AIIB and the 'best practices' competition

Want China Times, Staff Reporter 2015-03-31

An illustration of the AIIB. (Illustration/CFP)

China's move to establish the Asian Infrastructure Investment Bank (AIIB) achieved a major breakthrough when developed countries such as Britain, France, Italy and Luxembourg applied to join the bank as founding members.

The AIIB is the first China-dominated multilateral financial organization that has included developed nations as members, which offer a precious opportunity to test China's ability to play the role of a responsible country, Caixin Weekly said.

Unlike the World Bank and the Asian Development Bank (ADB), whose core missions are to reduce poverty, the AIIB aims to promote interconnectivity in the Asian region through investment in quasi-commercial infrastructure projects.

According to China's finance minister, Lou Jiwei, the World Bank and the ADB have accumulated a lot of experience and know-how in improving their own operations and the AIIB will learn from that to set up better standards.

The AIIB is likely to work out lending rules with its own characteristics. It also needs to take action to show how it is going to reform any unreasonable aspects of existing rules.

Jin Liqun, secretary-general of the AIIB's interim secretariat, said the bank will adopt a zero-tolerance policy on corruption and will also pay attention to environmental protection and the security of immigrants.

The possible competition between the AIIB and the ADB is an issue that has received widespread attention. Of the 30-odd countries that have applied to join the AIIB, all are members of the ADB except for Jordan, Kuwait, Oman, Qatar and Saudi Arabia.

This means that if the two organizations want to raise capital in the future, they will have to compete with each other for the same sources of funding.

The AIIB is set to be established by the end of this year. By then, people will see how it realizes its core values of being "lean, clean and green." It will be a complement, not a substitute, to the World Bank and the ADB and will improve, rather than subvert, the existing global financial order.

Related Article:

AIIB to have zero tolerance for corruption: official