See More on Facebook

Economics

China-led AIIB makes a mark in less than 3 years

The Asian Infrastructure Investment Bank is beginning to make an impact around Asia as countries sign on to the China-led initiative.


Written by

Updated: June 27, 2018

 

Just three years after its founding, the Asian Infrastructure Investment Bank (AIIB) – initially perceived as China’s World Bank – is well on its way to becoming a credible institution by taking forward its mandate of funding infrastructure projects in Asia.

The AIIB – founded to plug Asia’s monumental infrastructural deficit – is led by China and has 57 prospective founding members and 20 from outside the region, including France, Germany, Italy and the UK. The total membership stands at 84 as of end 2017.

AIIB has an authorised capital base of US$100 billion earmarked “to improve economic and social development in Asia by investing in high quality, financially viable and environmentally friendly infrastructure projects”. China is its single largest contributor and holds around 28 per cent voting share, giving it veto power over major decisions.

AIIB & India

India is AIIB’s second-largest shareholder and the biggest borrower. Projects worth US$4.4. billion have been financed to it in the past three years, Subhash Chandra Garg, India’s secretary at the Department of Economic Affairs, said in an official statement.

The statement came ahead of AIIB’s third annual meeting currently underway (June 25-26) in Mumbai, India’s financial capital, with innovation and collaboration as its theme.

AIIB is the first major multilateral development bank where principal contributors are the borrowing members themselves. While 75% of the capital is from Asia, several non-Asian regions like Europe, North America, some East African and Latin American countries have also joined the bank as members.

Borrowing from AIIB is preferred by a number of countries as it charges about one to 1.5 per cent interest with long term repayment including five-year grace period.

Indonesia has emerged as the second largest borrower with about US$ 600 million loans.

AIIB’s Balancing Act

On 24 June 2016, the AIIB board approved its first four loan projects totalling US$509 million – which more or less put to rest the speculations about the long-term aims and intentions of AIIB.

AIIB project was first announced in October 2013 simultaneously with Chinese President Xi Jinping’s overland Silk Road Economic Belt and Maritime Silk Road initiatives – the two pillars of China’s Belt and Road Initiative (BRI).

The initial scepticism was therefore that the AIIB was primarily a vehicle to fund BRI-related projects to promote connectivity in Asia as well as to further China’s strategic goals, several critics had pointed out then.

That India has become an important recipient of AIIB loans is noteworthy and indicates the degree of independence of the AIIB from the BRI.

India has reiterated its reservations about the China-Pakistan Economic Corridor (CPEC) time and again. It was the only country in the eight-nation Shanghai Cooperation Organisation meet held earlier this month which refused to endorse China’s ambitious Belt and Road initiative for which Beijing has signed pacts with nearly 80 countries and international organisations.

As a report in Australian Institute of International Affairs, a leading think tank, states, “…For critics focused on poverty reduction there is a slum upgrading project, and for markets, there are road and power projects. For regional supporters, there are two continental projects linking to China’s Silk Road plan but also a project in South Asia and one in Southeast Asia, projecting an expansive view of China’s support for the region.”



Enjoyed this story? Share it.


Lamat R Hasan
About the Author: Lamat is an Associate Editor at Asia News Network.

Eastern Briefings

All you need to know about Asia


Our Eastern Briefings Newsletter presents curated stories from 22 Asian newspapers from South, Southeast and Northeast Asia.

Sign up and stay updated with the latest news.



By providing us with your email address, you agree to our Privacy Policy and Terms of Service.

View Today's Newsletter Here

Economics

Cooperating on energy in face of tariffs

At Houston oil and gas industry forum, US, China executives discuss future. The US energy industry expects a strong long-term energy relationship with China, a US energy official told US and Chinese oil and gas executives the day after China announced a retaliatory 10 per cent tariff on US natural gas. Steve Winberg, US Energy Department assistant secretary for fossil energy, on Wednesday assured the energy executives that the US has never revoked a liquefied natural gas (LNG) export authorization, nor plans to do so. “Some potential exporters and financiers have expressed concern that the US may rescind or revoke LNG export authorization. Let me be very clear that these concerns are unfounded,” Winberg said on Wednesday at the opening of the two-day 18th US-China Oil and Gas Industry Forum in Houston. The forum has been a collaboration of the US Energy Department, Ch


By Cod Satrusayang
September 25, 2018

Economics

Swift assistance needed to rehabilitate Hokkaido’s quake-stricken industries

To realize Hokkaido’s post-quake rehabilitation, it is indispensable to rebuild its industries. A half month has passed since the Hokkaido earthquake, which registered the highest level on the Japanese seismic intensity scale of 7. A power blackout that spread to all parts of the prefecture has been resolved. The No. 1 unit at the Tomato-Atsuma thermal power plant — a facility that plays a central role in the supply of electricity there — has been brought back on line. The government has withdrawn its request for power-saving, and neon lighting has returned to flourishing areas in Sapporo. However, scars from the earthquake have not yet healed. Even if the amount of direct damage, including that caused to roads, rivers and forest land, is calculated alone, the figure exceeds ¥150 billion. There are still many disaster victims in evacuation centers. T


By The Japan News
September 25, 2018

Economics

Disruption seen from auto parts duty in US-China trade war

US tariffs on Chinese auto parts will probably result in higher prices and could disrupt the global automotive supply chain industry. The Trump administration has imposed a new 10 percent tariff on $200 billion worth of Chinese goods that takes effect on Sept 24. Beginning on Jan 1, the tariffs will increase to 25 percent. China retaliated with $60 billion of new tariffs on US products. The new levies target more than 100 automotive products including engines, gaskets, rubber seals, tires and transmission shafts. Tariffs are basically taxes on the consumer, and all costs increases within the supply chain will eventually be passed along to the consumer, according to Peter Nagle, senior automotive analyst at IHS Markit. “In the short-term, suppliers might absorb some of the cost of the tariff but eventually they will have to raise prices or resource product from elsewhere, which also will rai


By China Daily
September 24, 2018

Economics

India launches world’s biggest healthcare programme

Prime Minister Narendra Modi launched India’s ambitious healthcare program on Sunday. Deemed the “world’s largest government-funded healthcare programme”, the scheme will cover half a billion people through its network of hospitals and support services. Speaking at the event, the PM said that the number of beneficiaries is equivalent to the total population of the United States, Canada and Mexico or the entire European Union. “This is a major step taken to fulfil the vision of providing better healthcare facilities to the poorest of the poor and to those standing last in the queue,” the PM said. Following the launch, the PM informed the gathering that the scheme covers diseases such as cancer, heart diseases, kidney and liver problems, diabetes and over 1300 various ailments. “The treatment of the diseases can not only be done in government hospitals but also private hospitals,” said


By Cod Satrusayang
September 24, 2018

Economics

US exempts Korean steel from import tariff

The move is seen as a positive signal for the local steel industry. Steel products made by South Korea’s SL Tech has been excluded from the US’ steel tariffs, marking the first case of exemption since the US imposed a quota on Korean steel shipments this May, industry sources said Thursday. The US Commerce Department earlier this week accepted US medical device manufacturer Micro Stamping’s request for a tariff exemption on ultrafine steel tubes imported from Korean steel company SL Tech. Micro Stamping uses ultrafine steel tubes made by SL Tech to produce medical equipment. Korean steelmakers viewed the decision as a positive sign of a higher possibility of tariff exemptions, while remaining cautious over whether the same decision would be applied to steel products used for construction and household appliances.


By The Korea Herald
September 21, 2018

Economics

China hits back with tariffs on US$60b of US goods in trade war

China has hit back with reciprocal tariffs after President Trump imposed tariffs on over $200 billion of Chinese goods. China will impose tariffs on US$60 billion (S$82.3 billion) worth of US goods as retaliati


By The Straits Times
September 19, 2018