China's President Xi Jinping opens AIIB, says it will boost infrastructure investment in Asia

China's President Xi Jinping delivering a speech during the opening ceremony of the Asian Infrastructure Investment Bank.
China's President Xi Jinping delivering a speech during the opening ceremony of the Asian Infrastructure Investment Bank. PHOTO: EPA

BEIJING (Bloomberg) - The US$100 billion (S$144 billion) Asian Infrastructure Investment Bank (AIIB) will boost investment for infrastructure in Asia, improve connectivity and integration, China's President Xi Jinping said on Saturday (Jan 16) at the opening ceremony for the new China-backed lender.

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

The Beijing-based AIIB, which will compete and cooperate with the Washington-based World Bank and Japan-led Asian Development Bank, is pivotal to Mr Xi's vision for China to achieve the same great-power status enjoyed by the US.

With the bank open after China overcame opposition from the US, the focus switches to whether it can achieve the high standard of governance it has promised even as waning confidence in the government's efforts to manage a slowing economy has plunged stocks into a bear market.

"Setting up a development bank is relatively easy, running a bank is hard," said Mr 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, Mr Pierre Gramegna, Luxembourg's 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. The AIIB is one of three entities it's 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.

Mr 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, the Australia & New Zealand Banking Group said last year.