The AIIB stepped into the docking period and heavyweight projects entered the global capital vision.
The Asian Infrastructure Investment Bank (hereinafter referred to as "AIIB") is about to launch the first round of investment and financing projects that have attracted much attention this quarter.
With the global economy falling into a state of low growth, infrastructure projects along the China’s "Belt and Road Initiative" have aroused interest from all parties. Institutions such as the European Investment Bank, the European Bank for Reconstruction and Development, the Asian Development Bank and the World Bank, as well as major economies such as Russia, India and the European Union, are stepping up their project docking with the AIIB in the near future, and several heavyweight projects have gradually entered the vision of the global capital market.
International institutions have strong willingness to dock.
Jin Liqun, president of the AIIB, publicly stated that the first batch of projects will be financed in the second quarter of this year. To this end, many international institutions have shown their willingness to deepen project docking and cooperation with the AIIB.
Hoyer, president of the European Investment Bank (EIB), said recently that he will visit Beijing in May to seek the possibility of cooperation with the AIIB. He said that there have been many discussions within the European investment banks about the Asian Investment Bank (AIIB) led by China. If both sides think there are suitable projects, the two major investment banks will not rule out the possibility of cooperation and joint financing.
The European Investment Bank (EIB) is a financing institution jointly established by EU member states. Although it is an independent institution, it will cooperate with EU policies to provide financing for small and medium-sized enterprises with sustainable development and innovative characteristics in EU member States, and there are also many investment projects outside the EU, including Turkey and Africa.
Foreign media quoted officials of the European Investment Bank as saying that the bank had long been in contact with many banks and personnel of the AIIB in China. Heuer’s visit to Beijing in May was mainly to attend the opening of the local office of the European Investment Bank, and he would also meet with relevant Chinese personnel to discuss possible future cooperation.
Officials who did not want to be named revealed that the projects that the European Investment Bank may cooperate with the AIIB in the future include energy and energy conservation industries, especially on issues such as extreme climate and pollution control.
Regarding China’s recent investment in Europe and the future development of the AIIB, Hoyer said that the China government indicated that it would participate in the investment recovery plan proposed by European Commission President Juncker, and he had high expectations for it, and he also saw that China was very interested in investing in Europe.
Another EU-level banking institution, the European Bank for Reconstruction and Development (EBRD), is also looking forward to cooperating with the AIIB on projects in Central Asia.
Suma chakra Bhatti, president of the European Bank for Reconstruction and Development, who is providing economic assistance in Europe and the Middle East, said in an interview with the Nihon Keizai Shimbun that in 2016, she will promote cooperative financing of at least two infrastructure projects in Central Asia with the AIIB.
The European Development Bank originally provided support for economic recovery with Central and Eastern Europe as the center. With the transformation of the above-mentioned countries to market economy, the support targets have expanded to neighboring countries with strong infrastructure needs such as the Middle East, North Africa, Greece and Central Asia. Chakra Bhatti said, "In the areas where support is provided, the voice calling for Asian enterprises to invest is getting stronger and stronger", so the bank plans to strengthen cooperation with Asian enterprises and jointly promote investment and financing.
Chakra Bhatti said: "The idea of the new Silk Road is closely linked with Kazakhstan and other Central Asian countries that the European Development Bank is committed to supporting, and will jointly promote investment with China enterprises."
Chakra Bhatti said that the huge infrastructure demand in Asia and the Middle East could not be met only by the European Development Bank, the Asian Development Bank (ADB) and the World Bank. This shows the attitude of actively cooperating with the AIIB.
Another regional development bank, the Asian Development Bank, recently expressed its interest in cooperating with the AIIB and looked forward to bringing complementary and win-win effects to regional development. At the end of last month, Takehiko Nakao, the bank’s president, said when talking about cooperation and financing with the AIIB: "The AIIB hopes to approve an investment project in the second quarter of this year, and is now actively promoting it on the premise of cooperation and financing between ADB and the AIIB." Nakao also said that if the demand for funds in Asia increases in the medium term, "capital must be increased in the future."
Nakao pointed out that the AIIB hopes to carry out specific procedures for cooperative financing on several projects. In addition to ADB, the World Bank and the European Bank for Reconstruction and Development are also candidates for cooperation financing of the AIIB.
With Asia as the center, ADB has opened 29 offices. Nakao stressed that dialogue with the local government and people will be beneficial to the establishment of the project and environmental protection. The AIIB does not have these regional offices, "so it can complement each other more".
Regarding the capital increase of ADB, Nakao mentioned the possibility of increasing the proportion of capital contribution of emerging economies, saying that "it is also possible for countries with the ability to make over-investment". Because the right to speak in international institutions does not reflect the strength of the real economy, emerging economies have been demanding an increase in the proportion of capital contribution. However, Zhongwei did not clearly disclose the specific time and scale of capital increase.
Specific projects are emerging.
The details of the first batch of projects that have attracted much attention have not yet been announced, but the parties who can’t wait to participate in the cooperation have revealed the blueprint of the cooperation project.
According to the Russian satellite news network at the end of March, Alexei Chekunkov, general manager of the Russian Far East Development Fund, told RIA Novosti that the fund would propose to the AIIB to co-finance 19 projects in Russia, with the necessary investment of 9 billion US dollars.
Chekunkov said: "These projects need a total investment of about 9 billion US dollars, and there are 19 projects. We will communicate with Jin Liqun, president of the AIIB, on project cooperation." He also said that the fund is prepared to provide 700 million US dollars.
He explained that the investment projects are mainly infrastructure, international traffic corridors, port and airport construction in the mining field.
The Russian Far East Development Fund is engaged in the investment of infrastructure and new enterprises, and these projects have great social and economic benefits for regional economic development.
Russia’s "Independent" analyzed that Moscow expects to obtain construction funds for roads and energy projects in Siberia and the Far East in cooperation with the AIIB.
Russian Minister of Economic Development Alexei Ulyukayev once told the media that a number of projects will be considered in the second quarter of 2016, and one of the first financing projects may be a Russian project.
Ulyukayev said that the details of the project are inconclusive. "It is an infrastructure project related to road construction and railway construction. The projects we hope to involve are not only us, but also projects of interest to China and the Eurasian Economic Community. " Ulyukayev further clarified.
In addition to Russia, India, the main member of the AIIB, also revealed the direction of cooperation.
Reuters quoted Indian officials as saying that India is expected to receive the first loan from the AIIB later this year. India is seeking a $500 million loan from the AIIB to develop solar energy projects.
Providing funds for clean energy projects can alleviate the concerns of environmental lobby groups, who worry that the lax lending standards of the AIIB may increase the consumption of "dirty" fuels such as coal in developing economies such as India.
A senior official said that India is seeking a loan from the AIIB to support Prime Minister Modi’s plan to increase solar installed capacity to 100 GW by 2022. India is the second largest shareholder of the AIIB after China.
"The funds from the AIIB may start coming in about six months," an official from the Indian Ministry of New and Renewable Energy told Reuters.
The loan has a maturity of more than 15 years, and the interest rate may range from 2% to 2.5%, which is linked to the London Interbank Offered Rate (Libor). The AIIB did not directly comment on India’s loans, but said that "it is expected that the first batch of loans will be decided later this year."
Highlight attraction and inclusiveness.
As all parties pay close attention to the interaction with the AIIB, many western countries that had doubts about the AIIB began to waver. It can be expected that with the opening of investment projects in Asia, a transparent and fair operation mechanism will be presented to the world, and more cooperation modes will follow, which will promote the inclusive development of the AIIB.
It is reported that Fang Huilan, Minister of International Trade of Canada, said recently that the Harper government refused to join the AIIB, which led to Canada’s failure to become a founding member of the AIIB, which was a "missed opportunity". Now it is possible for Canada to join the AIIB.
According to The Vancouver Sun, Canada’s China policy is undergoing major adjustments. Since November last year, the Liberal Party government, which has been in power, is carefully improving relations between the two countries, starting negotiations on free trade agreements and helping 100,000 Canadian students to study in China. The dialogue on the free trade agreements between Canada and China has increased.
In response to Canadian government officials’ suggestion that Canada may join the Asian Infrastructure Investment Bank, Foreign Ministry spokesperson Lu Kang said at a regular press conference on the 7th that China is happy to see the development of the AIIB, which will benefit more countries.
In response to relevant questions, Lu Kang said that the AIIB is an open and inclusive multilateral development institution and will accept new members in accordance with the Agreement on Asian Infrastructure Investment Banks. The Asian Infrastructure Investment Bank Agreement stipulates that countries (or regions) that meet the membership can become members of the AIIB with the consent of the Board of Directors.
Lu Kang said that as an initiator of the establishment of the AIIB, China is happy to see the AIIB grow and develop, and play a greater role in global economic recovery, promoting regional infrastructure construction and interconnection, and achieving common development, so that more countries can benefit from it.
In the preparatory period of the AIIB, the United States discouraged its allies from participating in the launch of the AIIB. Up to now, the United States has not joined the AIIB. Regarding whether the United States will join in the future, AIIB President Jin Liqun said that some countries make decisions quickly and some are slow.
"We have a history of 5,000 to 6,000 years, and we are patient and in no hurry," Jin Liqun said. "Whether to join the decision to see the United States, even if not, does not mean that the AIIB is a conflict point in Sino-US relations, but a new cooperation platform. We still have enough professionals with American passports to work in the AIIB."
Jin Liqun revealed that the AIIB is trying to accept some new members, and there will be new news before the end of this year, including some non-sovereign countries and regions. Hong Kong can play an active role in promoting the financing of the AIIB. Jin Liqun made this statement when answering a question from a Hong Kong reporter.
According to him, the AIIB has 57 members, and more than 30 countries are currently applying to join.
Jin Liqun also publicly stated that there is no need to worry that the AIIB will be biased to help China enterprises win some contracts and help them go out just because China is the shareholder of the founding country of the AIIB. Jin Liqun also smiled and said, "China enterprises are very competitive."
"Look at the articles of association of the AIIB. In fact, there is no need to worry about this. We have a unified procurement clause and will establish a fair market. Enterprises from any country can participate in bidding." Jin Liqun said, "The AIIB will choose the enterprise with the best price and the best service."
Jin Liqun also said that the AIIB will provide preferential and competitive loan interest rates.
During the Boao Forum, Jin Liqun denied the statement that "the AIIB is a political and economic tool of China" in an interview with BBC reporters. Jin Liqun said that according to the structure of the AIIB, China’s voting right in the AIIB is lower than its capital contribution. China has 30% of the votes, but only 26.06% of the voting rights.
The structure of the AIIB determines that the voting rights of major shareholders are lower than the capital injection ratio, while the voting rights of minority shareholders are higher than the capital injection ratio.
Jin Liqun said that the important resolutions of the AIIB need to be passed by a majority vote, that is, two-thirds of the member countries, three-quarters of the voting rights and 75% of the votes are needed. China’s voting right is only 26.06%.
He said that China, as a major shareholder, has made many contributions and great responsibilities, and China strives to cooperate with other shareholders to ensure that the AIIB can operate according to high standards. As for the statement that the AIIB is a diplomatic tool of China, he said that just because the United States is the largest shareholder of the World Bank and Japan is the largest shareholder of the Asian Open Bank, it cannot be said that the above institutions are tools of the United States and Japan.
Overseas win-win development can be expected
One of the main reasons why the first batch of AIIB projects have attracted worldwide attention is its demonstration effect, and broader cooperation opportunities between China and Asia will be presented in front of all parties. In the face of "new mediocrity" in global economic growth, how to actively link transnational investment and promote the docking of high-quality projects is the key to solve the growth dilemma. At this moment, the AIIB is a useful platform that appears at the right time, creating conditions for all parties to invest in a win-win situation in the future.
Most countries in Southeast Asia said that the Belt and Road Initiative and the AIIB are the preferred carriers for Asian countries to strengthen cooperation. Through capacity cooperation in infrastructure, industrial equipment and other fields, Asian countries will win-win cooperation and share the dividend of integrated development.
Liu Ying, director of the cooperative research department of Chongyang Financial Research Institute of Renmin University of China, wrote that the AIIB will provide funds for the infrastructure investment gap in Asia. The lag of infrastructure seriously restricts economic development, especially in countries along the "Belt and Road", and there is also a gap in investment funds for infrastructure in developed countries. There is a funding gap of more than $500 billion in infrastructure investment in Asia every year. Especially after the international financial crisis and the European debt crisis, many countries are financially stretched. The opening of the AIIB will effectively increase infrastructure investment in Asia and promote the process of regional interconnection and economic integration.
Liu Ying also said that the AIIB is a win-win choice for both developing and developed countries. For developing countries in Asia, the AIIB will inject more funds to strengthen infrastructure construction, which will help strengthen trade and investment and promote sustained, stable and rapid economic development. For developed countries, the AIIB will help expand investment demand and boost their economic recovery. For Asia and its surrounding areas, the AIIB will help accelerate and promote interconnection, continuously enhance the self-development capabilities of countries in Asia and inject lasting impetus into economic development; It is also conducive to expanding global aggregate demand and promoting world economic recovery.
Lin Yifu, a former senior vice president and chief economist of the World Bank, also suggested that the G-20 should promote the convenience of international investment and play the role of the AIIB to contribute to solving the problem of slow growth facing the world.
Lin Yifu said that developed economies such as the United States, the euro zone and Japan are falling into a "new mediocrity" of growth, and the job market needs to be improved. Because they account for more than 50% of the global economy, their weakness will also expose developing countries to low growth risks. The world needs new ideas to guide economic growth at present. He said that the past growth model of promoting exports through currency depreciation among economies is no longer applicable, and now it is necessary to improve competitiveness and new ideas to guide economic growth. Promoting investment between countries is a beneficial method for both developed and developing countries.
"I suggest strengthening the role of organizations such as the Asian Development Bank and the World Bank and promoting the establishment of emerging investment promotion institutions such as the Asian Infrastructure Investment Bank, so as to promote and strengthen infrastructure investment worldwide." Lin Yifu said.
Lin Yifu also pointed out that developed countries created a lot of liquidity during the financial crisis, and they can conditionally invest in overseas entity projects, "turning liquidity into practical job creation and economic growth". Using these investments, developing countries can promote local infrastructure construction and improve their overall competitiveness. In addition, investment facilitation can also promote developing countries with foreign exchange reserves to diversify overseas investment, which is also good for industries in developed countries.