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Asean & Global Updates
POSTED | 12:44 PM | 16-01-2016

Xi: AIIB to boost infrastructure investment in Asia

The $100-billion Asian Infrastructure Investment Bank will boost infrastructure investment in Asia and improve integration, China’s President Xi Jinping said on Saturday (16 Jan 2016) at the opening ceremony for the China-backed lender, Bloomberg News reported.

The AIIB will provide impetus for economic growth in Asia and the rest of world, Xi said at the event in Beijing to mark the emergence of the world’s first major multilateral development bank in a generation.

The Beijing-based AIIB will compete and cooperate with both the Washington-based World Bank and the Japan-led Asian Development Bank. The new lender is pivotal to Xi’s vision for China to achieve the same great-power status as the US, which opposed the creation of the AIIB. China will need to meet its pledge for a high standard of governance at the AIIB amid a slowdown in the country’s economy and a plunge in stocks.

“Setting up a development bank is relatively easy, running a bank is hard,” said David Loevinger, a former China specialist at the US Treasury and now an analyst at fund manager TCW Group Inc in Los Angeles. “China has committed to hold the AIIB to high standards of governance and transparency. They’ve talked the talk. Now they’ve got to walk the walk. If China delivers, its role as a global leader will be enhanced.”

The emergence of the AIIB shows that China is playing a full role as a member of the global economy, and is evidence of global rebalancing, Pierre Gramegna, Luxembourg minister of finance, said at the Beijing ceremony.

The last new multilateral lending institution was the European Bank for Reconstruction and Development, set up in 1991 to help rebuild former Communist nations in Eastern Europe after the Cold War.

China has similarly lofty goals, said Bloomberg News. The AIIB is one of three entities China is promoting, along with a joint BRICS Development Bank with Brazil, Russia, India and South Africa, and a Silk Road Fund designed to revive Chinese commercial ties in south and central Asia. They would join existing bodies including the ADB, World Bank and Inter-American Development Bank in offering finance to developing nations.

Xi aims to fund projects that will aid development in what are already some of the world’s fastest-growing areas. The vision could produce benefits that match China’s integration with the global economy when it joined the World Trade Organization in 2001, Australia & New Zealand Banking Group Ltd said last year.

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