Asian Infrastructure Investment Bank (AIIB)

[CityFarmer]

AIIB is unstoppable, with its China backing...

UK seeks to join China’s Asian Infrastructure Investment Bank

LONDON (Mar 13): The UK is looking to join China’s Asian Infrastructure Investment Bank (AIIB), becoming the first “major western country” to apply for membership, Chancellor of the Exchequer George Osborne said.

“Joining the AIIB at the founding stage will create an unrivaled opportunity for the UK and Asia to invest and grow together,” Osborne said in a statement Thursday. The UK will hold talks with the China-backed investment bank’s founding members later this month, according to the Treasury.

The world’s second-largest economy has promoted the creation of the US$50 billion Asian regional bank, a potential rival to institutions such as the Asian Development Bank, to help finance construction in the region. The US Treasury has stressed that the AIIB needs sound governance and might initially benefit from co-financing projects with established institutions.

“By getting in early, the UK has a chance to influence the way the bank is run,” Mark Williams, chief Asia economist at Capital Economics Ltd, said by phone Thursday.
...
http://www.theedgemarkets.com/sg/node/189325

[greengiraffe]

Can China run the world
1511 words
21 Mar 2015
The Australian Financial Review
AFNR
English
Copyright 2015. Fairfax Media Management Pty Limited.

Diplomacy Jin Liqun has gone from translating Patrick White to running China's infrastructure bank, write Greg Earl and Lisa Murray.

With his scruffy grey hair, clipped international accent and penchant for the works of Shakespeare, Jin Liqun is not your average Chinese bureaucrat. He's more Oxford professor than Party stalwart. And in the late 1970s, the man who will soon head the first China-led global financial institution found time to translate five chapters of Patrick White's Tree of Man into Mandarin.

Deng Xiaoping was encouraging Party members to seek new cultural ideas from the world as part of his "open doors" policy; while most people turned to Europe, Jin was more interested in Australia.

But this week, it was Europe and not Australia that embraced Jin's latest venture as Britain, France, Germany and Italy all defied the United States to seek founding membership of the Asian Infrastructure Investment Bank (AIIB).

Australia, too, signalled it was likely to join next week after Canberra initially sided with Washington and Tokyo in expressing concerns about the bank's governance structures.

This marks a rare, comprehensive victory for China on the world stage in its growing strategic rivalry with the US. But once the diplomatic wrangling is over, it remains to be seen whether the country has the resources and capability to lead a viable and relevant global financial institution.

China has plenty of well-schooled economists such as Jin, but running a global development bank will require them to engage with a wide range of lobby groups from environmentalists to anti-corruption campaigners. And at times, if the institution is going to retain the confidence of foreign investors and lenders, they will be forced to make decisions that don't always reflect China's interests.

The AIIB is just one of a sudden suite of new global economic institutions China is establishing, in an apparent effort to deflect attention from its recent tough approach to border disputes with neighbours and to have more influence over global economic management now that its companies are so dependent on global growth.

The so-called BRICS (Brazil, Russia, India, China, South Africa) bank was the first driven by emerging-market country discontent at the way longstanding institutions, from the International Monetary Fund to the Asian Development Bank (ADB), are dominated by the old economic powers.

The AIIB was announced in late 2013 as a way of helping fill the estimated $US8 trillion infrastructure funding deficit in the Asian region over the next decade, which poses a threat to Asia's high-growth trajectory.

Experts say the World Bank and ADB can't fill the void and that while there is plenty of private capital washing around with easy monetary policy, there is still a need for development bank soft lending to kick off big port and road projects.

But now China has doubled down further with special funds to boost trade connectivity along the old Silk Road and another fund to boost infrastructure in south-east Asia.

Yun Sun, a scholar at Washington's Henry L. Stimson Center, says China is expanding its global economic reach by experimenting with quite different options - but all of them have challenges.

She says the BRICS bank has already lost favour because China made the biggest financial contribution, but is expected to share power equally with the other four members.

The AIIB will force the government into difficult decisions about how much Jin and his colleagues will be able to operate independently, much as IMF managing director Christine Lagarde is expected to distance herself from the French government.

"Chinese policy banks [such as the China Development Bank which is active in Australian lending] don't have big relationships with civil society groups. I think that is one question the government did not think about," Sun says.

Then there is pay. If China wants top global professional staff on board it will have to pay the going rate, but this will make Chinese staff transferring from government agencies seem like second-class citizens.

"That's become a controversial question in China. If they are all paid the same the Chinese staff won't want to leave," Sun says.

But Chen Xiaochen, a researcher at the Chongyang Institute for Financial Studies at Renmin University, says the country has built considerable experience in this area from the China Development Bank's offshore work, the BRICS bank and the Chiang Mai Initiative, which is a multilateral Asian currency swap arrangement led equally by China and Japan. "It can also look to hire staff with World Bank or ADB backgrounds so I don't think it will have trouble finding people who know what they're doing. In the World Bank, there is a perceived glass ceiling for people who aren't American. Those people might look to the AIIB as an option," Chen says.

Nevertheless, China has plenty of people dotted around the world who could be called on to back up Jin, ranging from International Finance Corporation chief executive Jin-Yong Cai to IMF deputy managing director Min Zhu and ADB vice-president Wencai Zhang.

Sources familiar with Jin's thinking on the bank's management say he has plans which may rub up against the conventional Western thinking Australia has aligned itself with in the US campaign.

He wants the AIIB to have a non-resident board of directors which would be less day-to-day and hands-on than the World Bank board, which meets weekly in most cases. He believes management should run the bank and stand or fall on performance, accountable to government shareholders. The sources say the World Bank and other institutions have created expensive sinecures for staff from their respective home Treasuries in a kind of double governance arrangement.

But as a major debate opened up in the US government about China's diplomatic triumph, New York University Chinese legal expert Jerome Cohen noted Beijing had been canny in appointing a Harvard-educated World Bank lawyer, Natalie Lichtenstein, as the AIIB's first legal counsel. "Her appointment, despite the opposition to AIIB of her country's government, is a ... shrewd PRC move," he says.

So where does all this leave Australia?

Global Foundation chief executive Steve Howard, who has provided advice to the Chinese government, says: "China, for the first time, is ready to play a leading role, after many years of encouragement by us and others to do so.

"They want to not only meet, but exceed, expectations about international governance and standards for the AIIB, and win respect.

"Let them demonstrate that they can do it. Australia should be at the forefront, not at the tail end of this historic shift."

All the indications now are that Australia will join up, having declared that its initial opposition alongside the US and Japan has forced China to make upfront commitments about transparency and co-operation with established development lenders.

And despite the federal cabinet split last November over whether to join the AIIB, Australian government experts have for almost a year been deeply engaged in the debate about whether the region needs a new lending institution. A confidential federal Treasury discussion paper provided to China in the middle of the year considers many of the questions that Chinese officials will now be forced to deal with.

It says: "The AIIB could play a role in helping countries to address the market failure problems that act as barriers to private sector investment - that is, assisting countries with elements of their economic reform agendas in order to develop bankable projects.

"The AIIB may also provide a vehicle to mobilise the high level of domestic savings in the region directly towards infrastructure investment, contributing a more efficient allocation of capital within the region. In this way it could also help nurture the development of Asia's financial markets and deepen regional financial integration."

But it demands a higher level of governance from China than applies at other development banks, saying that all services should be purchased transparently through international competitive bidding and all recruitment should be open and merit-based. "This would distinguish the AIIB among regional financial institutions," it says.

Treasury says the AIIB may not get a triple-A credit rating for some years which will require it to establish a strong operational record and capital structure.

Just like the Chinese economy, Jin has been on a career fast-track since his time reading Patrick White. He still jokes that when his publisher rang looking for the rest of the translation, he was already in Washington learning about global finance as China's executive director at the US-dominated World Bank.

But as the US is now closing the door on giving China this sort of financial education leg-up due to their broader global rivalry, Jin, like his country, will have to hope he has learned how to be a real banker.

8

$US trillion

Estimated infrastructure funding deficit in the Asian region over the next decade.


Fairfax Media Management Pty Limited

Document AFNR000020150320eb3l00008

[CityFarmer]

AIIB first customer?

Quake-stricken Nepal to seek funds from AIIB to rebuild

BAKU — Nepal will seek financial help from the Chinese-led Asian Infrastructure Investment Bank to rebuild the nation’s infrastructure that was badly damaged by last month’s earthquake, Nepal’s Finance Minister Ram Sharan Mahat has said.

The AIIB is expected to be set up this year, and Nepal could be its first customer.
...
http://www.todayonline.com/world/asia/qu...ib-rebuild

[greengiraffe]

Australia signs up to Asian Infrastructure Bank, Joe Hockey reveals
THE AUSTRALIAN JUNE 24, 2015 2:51PM

Sid Maher

National Affairs Editor
Paris

Australia has officially joined the Asian Infrastructure Investment Bank and will make an initial contribution of just under $1 billion.

Joe Hockey revealed the decision this afternoon.

The Treasurer said he would travel to Beijing next week to sign up to the bank and Australia would become a founding member with 56 other countries.

The bank, which has been strongly pushed by China, will aim to boost investment in infrastructure in the Asian Pacific Region.

However the decision originally split Cabinet as United States President Barack Obama urged Australia not to sign.

Australia will be the sixth biggest shareholder in the bank but Mr Hockey said Australia was not big enough to become a board member in its own right.

Mr Hockey said the concerns in Cabinet had been around governance arrangements and whether it would be a truly international bank.

But after intensive negotiations the government was satisfied with the governance arrangements. It passed Cabinet unanimously, he said.

“The governance of the AIIB will be based on best practice, ensuring that all members will be directly involved in the direction and decision making of the bank in an open and transparent manner,’’ Mr Hockey said.

Australia had consulted both the United States and Japan over the decision to join the AIIB.

Asked about the US reaction, Mr Hockey said: “They understood where we were coming from. It is a significant opportunity for Australia.’’

He said Asia faced an $8bn shortfall in infrastructure over the next 10 years.

The AIIB is expected to be operational by the end of the year.

Australia will contribute around $A930 million as paid-in capital to the AIIB over five years and will be the sixth largest shareholder. The AIIB will have paid-in capital of US$20bn ($A25.2bn) with total authorised capital of US$100bn ($A126.2bn).

[greengiraffe]

China-backed multilateral bank to take concrete shape this week
716 words
28 Jun 2015
Channel NewsAsia
CNEWAS
English
© 2015 MediaCorp News Pte Ltd. All Rights Reserved

SHANGHAI/BEIJING: One of China's biggest ever foreign policy successes will take concrete shape on Monday (Jun 29) when delegates from 57 countries sign an agreement on the Asian Infrastructure Investment Bank (AIIB) in Beijing.

The founding members of the China-backed AIIB will sign articles of agreement that decide each member's share and the bank's initial capital.

The multilateral institution, seen as a rival to the Western-dominated World Bank and Asian Development Bank, was initially opposed by the United States but has attracted many prominent US allies including Britain, Germany, Australia and South Korea. Other founding members include most Asian nations and countries from the Middle East and South America.

Japan and the United States are the most prominent nations not represented in the bank. China has said it has left the door open for them to join.

"It's a huge diplomatic and strategic win for China," said Malcolm Cook, a senior fellow at the Institute of Southeast Asian Studies in Singapore, said of the AIIB.

"(But) the fact that so many have signed on will mean that the management of the AIIB will be quite complicated ...The more countries you have on board, the more interests will be at play and more each member will of course want the institution to serve their own interests."

One senior Western diplomat in Beijing said China had felt it had no choice but to set up its own bank after repeated attempts to reform existing institutions like the International Monetary Fund to take into account China's role as the world's second-largest economy were blocked in Washington.

"The United States only has itself to blame," said the diplomat, from a country which has signed up to the AIIB, speaking on condition of anonymity.

Asian countries are expected to own up to 75 per cent of the bank while European and other nations will own the remainder. Each Asian member will then be allotted a share of that 75 per cent quota based on their economic size, two Japanese sources have said.

The AIIB will begin with authorized capital of US$50 billion, eventually to be raised to US$100 billion.

China is likely to hold a 25-30 per cent stake, while India will be the second-biggest shareholder with a possible 10-15 per cent, delegates at a meeting to finalise the new bank's articles of agreement told Reuters in May.

Germany plans to take a 4.1 per cent stake to become the fourth-biggest member after China, India and Russia, according to a finance ministry draft document seen by Reuters earlier this month.

Australia said last Wednesday it would contribute AUS$930 million (US$719.36 million) over five years to become the institution's sixth largest shareholder.

Indonesia will be the eighth-largest shareholder in the AIIB with an investment of US$672.1 million over five years, its finance ministry said on Sunday.

China says it will not hold veto power within the AIIB, unlike the World Bank where the United States holds a limited veto.

The AIIB is the brain child of influential Chinese think-tank China Center for International Economic Exchanges, or CCIEE, which is helmed by former vice premiers and ambassadors, among others. The think-tank had proposed the creation of the bank in 2013 as an institution that balances China's political and economic priorities, CCIEE officials said.

"The AIIB has made a lot of progress so far in its preparatory work, but this is only the first step in a long road ahead," Chinese Finance Minister Lou Jiwei said in a commentary published on the website of the official People's Daily newspaper on Thursday.

"It will require a lot more effort to bring the AIIB up to the standards of global financial institutions."

Apart from backing the AIIB, China has also pledged billions of dollars to the Silk Road fund and the "One Belt, One Road" initiative, which are also aimed at funding infrastructure to increase trade and connectivity between Europe and Asia.

(US$1 = 1.2928 Australian dollars)

(Additional reporting by Ben Blanchard in Beijing; Gayatri Suroyo and Fransiska Nangoy in Jakarta; Editing by Raju Gopalakrishnan) - Reuters


MCN International Pte Ltd.

Document CNEWAS0020150628eb6s000rx

[greengiraffe]

AIIB benefits tipped to take time to fully flow
Jennifer Hughes
728 words
25 Jun 2015
The Australian Financial Review
AFNR
English
Copyright 2015. Fairfax Media Management Pty Limited.

Hong Kong | Zhou Yuan told a conference in Hong Kong last week that he could not promise to inform them, but that he hoped to entertain them. The dry-humoured head of strategy for China Investment Corporation then proceeded to do both as he talked about how China would view infrastructure investment in the region.

Few subjects generate more interest and debate in Asian financial circles than infrastructure. Participants want to know how the new China-led Asian Infrastructure Investment Bank will actually operate and what roles other groups, such as banks and long-term investors, might play.

At the heart of the matter are enormous estimates of what Asia needs to spend on infrastructure in the coming years and questions about how much of this China will provide - and on what terms.

"If you can't expect a return - that is, if you can't expect infrastructure projects to pay you a dividend some time down the road, you can't call that investment any more. You might as well call that a Marshall Plan," Mr Zhou said at the FT Investment Management Summit.

Inevitably, comparisons abound between China's AIIB and the US-financed 1948 Marshall Plan that supported European rebuilding after World War II, and that deployed its current account surpluses in a way that backed American economic and geopolitical goals. China's current plans include its Silk Road economic initiative (One Belt, One Road), its interest in a BRICS development bank as well as the AIIB and other investments such as those funded by CIC, its sovereign wealth fund.

China Development Bank reckons the number of cross-border projects in train under the Silk Road effort already total $980 billion in investment value. Other figures put Asia's total need nearer $8 trillion by 2020. "Everyone will give you a different number. The one thing is they will all be wrong but they will all be big," said James Cameron, head of project and export finance for HSBC in Asia.

Back on the ground, China's planned spending has banks and other investors wondering what might be left for them. Project financiers are already struggling because regulators are forcing banks to hold more capital against long-term lending in riskier emerging markets.

Investors do not have it much easier. Backing a power station in Vietnam, secured against the future income of the plant, might seem a good bet to a pension fund manager looking for assets to match long-term liabilities. But regulators are worried about the currency and the country risk, so they ask for capital and other regulatory protections, pushing up the cost of such investments.

"Pension funds and insurance companies are very interested but may not always be able to invest," said François Leblanc, head of BNP Paribas' Asia-Pacific financial institutions team, who cited funds' own investment guidelines as another constraint.

"There are a lot of difficulties. Bridging the gaps isn't easy between what markets can deliver today and what investors need," he said.

On that basis, Mr Zhou's comments about a commercial focus, at least from CIC, will be welcome. One fear has been that China would persist with vendor-style financing, in which many developing countries with natural resources received funding for infrastructure - supplied, financed and built by Chinese companies.

If China is more serious about a commercial, markets-based system - including via the AIIB, which it will lead - then Asia more generally stands to gain.

"The AIIB has a range of potential tools," said HSBC's Mr Cameron.

"They could invest or fund directly, look at perhaps taking a slice of the risk, provide guarantees or help with ensuring the right advice is given up front to structure projects to be more attractive for outside financing and investment.

"There's a lot that could help develop the whole infrastructure financing space."

Asian infrastructure is particularly tricky because of the region's different legal systems and markets.

The sheer range of projects under way complicates the sector further. But any sign of standardisation - such as one power station or road system using the same funding template used by a previous, successful venture - would help the next project. And that could ultimately transform Asian financing as well as its infrastructure landscape.


Fairfax Media Management Pty Limited

Document AFNR000020150624eb6p0001y

[greengiraffe]

http://www.ibtimes.co.uk/aiib-china-take...nt-1508369

AIIB: China takes 30% stake as 50 members sign articles of agreement
JERIN-MATHEW By Jerin Mathew
June 29, 2015 07:21 BST
Asian Infrastructure Investment Bank

Delegates from the 57-member countries attend a signing ceremony of articles of agreement of the Asian Infrastructure Investment Bank (AIIB), at the Great Hall of the People in Beijing(Reuters)
China has taken a 30% stake in the Asian Infrastructure Investment Bank (AIIB) as the country held a meeting on 29 June, for the signing of an agreement that outlines the legal framework and management structure of the institution.

Representatives of the 50 prospective founding members of AIIB signed the bank's articles of agreement (AOA) at a ceremony held in the Great Hall of the People in Beijing. Australia was the first country to sign the document.

Seven prospective founding members, who are awaiting domestic approval for their membership, are yet to sign the agreement.

The AOA details the fundamental principles for the establishment and future operations of the AIIB.

According to the AOA, China will contribute $29.78bn (£18.92bn, €26.67bn) of the bank's $100bn capital base, becoming its largest shareholder with a 30.34% stake, the China Daily reported. The country will have 26.06% of the total votes in the institution.

India is the second-biggest shareholder at 8.4%, followed by Russia, which will have a 6.5% stake. Members from the Asian region will collectively hold 75% stake in AIIB and the rest will be distributed among members outside the region.

The bank will be headquartered in Beijing, and may have regional centres in other countries.

"The AIIB will adopt international good practices and embrace high standards, striving to build a professional, efficient and clean platform for infrastructure investment," finance minister Lou Jiwei said in an article in China Daily.

Speaking at the ceremony, Lou said he was confident that AIIB could start functioning before the end of 2015.

In October 2014, representatives of 21 Asian nations convened in Beijing to inaugurate the bank, which is focused on providing funding to infrastructure projects in Asia. The AIIB will have paid-in capital of $20bn with a total authorised capital of $100bn.

A total of 57 countries across the globe have joined AIIB as its prospective founding members.

Britain became the first major Western country to apply to become an AIIB founding member, and was followed by major European nations including France, Germany, Luxembourg, Switzerland and Austria.

The decision of the countries, most of which are close allies of the US, came despite warnings from the US over the AIIB's governance and environmental standards. The US and Japan are two major economies that have stayed out of the institution.

More about AIIB
Australia to contribute A$930m to China-led AIIB to become 6th largest shareholder
China-led AIIB finalises articles of agreement and expects to begin operations by end-2015
World Bank calls on China's AIIB and Brics' NDB to help eradicate extreme poverty

[greengiraffe]

China's Jin Liqun tipped as head of new investment bank
Lisa Murray AFR Correspondent
502 words
8 Jul 2015
The Australian Financial Review
AFNR
English
Copyright 2015. Fairfax Media Management Pty Limited.

Shanghai | A former Chinese deputy finance minister, who during the 1970s translated five chapters of Patrick White's Tree of Man into Mandarin, is on track to be elected president of the Asian Infrastructure Investment Bank at a meeting in August.

Jin Liqun, who is in charge of establishing the controversial new bank, was officially nominated for the role by the Finance Ministry late on Monday.

Flagged by President Xi Jinping in October 2013, the AIIB was launched at a signing ceremony in Beijing last week attended by representatives from its 57 founding members, including Australian Treasurer Joe Hockey.

China will contribute $US29.8 billion ($39.83 billion) of the bank's $US100 billion in total authorised capital and will have a voting share of 26 per cent, giving it an effective veto over big decisions. That means the election of Mr Jin as the lender's first president is all but certain.

One of his earliest priorities will be to attract key staff with international experience to the bank, which had a controversial start after Washington and Tokyo lobbied countries not to join because of governance concerns.

Mr Jin is well qualified to staff the AIIB, having served as China's representative at the Asian Development Bank and the World Bank. He was vice-president at the ADB for five years until 2008.

Before his role setting up the AIIB, he was chairman of one of China's biggest investment banks, China International Capital Corporation.

After meeting Mr Jin last week, Mr Hockey told The Australian Financial Review Mr Jin "wants to work closely with us and harness our expertise, particularly with the global infrastructure hub." The hub was an initiative set up at the G20 conference in Brisbane in 2014 to improve co-operation and information sharing between investors and governments on infrastructure projects.

Mr Jin has a special interest in Australia, which started in the 1970s when Deng Xiaoping was encouraging Communist Party members to seek ideas about culture and literature from the rest of the world as part of his "open doors" policy. Most people looked to Europe but Mr Jin was more interested in Australia and opted to translate White's Tree of Man.

Before he could finish he was posted to Washington as China's alternative executive director at the World Bank.

At a think tank summit in Beijing last week Mr Jin said the AIIB would be "lean, clean and green".

The comment appeared to be directed at recent criticism the lender would not have the same regard for environmental safeguards as other multi-lateral lenders.

In the lead-up to its launch, a Chinese Foreign Ministry spokesman said the bank would aim to be less expensive and more efficient than its counterparts.

AIIB members have until the end of July to make their nominations for president.

A vote will be held at the next meeting in late August.


Fairfax Media Management Pty Limited

Document AFNR000020150707eb780000h

[CityFarmer]

With the endorsement of key players e.g. WB, ADB, and now the NDB. It might be a tough job for Japan PM Abe, to challenge...

BRICS' bank launches in Shanghai, to work with AIIB

SHANGHAI/MANILA (July 21): Officials from the world's largest emerging nations launched the New Development Bank (NDB) on Tuesday, the second of two new policy banks heavily backed by Beijing that are being pitched as alternatives to existing institutions such as the World Bank.

Also known as the BRICS bank, it follows soon after the establishment of the China-led Asian Investment Infrastructure Bank (AIIB). The new bank will fund infrastructure and development projects in BRICS countries - Brazil, Russia, India, China and South Africa.

The ceremony on Tuesday concludes a lengthy wait since the NDB was first proposed in 2012. Disagreements over the bank's funding, management and headquarters had slowed its launch.

"Our objective is not to challenge the existing system as it is but to improve and complement the system in our own way," NDB President Kundapur Vaman Kamath said.
...
http://www.theedgemarkets.com/sg/node/217297

[greengiraffe]

Gd day moderator,

Could you pls help change this thread to AIIB.

Thanks
GG

http://www.straitstimes.com/business/aii...ia-develop

It is quite obvious that China don't want to be the policeman of the world as they prefer to hide behind their motive to achieve their influence given that $ is the modern bloodless tool to conquer the world...