Jin Liqun: China’s internationalist
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Jin Liqun: China’s internationalist

It is a strange world when the most outward-looking financial institution is based in Beijing – welcome to Asian Infrastructure Investment Bank, led by Jin Liqun. But can the rest of the world really accept the idea that this is an apolitical organization formed only for regional infrastructure?

By Chris Wright

Illustration: Hit&Run

A conversation with Jin Liqun, chairman and president of the Asian Infrastructure Investment Bank, can take you down some interesting literary paths. Before our interview in Beijing kicks off, he quotes William Wordsworth, Charles Dickens and DH Lawrence in reference to industrialization and air pollution, before moving on to Faust and the devil in the works of Johann Wolfgang von Goethe and Christopher Marlowe.

He is recalling a discussion with potential participating countries in the Chinese multilateral during which he used the German writer’s themes to show he understood their concerns about joining. “When Mephistopheles was in his study, he wanted to get out, but saw a charm on the door and could not leave,” Jin told them. “Faustus said: ‘You can get out the window.’ But Mephistopheles said: ‘No, even devils follow a regimen. We have to leave and enter by the same channel. Entrance is our choice, but exit? We are enslaved.’”

One wonders what the country representatives must have made of this discomfiting allusion, equating membership with the torments of a soul-pilfering devil, but Jin was trying to say he understood their concerns.

“If you induce countries to join with nice words, once they are on the boat and it is moored in the middle of the lake, what can they do? No lifejacket!” He laughs. So, he says, AIIB did everything in its power to make membership inclusive, inviting ideas from member countries about the drafting of the articles of association, and bringing all of them to a meeting at the historic Diaoyutai State Guesthouse in Beijing, not just to be presented with a binding document to sign but to consult them on what those final documents should say.

If Jin has one message he wants to put across about AIIB, it is about inclusion, and that is probably because so much of the AIIB’s formation took place against a backdrop of considerable suspicion.


Demand for infrastructure in the region in the period 2015 to 2030 is estimated at $40 trillion, well above the available financial resources. AIIB, which puts the financing gap at about $21 trillion, was launched to channel funds into Asian infrastructure, but was viewed by some as a multilateral where China would call the shots, providing a vehicle for Chinese soft power and a rival for the World Bank and the Asian Development Bank, which are led by the US and Japan respectively.

In a practical sense, AIIB was seen as an agent of the One Belt, One Road initiative to build infrastructure across Asia and the Middle East in order to improve Chinese export markets, while demonstrating China’s financial and political importance in world affairs. The United States, even under president Barack Obama, wanted nothing to do with it, and voiced its objections when the UK joined.

Pitching AIIB as an apolitical force for good is still an uneasy reach for some, even within China. “What is it, then, if it’s not a policy tool?” asks one leading mainland economist. “It fits the grand scheme of China becoming more influential. That’s all there is to it.”

Jin is well aware how it looks. “From the very beginning I was aware of the concerns. People said: ‘What’s your purpose in creating this bank?’” After president Xi Jinping said at the bank’s opening ceremony that China had benefited from the support of the World Bank and ADB and wanted to reciprocate out of gratitude, Jin recalls, “people said: ‘Wow, such nice words. You just want to play your diplomatic card. You just want control.’”

But that control will be relinquished. “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.

On that point, something important is about to happen. AIIB now has 57 member countries, including G7 economies France, Germany and the UK, and another 30 nations are set to join. If they do so, China’s stake in the bank will drop from 26.6% of the voting shares to around 20%.

This is a crucial difference, because since many big AIIB decisions require a 75% vote to go ahead, China effectively has a veto today, but will willingly surrender it through dilution from the expanded membership. 

“China was always prepared to have its voting power diluted,” Jin says. “China never entertained any idea that we should have veto power. Why? Because this institution was created in the 21st century, not in 1944.”

How times change. A year ago Jin Liqun met the Secretary General of the OECD
Angel Gurria, then US Secretary of the Treasury Jack Lew and the UK Chancellor
of the Exchequer George Osborne

The barb is clearly aimed at the IMF and World Bank, the Bretton Woods institutions conceived in that year, and is one of several occasions Jin seeks to distinguish AIIB from its peers. He is quick to point out, for example, that when he himself worked at the World Bank (first in 1980 and then as alternate executive director for China from 1989 to 1992), US voting power was 21%, and the required special majority was 80%. Even after US voting power was diluted with the membership of additional countries, the articles of agreement were amended to make sure the Americans kept the veto, which they still do today.

Barbs aside, Jin is not antagonistic to other multilaterals and has worked at the highest levels within them. In addition to his two stints at the World Bank, he spent five years as ranking vice-president of the Asia Development Bank. But he is keen to distinguish AIIB from their world view, and has said in the past that they have drifted from their mandates, focusing so heavily on poverty alleviation that they have neglected the infrastructure development that would pave the way for social development.

He is keen to convey a sense of something new and nimble, a middle ground between multilateral and commercial bank. “Virtually all the MDBs have been patterned on the Bretton Woods institutions. But we should keep in mind they were created seven decades ago in a completely different historical era. They were created in different times for different purposes. It doesn’t make sense to clone a World Bank or an ADB.”


Jin is also keen to counter the idea that AIIB is synonymous with the One Belt, One Road initiative. “AIIB is an international development institution, owned by 57 member countries, with more to join. It’s different from the Silk Road fund, which is a Chinese fund. It’s certainly different from China Development Bank and China Eximbank.”

There is, though, bound to be some overlap. “There are 40 or even 50 countries which fall in the One Belt, One Road area. But One Belt, One Road has no geographical description: it is very hard to define.”

This is a reasonable point as it is hard to find anyone who can describe with any great clarity what One Belt, One Road actually is, and it is possible to swing a tenuous connection pretty much anywhere from Africa to London to Japan. 

“OBOR is a weird concept, in my view,” says one local banker, who tends towards the cynical on the whole enterprise. “People visualize a bunch of people riding camels from China to London or Rome. It never existed.”

Jin continues: “So if lots of our projects are in the One Belt, One Road countries, which are our member countries, what’s wrong with that? Eventually it’s the sovereign government’s decision whether they should have a project that is defined as a One Belt, One Road programme or not.”

Jin Liqun, chairman and president of the Asian Infrastructure Investment Bank

Jin has said he wants AIIB to be lean, clean and green. Its modest but on-target first year of lending, at $1.73 billion to nine projects from power distribution in Bangladesh and slum upgrades in Indonesia to road improvements in Tajikistan and maritime infrastructure in Oman, was achieved by a staff of 60, though headcount has since risen to about 90. The ADB, according to its 2015 annual report, has a permanent staff of 3,105.

Building the institutional capacity is obviously a work in progress, and has involved a mix of younger local staff and those with international experience. 

“I took advantage of the number of young retirees from the World Bank, EBRD, EIB, ADB and the private sector,” Jin says. “They are young and healthy, with lots of experience, they can work comfortably for another four or five years and they can do the mentoring of younger ones.”

One of his first hires, for example, was Natalie Lichtenstein, who had 30 years experience at the World Bank as well as time in the US Treasury. Jin made the US lawyer the AIIB’s chief counsel (though she has since moved on and been replaced by Gerard Sanders, an EBRD and UN alumnus). Another is Thierry de Longuemar, a French national and former vice-president of the ADB, who is now AIIB’s CFO and vice-president. Jin says: “We don’t look at the passports. We look at the track record.”

This double act – differentiating the institution from other multilaterals while filling it with their staff – is going to be challenging, but some analysts like what they see so far.

“From the beginning, AIIB has tried to be more efficient than the World Bank or ADB,” says Yan Se, senior economist for China at Standard Chartered. “The process of getting participating countries together, and the governance and capital structure, is very complicated, and one reason people are not happy with other multilaterals is because of their intrinsic complexity. AIIB has had to strike a good balance between efficiency, risk control and political considerations; a delicate balance, and judging from the first year’s performance it’s been pretty good.” He is impressed by the senior management team, but says work is now most pressing in middle management, or the “people who implement things.”

'Wrong fit'

Beijing’s air pollution is one deterrent when it comes to hiring. And already there has been turnover in the upper echelons as the Korean vice-president, Hong Kyttack, left to deal with a scandal at the Korean Development Bank dating from his time as chairman there.

“I know many people who want to work for [the AIIB],” says one banker in Beijing. “But they want to go there because they think of it as a stable 9 to 5 that pays more than they get at the ministries and has a nice tax-free package with access to local schools. They want to do it so they will have more time to see their kids. That’s the wrong fit: you want people who know about infrastructure building in developing countries.”

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 doesn’t 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” – paints it as more of an issue of financial, rather than professional, capacity.

“Infrastructure investments by their nature are very, very large. 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 with a total cost of $8.6 billion. The World Bank put in $800 million, AIIB $600 million and the ADB has a related project worth $1 billion. 

The EBRD and EIB 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 up 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 of lending in 2015. All development institutions started small, Jin says, pointing to the EBRD and ADB as examples.

Background to a banking intellectual

When seeking a president for a China-based regional multilateral development bank, what would the ideal CV look like? Senior experience at home and overseas, ideally in comparable institutions. Not just a willingness to engage with other countries, but a fascination in them, plus an ability to communicate.

One can see why Jin Liqun was approached. He has worked at the most senior levels at the World Bank, Asian Development Bank, China’s ministry of finance, the China Investment Corporation sovereign wealth fund, and the investment bank CICC. As a bonus, he speaks English with greater erudition and fluency than many English people, and turns out to have translated Ron Chernow’s book on JPMorgan, ‘The House of Morgan,’ into Chinese.

Jin is proud of his resumé and happy to recount it, but it’s when one goes further back that one understands the attitudes that have shaped him. 

He was born just before the Communist victory in 1949 and grew up in Suzhou, not far west of Shanghai. Talking about pollution in industrial China, he recalls in his youth not only swimming in the river but also drinking from it, memories that perhaps partly drive his yearning for environmental improvement. In our interview, he says the only loan he is considering granting in China itself is for environmental protection.

His early life was shaped by the political movement of the era. Recalling his culture shock when he went to the World Bank in 1980, he says: “You certainly could not forget I was 10 years in rural China during the Cultural Revolution.” He confirms reports that he spent years in a thatched shack doing hard labour from 4am to 10pm, and that he turned to the works of Shakespeare – Othello, Macbeth and the Merchant of Venice – at night. At one stage he volunteered for a night shift in a toilet paper factory.

He had been learning English from the age of 10 and, when the political climate changed and Mao told students to rise up against their teachers, he still found a way to study during his rural work, listening to the BBC on a short-wave radio. Even today, his pronunciation of certain vowels has a hint of the British public broadcaster.

Eventually he found his way back to study, joining Beijing Foreign Studies University in 1978. When he took the World Bank job in 1980, it was not without regret, as he had also been offered a position as professor of English literature. A love of the English language and the finest writing in it is very obvious from meeting him.

And then, the big multilateral, state and investment banking roles. “I try to synthesize all these experiences in creating this bank with my colleagues,” he says.

“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.” He says his message to staff is quality, not quantity.

“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.” One wonders, though, if AIIB has started lending at an unfortunate time for China.

“Four or five years ago when it was set up, the situation was very different from now,” says one economist. “There was a sense that there was too much money, too much foreign currency, and it was not clear how we were going to spend it if we weren’t going to put everything in US Treasuries. The mood now is very different. There isn’t this urge to find new ways to spend. Reserves are falling and the government no longer wants so much money leaving the country.”

Too late now, though; AIIB will soon have almost 90 voices only one of which will be China’s, although, as some point out, China’s loss of a veto doesn’t mean it won’t be able to ask Asia-based allies to vote as it does. 

“A majority of participants are Asian developing countries,” says Yan Se. “Chinese influence will remain very strong.”

As the interview draws to a close, the conversation finally turns to the topic of how the AIIB might work with a Trump-led isolationist US. These are, after all, topsy-turvy times, when China’s president Jinping defends globalization and free trade in a speech in Davos, while the new US president boasts he will build a “great, great wall.”

“Regardless of the membership of the US, we can still work together,” Jin says. “We have American nationals, we encourage US financial institutions to work with us, we encourage the US real sector companies to participate in the international competitive bidding. The door has been flung open and it will remain that way.” 

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