30 are on track to join. If they do so, then China’s stake in the bank will drop from 26.6% of the voting shares today to around 20% afterwards. As large AIIB decisions require a 75% vote to go ahead, that means China will effectively lose its veto.