New China bank sets ambitious early goals

Having managed to organize and fund itself despite a cool reception from the Obama administration, China’s new Asia Infrastructure Investment Bank is setting some ambitious goals as it prepares for its formal opening later this month.

The U.S. will not be among the founding members of the AIIB, but dozens of Washington’s top allies in Europe, the Middle East and East Asia have signed on to China’s new development bank, designed to help finance trillions of dollars in new infrastructure projects and programs across the booming Asia market.

China will be the largest single shareholder and AIIB President-designate Jin Liqun, a Chinese banker and former vice finance minister, told reporters this week the new bank hopes to lend as much as $15 billion a year for the first five or six years of its operations. He also dismissed privately voiced fears from U.S. officials and others that the Beijing-based AIIB would serve as an arm of China’s economic and foreign policy, potentially undercutting international standards on lending standards, the environment and corruption.

“The bank is neither a Chinese bank nor a bank owned by the Chinese government, but one owned by all participating countries,” Mr. Jin told a conference organized by the European Union Chamber of Commerce in Beijing Tuesday, according to the official China Daily.

China will be the largest single shareholder and have the largest voting share by providing just over a quarter of the startup funding.

The AIIB, the first major new multilateral financial institution created in nearly two decades, plans to hold its first board meeting in January and begin selecting its first projects for funding in early 2016, Mr. Jin said. Despite the recent inclusion of China’s yuan in the International Monetary Fund’s basket of global reserve currencies, the bank will make its first project loans in dollars, although Mr. Jin did not rule out yuan-based deals in the future.

China insists the AIIB will not duplicate the work done by the U.S.-backed Asia Development Bank based in Manila, saying the region’s infrastructure needs are so massive over the next 15 to 20 years that there will be plenty of business to go around. AIIB officials have already been in touch with the ADB, the World Bank and the European Bank for Reconstruction and Development about joint projects, both in Asia and Europe.

The bank has come together with remarkable speed for a major new international financial institution. Chinese President Xi Jinping first proposed on a visit to Indonesia in October 2013. As it has grown into a global economic superpower, Beijing has repeatedly chafed at its lack of clout in the traditional, Western-dominated financial institutions such as the International Monetary Fund and World Bank.

While the U.S. and Japan have held back from joining the AIIB, other major economies, including Britain, Germany Australia and South Korea, have either signed on as charter members or expressed an interest in joining.

Mr. Jin dismissed fears that the AIIB will undermine lending and ethics standards for development institutions, refusing to be provoked by the open skepticism and criticism that has greeted the bank.

“We were very calm and serene,” he said, according to an account in Bloomberg News. “We are very patient. For a Chinese nation with 5,000 years of civilization, patience is no problem.”