By Sean Chen
On Friday, Asian Infrastructure Investment Bank (AIIB) President Jin Liqun addressed the challenges of establishing the AIIB and shed light on the organization’s goals and daily operations. The talk, titled “The AIIB After Two Years,” was sponsored by the Shorenstein Asia-Pacific Research Center.
Officially established in 2016, the AIIB is a multilateral development bank (MDB) first proposed by Chinese President Xi Jinping in order to promote economic development in Asia through investing in infrastructure. The AIIB’s founding members included 57 nations, both within Asia and internationally. The U.S. and Japan are notably not members.
In its two years of operations, the AIIB has loaned to over 20 projects around Asia, over half of which involve joint investment with another MDB, such as the World Bank. The AIIB has invested in projects ranging from a long gas pipeline stretching from Azerbaijan to European nations to an upgrade of hydropower facilities in Pakistan. According to Jin, India has received the most loans from the AIIB; Turkish, Korean, Indian and Chinese companies have acquired a large amount of contracts.
Jin has been the AIIB’s president since its founding.
Reflecting on the impetus for the establishment of the AIIB, Jin said that, while many other MDBs do exist, there was a compelling reason to establish a bank with a modern style of governance.
“In the 21st century, we need a new kind of development bank with 21st century governance,” Jin said.
He mentioned that other major MDBs were founded in the previous century, and have not caught up with the times due to institutional inertia, lack of resources and sometimes divergent goals.
Jin addressed some of the changes the AIIB has made compared to existing MDBs. One such measure is the elimination of the resident board of executive directors, which in the World Bank meets once or twice weekly to approve all loans. Instead, more decision-making capacity is given to the management figures of the bank, which include Jin.
According the Jin, the AIIB made this managerial change to avoid the “vacuum of accountability” that arises when board members who hold sole responsibility for making loans move on from their posts long before the potential negative outcome of a loan can emerge.
Other features Jin mentioned are the AIIB’s focus on long-term infrastructure expansion and consideration of companies’ bids for projects, regardless of the companies’ country of origin.
Jin also indicated that decision-making in the AIIB is consensus-based amongst its managers.
“I never ever call the shot,” Jin said. “No resolution, no decision will be made and handed down without a very democratic discussion in our institution.”
Jin introduced the three pillars of the AIIB: lean, clean and green. The objectives stand for avoiding bureaucracy, eliminating corruption and promoting environmentally-sustainable economic development.
Jin particularly emphasized the AIIB’s zero-tolerance policy towards corruption. Citing his own previous credentials as the Executive Director of China at the World Bank and Vice President of the Asian Development Bank (ADB), Jin said that he is experienced in preventing corruption.
“[The AIIB] recruits the best of talents with moral and professional integrity,” Jin said, “This is not a boat of robbers.”
Addressing the relationship between the AIIB and China’s One Belt One Road Initiative (OBOR), which aims to strengthen economic ties amongst Eurasian nations, Jin said that OBOR focuses on bilateral negotiations. However, the AIIB is a multilateral international institution, meaning that more countries are represented during negotiations.
Jin said that it is important for the Chinese to focus on effective governance and standards within the OBOR so as to settle international skepticism about the program.
“It’s so important for [the AIIB] to go by international standard [to show that] China will mean what it says,” Jin said. “Then people will believe China’s also serious about its approach to One Belt One Road.”
Jin said that he welcomes U.S. membership in the AIIB, and added that U.S. nationals and companies are already involved with the AIIB despite America’s lack of formal membership.
“Credibility has to be earned,” Jin said. “Skepticism will disappear when you really deliver.”
Considering the AIIB’s record as presented by Jin, APARC director and sociology professor Gi-Wook Shin commented on U.S. involvement in the organization.
“Looking back, the U.S. made a mistake of not getting involved in the formation of this important multilateral development bank,” Shin wrote in an email to The Daily.
Shin also explained the value of events like Jin’s talk on the AIIB.
“One of APARC’s main missions is to raise awareness of the important functions of Asian institutions among students, faculty, and the larger Stanford community,” Shin wrote. “[Jin’s] speech clearly contributed to a better understanding of this new, influential organization.”
Jin also addressed the recent trade conflict between the U.S. and China. Particularly, Jin expressed that he felt U.S. measures are misguided.
“If you hurt China, you’re hurting your allies,” Jin said, saying that over half of China’s trade surplus with the U.S. can be accrued to the ventures of other countries, of which U.S. allies are a significant part. “You must understand first who you are aiming at [before starting a trade war], are you going to shoot at some part of your own body?”
Jin said that he believes trade war should not occur between the U.S. and China.
“Don’t blame globalization; blame yourself if you seem to be losing out,” Jin said. “But actually, nobody is really losing out in this world…it’s relative gains.”
Throughout the seminar, Jin quoted passages from the works of Yeats, Austen, Wordsworth, Shakespeare and other Western authors. Jin, an English masters graduate himself, mentioned the value of a liberal arts education. According to Jin, part of the mission of a university education is to train good citizens who hold good values.
“We in China attach too much importance on science and technology to the neglect of liberal arts education,” Jin said. “You may have young people very talented…but if he or she does not have very good values…they could be devastating.”
APARC fellow Thomas Fingar M.A. ’69 PhD ’77, who moderated the seminar on Friday, expressed agreement with Jin’s statements about education.
“[Jin’s] stress on integrity, honesty and humanistic values was clear and convincing,” Fingar wrote in an email to The Daily. “He made a powerful case that learning technical skills is not enough and that how one acts towards other people and society in general is critically important.”
Jin also said that public service should motivate learning.
“You never learn something for some material gains,” he said. “You need to learn something and do something good for society.”
Contact Sean Chen at kxsean ‘at’ stanford.edu.