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Recap: Is There Room for the U.S. in Asia’s Development?, 1.6.22

Recap: Is There Room for the U.S. in Asia’s Development?, 1.6.22

What is China’s goal in making global development investments? Despite the fact that the U.S. declined to join the Asian Infrastructure Investment Bank, are U.S. investors still welcome in AIIB projects? Is there room for U.S.-China collaboration around global development and governance in the financial arena? Jin Liqun, President of the AIIB and one of China’s top development experts, shares his insights in this virtual conversation with James Heimowitz, President of China Institute from January 6, 2022. Anla Cheng, CI’s Vice-Chair, provided an introduction to the program.

Speaker Bios

JIN Liqun (JL) is the inaugural President and Chair of the Board of Directors of the Asian Infrastructure and Investment Bank (AIIB). On July 28, 2020, he was elected to serve a second term of five years, beginning in January 2021. Before being elected as the Bank’s first President, he served as Secretary-General of the Multilateral Interim Secretariat tasked with establishing the Bank. Jin has rich experience across the private and public sectors and with MDBs. Prior, Jin spent nearly two decades at the Chinese Ministry of Finance, reaching the rank of Vice Minister.

Full Program Recording of Is There Room for the U.S. in Asia’s Development?:

Select Quotes from the Program:

Anla Cheng: We are facing tough times. We at China Institute are committed to dialogue. There are so many global challenges that won’t get solved unless the U.S. and China work together. It is a great thrill that we can welcome Jin Liqun. His work shapes the way in which China and the U.S. can work together around the world.

Jin Liqun (JL): I understand we are having an exchange of ideas among friends. Let us be quite frank.

I have followed closely the bilateral relationship and have pushed for a sound and healthy bond between our two peoples and countries over the decades. As the President of AIIB, I also would like to share my thoughts from a multilateral development bank.

I have been asked numerous times why the United States did not join this bank. I respect the sovereign position of any country…We have enjoyed a strong working relationship with the United States, including members of the IMF and the World Bank.

Multilateralism came out of WWII [reconstruction] and the lack of a system to address major challenges. Today…we are facing a pandemic and at the tipping point of climate change. They are border-hopping problems. The U.S. played a critical role in setting up the world financial system.

It is deeply unsettling to see the recent rise in populism and lack of understanding between countries. Common human values should prevail over politics. Major powers need to work together to reverse the erosion of multilateral cooperation seen in recent years.

A multilateral approach in our view is the only solution to a global crisis.

It is unsettling to see the rise of populism. A multilateral view is the only solution for a global crisis. I saw with my own eyes how loans from international communities transformed lives from abject poverty to opportunity. I have seen how support from multilateral institutions has supported gender balance.

Never ever has multilateralism been so critical for our common destiny. Never ever has the need for a multilateral approach to solve humanity’s formidable challenges so acute.

AIIB was created as a direct response to a genuine desire among countries for greater — not less— international cooperation. Bridging a significant gap in infrastructure financing is what anchors AIIB, and the meaningful cooperation among 104 approved members, that is the bedrock of our institution.

The governance structure is similar to the Bretton Woods, but with some new characteristics.

The bank’s ethos is best articulated by its values of being lean, clean, and green.

Over the last six years, we have worked very closely with the World Bank Group, ADB, EBID, EIB and many other institutions. The co-financing projects we worked on with those other institutions reached a total amount of $16.1 billion.

We have tried our very best to make sure that our projects are implemented by high standards. Working with other multinational institutions like the World Bank and ADB demonstrates the high level we maintained in terms of environmental protection and social protections.

Climate change is the defining issue of our generation and where the United States and China have opportunity to work together.

Transitioning economies as large as the United States and China in a new direction takes vision and courage. But the alternative of maintaining the status quo is no longer viable. The United States and China can demonstrate global leadership in this transition. The challenges will be many, headwinds will emerge, but perseverance and cooperation between these two countries toward a low carbon economy could literally save our world!

The multilateral development banks are in a position to support this green transition in emerging markets. Our policies and strategies are already aligning with the Paris Agreement.

…The world has no choice but to work as one if we are to overcome the immense challenges that confront us, and AIIB intends to be at the forefront of these efforts.

The conversation then moved to a dialogue between Jin Liqun and CI President James Heimowitz.

James Heimowitz (JH): People in the West are nervous. They are nervous about Beijing’s role on the global stage. What is the relationship between AIIB and the Central Government? How would you help address people’s concerns about Beijing’s role in Asia?

JL: I am not talking to you as a Chinese national, more as the head of a multilateral institution. When it comes to AIIB and the government, we have the same relationship that applies to all the other members. China is the biggest shareholder, accounting for 30% of voting power with 26 points voting power based on GDP. The AIIB voting powers are divided between the regionals and non-regionals. Voting power sharing is based on respective GDP. …The voting structure indicates that China has a strong voice in the institution. When this formula is being discussed, how could you imagine that European countries would want to join if China was dominant? Nobody would have joined! We have 57 founding members, over the last 5-6 years, the membership has have grown to 104. If China doesn’t treat the relationship with AIIB by the principles of international cooperation…how could we—this bank—have attracted so many countries from across the world? Canada joined eight months after the bank was set up! …If I as the president did not treat the relationship with China well, how could I be reelected for the second term? The basic principles is following international standards and best practices.

When I travel, I am always intrigued by a very interesting question. What is the relationship between AIIB and the Belt and Road Initiative? Developing countries treated me as if I was the president of the Belt and Road Bank! The Belt and Road Initiative is the platform, and we are a multilateral bank. They are not the same…

If there are issues with regard to the Belt and Road initiative, I hope people will keep in mind President Xi’s basic principle: The Belt and Road Initiative should be implemented on the basis of broad consultation, joint construction, and shared benefit.

It may not be appropriate for some countries to stay outside and being critical of the Belt and Road Initiative, without joining in the broad consultation, and without working with China to promote regional connectivity. That is something they may also need to support.

I would also say that China should ramp up its efforts to better communicate with the rest of the world for them to better understand the Initiative.

You may have noticed that China has made it very clear that it will stop exporting coal technology in the Belt and Road projects…China is listening to the outside world.

JH: China is listening, but my concern is whether the rest of the world is hearing what Beijing is trying to communicate. Is your bank active with domestic loans or purely international?

JL: If you have questions or misgivings, just talk to China. The outcome of the recent virtual summit between Pres Xi and Pres Biden-Xi Summit was very

important for us to understand how important it is to engage with each other.

JH: I am curious about the domestic perception of AIIB. Has there been any criticism on focusing and funneling resources internationally when there are so many domestic needs.

JL: Chinese people are proud that China is working with all these countries to promote common interest. But there are misunderstandings. Over the last five years or so, the relationship between China and India became very tense. In the 2017 border dispute, quite some Chinese were very upset [and asking] why are you giving money to India when they are making troubles on the border? Can you stop? Our answer was that we are a multilateral bank. Bilateral issues should not be dragged onto mltl platform. This is the area for cooperation. The countries with border disputes, they can work them out outside the bank. The bank should not be involved in the bilateral, political disputes. We keep providing loans to India despite some misgivings or serious questions about that. India is the biggest borrower from this bank. This indicates clearly that this is a multilateral bank!

JH: Is the work of AIIB impacted because the base is in China? Would the work be different if you were operating anywhere else?

JL: I don’t think we have any problems. If our operations were faced with issues, the pandemic certainly was one. It disrupted business and our travels, as well as the capacities of our borrowing countries to cope with COVID-19 affected their ability to maintain implementation of normal infrastructure projects. I hope we will walk out of this awful situation this or next year, we are agile and adapted to the new situation. What is important is that we work together for better cooperation.

JH: There are people in countries that have not joined the AIIB who would like to support and be involved. Can they do so?

JL: We’re inclusive! We should be open to all professionals regardless of the membership of their countries. We recruit Americans, Japanese, and many other professionals whose countries are not members. They are supporting the bank’s work and maintaining very high standards.

We want to work with everyone who is willing to support the global economy and global integration. We are operating according to international standards, and we are willing to work with anyone who is willing to work with us.

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