Jin Liqun: Asian Infrastructure, A Terrible Beauty

On 22 January, Bruegel and the Egmont Institute hosted Mr Jin Liqun (金立群) at an event in Brussels. As the president of the Asian Infrastructure Investment Bank (亚洲基础设施投资银行 or AIIB), Mr Jin addressed multiple questions about the bank’s creation, its future and its core mission.

A Conversation with Jin Liqun

Quoting the Irish poet W.B. Yeats, Mr Jin stated that globalization was a “terrible beauty” as it presents daunting challenges for economic growth. Indeed, Mr Jin’s counterparts at the Asian Development Bank estimated that the infrastructure deficit in Asia may be as big as US$26 trillion by 2030.

It is clear that the region has reached a critical juncture. It is in this context that the AIIB was born as a vehicle to spur economic growth. As Mr Jin eloquently put it, the bank is aimed at investments in infrastructure and other productive sectors. At the same time, the AIIB strives to be a lean, clean and green institution.

First proposed by Chinese president Xi Jinping (习近平) in 2013, the AIIB became operational in 2016. The bank’s membership has gradually expanded. In 2015 for example, Britain was the first European country to join.

In the US, the launch of the AIIB was received with concerns that China is aiming to establish an alternative, Chinese-led order. These fears stem from the country’s heavy promotion of its Belt and Road Initiative (一带一路倡议 or BRI). This global project captures China’s vision of connectivity.

Building infrastructure in Asia

As the name AIIB suggests, Asia is the main focus of the bank. Consequently, the AIIB considers investments in non-Asian countries according to their benefits for Asia. Here, Mr Jin gave the examples of the Panama Canal and Africa.

During his speech, Mr Jin outlined three impact criteria for the selection of investments: sustainability, green development and local acceptance. Since its creation, the AIIB has approved some 24 projects worth US$4,4 billion in loans spread across twelve countries in Asia, the Middle East and Africa.

Mr Jin stated that as a relative newcomer, the AIIB can learn from other multilateral banks. In being lean, the AIIB wants to avoid redundancies with a cost-effective governance. It is in this way that the bank can distinguish itself from other institutions such as the World Bank.

At the same time, Mr Jin remarked that every project should be a success. This raised the question of the altruistic nature of multilateral banks. If the AIIB does indeed prefers to avoid risks, how then can it compete with the private sector? In response, the bank’s president said that there should not be any vague projects. Legal mistakes also ought to be avoided.

If you want to get rich, build a road

By discussing the AIIB’s aim in providing better connectivity in Asia, Mr Jin clearly echoed the objectives of China’s BRI. As outlined in its 2015 Vision and Action Plan, connectivity is also a major part of the project. Furthermore, the bank’s president emphasized that the AIIB, just like the BRI, aims to provide both infrastructure and policy coordination among its members.

As for Chinese influence, the president was frank: “we do not feel it.” Mr Jin stated that the AIIB is to remain an international bank for Asia’s future. Interestingly, he did acknowledge a certain relationship and overlap between the AIIB and China’s BRI.

While the AIIB thus focuses on “infrastructure and other productive sectors,” Mr Jin described the BRI in much broader terms as a “platform to develop connectivity.” At the same time, the AIIB’s president observed an ongoing, yet subtle change in the BRI. As such, the geographical coverage of the project may logically get expanded to also include the American and African continents.

The ‘build it and they will come’ approach towards economic development is of course also visible with the Asian Development Bank when it was argued that the infrastructure deficit in Asia may be the biggest impediment for the region’s economic growth. The AIIB clearly agrees. For Mr Jin, it is very clear how resources can be generated: by building roads, power plants and transmission lines.

Where to next?

Coming to the inevitable question of the European link, Mr Jin mentioned the growth of Chinese consumerism and the preference for European-made products since its reforms of 1978. Here, the European market provides ample reason to strengthen Eurasian connectivity. What’s more, by forging closer ties with the members of the European Union, the EU could become the best guardian of the AIIB’s high standards and best practices.

The AIIB’s president did not tackle the question concerning the absorbing capacity of a project’s host country. Concerns about the export of Chinese labour were dismissed just as swiftly. Nevertheless, Mr Jin delivered a constructive speech about the role of the AIIB in tackling the connectivity bottleneck in Asia.