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Despite Obama snub, AIIB chief says door still open to US

BEIJING — One year after opening with 57 charter members, the China-led Asian Infrastructure Investment Bank (AIIB) remains open to the United States joining it, the bank’s president, Mr Jin Liqun has said.

Mr Jin Liqun, president of the Asian Infrastructure Investment Bank. Photo: AFP

Mr Jin Liqun, president of the Asian Infrastructure Investment Bank. Photo: AFP

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BEIJING — One year after opening with 57 charter members, the China-led Asian Infrastructure Investment Bank (AIIB) remains open to the United States joining it, the bank’s president, Mr Jin Liqun has said.

“The door will remain that way,” Mr Jin said in a Bloomberg Television interview, when asked whether he expects Washington would reconsider becoming a member of the AIIB.

“We maintain a consistent policy. The AIIB is a multilateral development institution.”

About 30 countries are waiting to join the AIIB, Mr Jin said at the bank’s headquarters in Beijing.

The lender with US$100 billion (S$144 billion) of pledged capital, which is part of Chinese President Xi Jinping’s push to expand the nation’s global influence, backed nine projects in seven countries last year.

Before the AIIB opened last January, US President Barack Obama rejected joining it, only to see several close American allies sign up. Now Beijing is preparing for the incoming US administration of Mr Donald Trump, who is already straining US-China ties before taking office on Jan 20.

Mr Jin, a former deputy finance minister who worked at the World Bank and the Asian Development Bank on China’s behalf, is still optimistic despite recent tensions.

“We can work very well together,” Mr Jin said, adding that senior officials in the US government, including Democrats and Republicans, have shared with him their praise for the new institution.

“I’m very much encouraged by the very positive comments on AIIB,” he added.

The AIIB got a boost last year when Britain, Germany, France and Italy became members. Other American allies such as Australia, South Korea and Canada also joined, leaving America and Japan as the only Group of Seven holdouts.

The AIIB’s inaugural projects ranged from a slum upgrade in Indonesia to a new pipeline linking gas fields in Azerbaijan to markets in southern Europe, via Turkey. The bank lent US$1.73 billion last year, exceeding an earlier target of US$1.2 billion.

Mr Jin said 75 per cent of the bank’s projects so far are proposed and co-financed with existing lenders, including the Washington-based World Bank, Manila-based Asian Development Bank and London-based European Bank for Reconstruction and Development, while AIIB staff selected the remainder.

According to Mr Jin, the AIIB will continue to collaborate closely with those other multilateral lenders while beefing up its own capability and working to increase its disbursements.

“The pipeline is getting bigger,” and the bank’s priority is to “have a better balance across the regions, countries and sectors”, he said.

Mr Jin said he is confident the country’s economy will fare well during its transition to new drivers of growth.

“China is faced with a number of challenges, particularly restructuring the economy, moving from excessive dependence on external sectors to domestic consumption, and improving the efficiency of the Chinese economy, not aiming at simply the numbers of the growth,” he observed.

Factories and services activities capped a year of strengthening across several indicators. But under the hood, risks remain: Increasing pressure on the yuan, rising capital outflows and concern that Mr Trump may make good on threats of punitive measures against China’s exports.

“China is a very much resilient country,” Mr Jin said. “The leadership is also capable of dealing with very tough issues.”

Foreign reserves fell for a sixth month in December, bringing the 2016 drop to US$320 billion. Capital outflow pressures have intensified as the yuan posted its steepest annual drop in more than two decades.

To prevent capital flight, authorities have recently announced new measures, including extra requirements for citizens converting yuan into foreign currencies.

“Some measure to address this issue in my view probably is necessary,” Mr Jin said.

He added that the global economic outlook this year is more positive than last year.

“If you look at the short-term cyclical recovery, and long-term trend, these two factors seem to be doing pretty well,” Mr Jin said.

“That would in my view favor infrastructure investment both in emerging market economies and in developed countries, which in turn will help sustain the growth. It is gratifying to learn that even in the US, they would like to spend more money on the infrastructure.” BLOOMBERG

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