Significance of establishing the AIIB
- By Zhang Maorong
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E-mail China.org.cn, February 22, 2016
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Jin Liqun, president of the Asian Infrastructure Investment Bank (AIIB), speaks at a press conference in Beijing, capital of China, Jan. 17, 2016. This was the first press conference of the AIIB, a China-initiated multilateral bank, after it started operational on Saturday. (Xinhua/Li Xin) |
The Asian Infrastructure Investment Bank (AIIB) officially opened for business on Jan 16. The AIIB is a regional and multilateral financial institution that was initiated by China. The successful opening for business of the AIIB means that Asian infrastructure development has a new financing channel and also marks that China shoulders the responsibility of a big power and plays its leading role as it should.
The AIIB finances Asian infrastructure construction, which helps the economic development of the relatively backward Asian countries. At present, many Asian countries are either at the initial or acceleration stage of industrialization and urbanization. They have a great demand for the infrastructure of transportation, energy, communication, etc, but suffer a severe shortage of supply and are faced with the shortage of construction funds and the lack of technology and experience. Asian Development Bank estimates that the Asian region has a financing gap as high as $800 billion in infrastructure construction every year from 2010 to 2020. In view of this, the primacy of the AIIB is supporting infrastructure construction in the Asian region and that construction obviously has the effect of promoting the Asian economy.
A Chinese saying goes that you should build the road first before getting rich. The establishment and the smooth operation of the AIIB will be complementary to existing multilateral development banks, relieve the financing bottleneck faced by the Asian economies, speed up the Asian infrastructure construction and drive the economic development of the countries involved, thus boosting Asian and even the global economic growth.
The AIIB will benefit the European developed countries like Britain, France, Germany and Italy by broadening the investment channel and expanding foreign trade. Although the weak European economy will be hard to stimulate within a short time, Europe does not lack funds. Now, as a mature economy, Europe lacks a new economic growth point and has a low return on investment. Europe is eagerly looking for an investment opportunity of high return on its capital around the globe. Under the situation of the weak recovery of the world economy, as the most dynamic and high-potential region in the world, Asia is an important engine of world economic growth and has a large demand for infrastructure investment in particular. However, the existing international financial institutions such as IMF, the World Bank and the Asian Development Bank are neither willing nor able to heavily invest in Asian infrastructure construction. Besides, their conditions for investment keeps the developing countries away. Therefore, by joining the AIIB——an emerging multilateral development institution, European developed countries will clearly gain profits from their investment in the dynamic Asian region and build a closer economic and trade relations with Asia, exploring new markets for European products and service.
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