How have the rising geopolitical tensions between the United States and China impacted the Chinese-led Asian Infrastructure Investment Bank (AIIB)? Its president, Jin Liqun, says they are having no impact.
"Regardless of the bilateral issues, which seems to be troubling [between] these two big countries, AIIB has maintained very good, close cooperation with American governmental institutions, financial institutions and respective businesses," Jin tells NPR's Steve Inskeep on Morning Edition.
He says the bank has strong relationships with Wall Street companies as well as with the U.S. Treasury Department.
Contentious issues — from Taiwan, to Chinese spy balloons, to trade — have put both countries on a collision course in recent years. Other financial entities have raised concerns about the growing duopoly between Beijing and Washington.
"Investment funds are particularly sensitive to geopolitical tensions and tend to reduce cross-border allocations, notably to countries with a diverging foreign policy outlook," according to a recent report by the International Monetary Fund (IMF). In another report, the IMF says, the ongoing tensions between the world's two largest economies could lead to a 2% decline in global output.
With tensions between the two countries not expected to abate anytime soon, there's no guarantee that the AIIB won't be affected in the future, but Jin is confident that his bank has the necessary checks and balances in place to avoid such a scenario.
"We don't pick projects from the Chinese government's list," he says. "We in the management try to reach consensus rather than push through any major decisions by voting. We don't do that."
Initially seen as a competitor to the World Bank, which is led by the U.S., the two banks have actually collaborated on dozens of projects over time. Over the past seven years, the AIIB nearly doubled its member countries, including close U.S. allies like Australia, Canada, the U.K. and Germany. China remains its largest shareholder with more than 26% of voting rights.
In comparison to the World Bank, the AIIB's investment strategy is focused on infrastructure development, including climate change mitigation and adaptation projects, Jin says. "Our idea is not to address poverty reduction directly. We try to promote sustainable development through investment in infrastructure."
Starting this July, all projects approved by the bank will need to be in alignment with the Paris Agreement on climate change. "To deal with climate change and all those development issues, no institution can go it alone," Jin says.
This echoes President Biden's World Bank nominee Ajay Banga, who recently told Morning Edition that tackling today's global challenges will require new partnerships and trillions of dollars.
To make sure people with low-income won't suffer further economic hardship from the shift toward a green future, Jin is calling on the world's wealthiest countries to protect their vulnerable citizens — and to share their resources with the rest of the world.
"Wealthy nations need to provide financing and technology," he says. "If you really want to achieve the long term benefit because you think this is in the best interest of humanity, then there must be some sacrifice in the short term."
Jin is bullish about the global economic outlook, even though he acknowledges that some countries face a tougher road to recovery.
"Global growth is not synchronized. Some countries' growth seems to be robust," he says. "All in all, I don't think there will be major troubles looming large on the horizon."
Not all economists agree. Many caution that high inflation and rising interest rates could hamper economic growth and lead to a downturn — potentially a recession — in many countries.
The U.S. and Japan — among the world's biggest economies — are two nations impacted by those economic headwinds. They are also the two nations who have so far refused to join the AIIB. Back in 2015, the U.S. government opposed the AIIB's creation and reportedly urged its allies and partners in Europe and Asia not to join.
"The United States remains focused on its existing commitments to the International Financial Institutions in which we are already members, and has no plans to join the AIIB," a Treasury spokesperson tells NPR.
Majd Al-Waheidi edited this digital story. contributed to this story
Copyright 2023 NPR. To see more, visit https://www.npr.org.
