During Chinese President Xi Jinping's trip to Southeast Asia in October 2013, he proposed establishing an Asian Infrastructure Investment Bank (AIIB). |
The world economic pattern is gradually changing in the wake of the international financial crisis. Under the context of economic globalization, the international division of labor is still in progress, but encounters ever more challenges. In addition to the hurdles confronting the multilateral trading system, further adjustments are also required to the global financial architecture. Regional financial cooperation, in common with regional trade cooperation, needs more favorable conditions to develop. The interaction among member nations of Asia-Pacific Economic Cooperation (APEC) show that China has a significant capacity for trade cooperation, and that it will also play an important role in regional financial cooperation.
China is now in the midst of establishing three cooperation platforms. One is the BRICS Development Bank, whose headquarters will be in Shanghai. Another is the Shanghai Cooperation Organization (SCO) Development Bank, which is still under design. And during Chinese President Xi Jinping's trip to Southeast Asia in October 2013, he proposed establishing an Asian Infrastructure Investment Bank (AIIB).
New Infrastructure Finance Option
As of August 2014, after the fourth round negotiations, 20 countries were willing to become founding members of the AIIB.
In fact, as early as May 2, 2014, Chinese finance minister Lou Jiwei attended the ministerial meeting in Astana, capital of Kazakhstan, on preparations for the AIIB. Other participants included his counterparts in 15 countries, namely Laos, Kampuchea, Myanmar, Thailand, Vietnam, Malaysia, Singapore, Brunei, the Philippines, Indonesia, Kazakhstan, South Korea, Mongolia, Pakistan, and Sri Lanka, 10 of whom are ASEAN member nations. China and South Korea also have their respective cooperation frameworks with ASEAN, but these are trade rather than financial cooperation platforms. It is imperative that corresponding financial cooperation platforms be built.
Global management consulting firm McKinsey & Co predicts that from 2010 to 2020, emerging economies in Asia will need US $10 trillion for infrastructure investment, including US $4.1 trillion for energy sources, US $2.5 trillion for transportation, US $1.1 trillion for communications, and US $400 billion for water and environmental health. The fact is that some of the 16 AIIB founding members are underdeveloped countries whose lack of capital in recent years precludes launching any of their infrastructure projects.