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Jin Liqun on Asian Infrastructure Investment Bank and multilateralism
President of the multilateral development bank looks back at its eight-year consensus-based operation: expanding from 57 members to 109, with loans totaling $45 billion
At the 30th-anniversary celebration and academic seminar of the Shanghai Development Research Foundation (SDRF) on September 21
Jin Liqun, formerly China’s vice finance minister and now President of the Asian Infrastructure Investment Bank (AIIB), delivered a keynote speech (Chinese) titled "Upholding Multilateralism, Establishing and Maintaining an Image As a Responsible Major Country." He reviewed the founding and development process of the AIIB and shared his views on multilateralism.
Respected Vice Chairman Qiao Yide, ladies and gentlemen:
Good evening! It's truly an honor to be part of the 30th-anniversary celebration of the Shanghai Development Research Foundation via video conference. Due to my current role in Egypt presiding over the Annual Meeting of the AIIB Board of Governors, I am unable to join you in person. Kindly accept my sincere apologies, and I eagerly look forward to the opportunity to engage in face-to-face discussions with each of you in the future.
The Shanghai Development Research Foundation was established in the context of China's reform and opening-up. Over the last three decades, the foundation has played a proactive role in contributing to the development and openness of Shanghai. It has also grown into a high-level platform for discussing major issues in the Chinese and global economies, earning broad recognition and praise both at home and abroad. Here, I would like to extend my heartfelt congratulations to the Shanghai Development Research Foundation on its tremendous achievements over the past 30 years!
Today's celebration is also a gathering of minds to exchange thoughts on China's relations with the world. Allow me to seize this moment to share my views on multilateralism, highlighting its relevance to the establishment and development process of the AIIB.
This year commemorates the 45th anniversary of China's reform and opening-up. Reflecting on the journey of opening up during the past 45 years, multilateralism has consistently stood as the fundamental value orientation for China. In his speech marking the 40th anniversary of China's reform and opening-up, President Xi Jinping emphasized that China will unswervingly follow the path of peaceful development, and pursue a mutually beneficial strategy of opening up. President Xi also highlighted China's active participation in the process of economic globalization, advocating for the establishment of an open world economy, building a community with a shared future for mankind, and contributing to the reform of the global governance system. This commitment aligns with the core spirit of multilateralism, embodying the responsibilities that a great nation should shoulder in advancing the common interests of humanity.
China not only articulates these principles but also translates them into action. In the process of reform and opening-up, especially over the past decade, China has played a significant role in the world economic system as an engine of growth, a stabilizer of development, and a promoter of global agendas.
China has consistently contributed over 30% to global economic growth for an extended period, establishing itself as the largest trading partner for more than 130 countries and regions. Global trade in goods has nearly doubled since China acceded to the WTO.
In both the financial crises of 1998 and 2008, China showcased the resilience of its economy by adeptly sustaining its economic and financial stability. Furthermore, through active participation in global and regional multilateral forums like the G20, 10+3, and APEC, China engaged in extensive coordination of macroeconomic policies, playing a pivotal role in the global economic recovery. Confronted with the challenges posed by the COVID-19 pandemic and intricate geopolitical landscapes, China ensured the smooth and stable operation of the global supply chain. It firmly supported and upheld multilateral trade rules while vehemently opposing unilateralism and trade protectionism.
Faced with formidable challenges in diverse fields, including global sustainable development, climate change, major infectious diseases, ecological protection, and biodiversity, China has been actively championing the ratification and execution of The Paris Agreement. China has made a solemn commitment to peak carbon dioxide emissions before 2030, achieve carbon neutrality by 2060, and refrain from constructing new overseas coal-fired power projects. China's global development initiatives have been instrumental in providing essential support for the United Nations' 2030 Agenda for Sustainable Development.
In October 2013, President Xi Jinping, on behalf of China, proposed the establishment of the AIIB, which received a positive response from the international community. This signified an important move for China to further open up in the new era, and a critical initiative put forward by China as a responsible great power to enhance international economic governance and support the global development agenda. As the AIIB was being set up and operationalized, President Xi Jinping, with the vision of building a community with a shared future for mankind, provided a systematic explanation of China's goal behind proposing the AIIB's establishment. He delved into the original aspirations and mission of the AIIB, its governance and operational principles, and its role in the broader international economic governance system, among other crucial aspects. President Xi emphasized that China has taken an active part in, contributed a constructive part, and benefited from the international development system. The initiative to establish the AIIB is a constructive move. It will enable China to undertake more international obligations, promote improvement of the current international economic system, and provide more international public goods. This is a move that will help bring mutual benefits and win-win outcomes to all sides. The overarching goal of establishing the AIIB is to advance infrastructure construction and connectivity in the Asian region, deepen regional cooperation, and foster mutual development. The AIIB is envisioned to evolve into a new platform for fostering a community with a shared future for mankind, serving as a bridge for both South-South and North-South cooperation. President Xi highlighted that the AIIB operates as an international financial institution, with its rules and operations shaped through consultation among member countries—not unilaterally decided by China. The AIIB should advocate for open and inclusive regionalism, encouraging active participation from all interested nations and working towards mutually beneficial cooperation. Moreover, the AIIB is anticipated to embrace the principles of multilateralism, complementing existing multilateral development institutions, enhancing cooperation, and collectively advancing the prosperity of both Asian and global economies. To realize this vision, the AIIB should learn from the experiences of established multilateral development banks, adhering to international, standardized, and high governance standards in areas such as business policies, human resource management, ensuring professional and efficient operations, transparency, and integrity.
Looking back at the proposal made ten years ago and the successful operation over the past eight years, the AIIB has continued to develop rapidly, demonstrating the value and essence of multilateralism amid the evolving international landscape.
First, it has consistently upheld mutual benefit and promoted common development. Over the past eight years, the AIIB, through various investment and financing operations, has continuously made efforts to promote sustainable infrastructure development, advancing infrastructure connectivity, and deepening regional cooperation. As of now, the AIIB Board of Directors has approved 233 projects with a total amount of nearly $45 billion, leveraging a total investment of nearly $150 billion, benefiting 35 member countries and regions. These projects cover infrastructure construction in areas such as transportation, energy, urban development, and water resources, as well as the development of social infrastructure in the fields of public health and education. The AIIB has made significant contributions in advancing common and sustainable development around the world.
Specifically, concerning green infrastructural development, the AIIB has outlined a target in its first Corporate Strategy for 2021-2030 to achieve a 50% proportion of climate financing by 2025. By the end of 2022, our investment in climate change had exceeded $11 billion, accounting for 56% of the AIIB's total investment that year, achieving the mid-term development strategy's target three years ahead of schedule. In July of this year, we ensured that all financing projects were fully aligned with the goals of The Paris Agreement.
It is the AIIB's unshirkable responsibility to help developing member countries, particularly low-income countries, respond to crises and challenges. In the wake of the COVID-19 pandemic in 2020, the AIIB swiftly established the "COVID-19 Crisis Recovery Facility" to support developing countries in combating the pandemic and recovering their economies. To date, the AIIB has provided nearly $14.7 billion in rapid funding support to 26 developing member countries. Beijing, Chongqing, and Wuhan in China have also benefited from the AIIB's financial support for pandemic response. Meanwhile, the AIIB has provided relief support to Sri Lanka, grappling with internal and external impacts, and to Pakistan, facing the aftermath of rare floods, with $100 million and $1.5 billion respectively since last year.
Second, it has consistently adhered to openness and inclusiveness, cooperating to advance the global development agenda. As the AIIB's initiator and largest contributor, China, from the very beginning of the AIIB's establishment, has adhered to the concept of a community with a shared future for mankind and open and inclusive regionalism. Following the principles of joint consultation, joint construction, and shared benefits, China has worked together with all parties to create this multilateral platform. On one hand, in negotiations, China consistently upholds the principle of democratic consultations, striving to find common ground while respecting differences, treating all parties equally, and avoiding a domineering approach. On the other hand, China does not create small circles or exclusive blocs; instead, it keeps its gate open, actively inviting Western countries such as the United States, Japan, and European nations to participate. Currently, the AIIB has expanded from 57 founding members to include 106 member economies spanning all six continents. During the AIIB Annual Meeting in Egypt, the Board of Governors is set to approve three new members, bringing the total to 109. Our network of friends is growing larger, with developing countries as the primary participants, including a substantial number of developed nations. It now stands as the second-largest global multilateral development institution in terms of membership. In terms of shareholding structure, although developing countries have the majority of shares, Western members' total shares also exceed 25%, giving them veto power on important decisions requiring a super majority of 75%. The Board of Directors and management negotiate and reach a consensus when facing issues, seeking common ground while reserving differences. They make decisions on important matters based on consensus, eliminating the need for voting. Everyone coexists in harmony, discusses major development plans through consultation, and maintains a cooperative atmosphere. This balanced arrangement and unique advantage lay the institutional foundation for the AIIB to play a bridging and linking role in South-South and North-South cooperation.
As a part of the multilateral development institutions' family, the AIIB has actively worked together with all parties to promote the global development agenda since its inception. In 2022, we established an Operational Partnership Office to further strengthen collaboration with various institutions. Currently, the AIIB has forged solid partnerships with traditional multilateral development institutions such as the World Bank, the Asian Development Bank, and the European Bank for Reconstruction and Development. Furthermore, we have signed memoranda of understanding with 32 multilateral and regional financial institutions, including the China International Development Cooperation Agency. These agreements facilitate collaboration in joint financing, knowledge sharing, capacity building, and various other areas, collectively contributing to the sustainable development of low-income countries. I have also engaged in or chaired meetings of multilateral development bank presidents, which encompassed 12 multilateral development banks. In these sessions, we fostered international dialogue and deliberated on multilateral solutions to global issues, ranging from macroeconomic stability to climate change, green development, and the digital economy.
Third, it has consistently operated according to high standards and norms based on multilateral rules. In terms of internal governance, the AIIB has established a complete three-tier structure of Board of Governors, Board of Directors, and Management following the common practices of multilateral development banks, ensuring that every member, regardless of its economic size, has a say and is respected and heard. As the largest shareholder, China also plays a constructive role through the Board of Governors and the Board of Directors. Meanwhile, the AIIB has established an effective banking supervision and accountability mechanism based on the principles of transparency, openness, independence, and accountability. This includes a clear division of responsibilities between the President and the Board of Directors and the annual performance evaluation of the President. These systems and mechanisms build trust and facilitate efficient decision-making.
In terms of institutional development, the AIIB has continuously improved and enhanced various policies and internal governance guidelines, including the formulation and revision of important policy rules such as the Environmental and Social Framework, Operational Policy on Financing, Accountability Framework, Procurement Policy, and Policy on Public Information. The AIIB has also established mechanisms such as the Project-affected People’s Mechanism (PPM) and the Independent Accountability Mechanism (IAM) to rigorously enforce anti-corruption measures during project execution and internal management and address conflicts related to the environment, society, and governance.
In terms of personnel selection and training, the AIIB's charter explicitly emphasizes the principles of "openness, transparency, and merit-based selection" for management. This principle is embodied in the institution's highest legal documents, making the AIIB the first among all major multilateral development banks to adopt such practices. The recruitment of AIIB staff is not limited to members but open to all countries and regions globally. Currently, the AIIB has assembled a high-quality workforce with core personnel from 65 countries and regions, totaling 500 professionals. As our business continues to evolve, we anticipate attracting more outstanding talents from various countries to join the AIIB.
Thanks to the AIIB's consistent nature as a multilateral institution and its positioning as a cooperative platform, its adherence to international, normative, and high standards in operation, the AIIB has withstood various challenges in a complex geopolitical environment. This resilience has garnered widespread recognition and praise from the international community. Notably, the AIIB has consistently received the highest AAA credit rating from the three major international rating agencies (Moody's, Standard & Poor's, and Fitch).
The successful establishment and operation of the AIIB mark a victory for multilateralism, showcasing the shared pursuit of peace, development, and cooperation by all countries. It also demonstrates China's leadership, credibility, and appeal as a responsible great power. In 2017, at the World Economic Forum in Davos, an Associated Press reporter asked me whether the establishment of the AIIB was a success of China's foreign policy. I answered, "Of course! But it is also the diplomatic achievement of the other 56 founding members. There is no denying it."
Facing great changes unseen in a century, Chinese leaders proposed the establishment of the AIIB with a focus on the common interests of humanity. They have consistently provided strategic guidance for its robust operation and long-term growth. In July 2020, during his speech at the opening ceremony of the AIIB's fifth annual meeting of the Board of Governors, President Xi Jinping suggested that the AIIB should aspire to become a new type of multilateral development bank that promotes development across the world, a new type of development platform progressing with the times, a new type of high-performance institution for international cooperation, and a new paradigm of multilateral cooperation. This sets ambitious goals for the AIIB's future development. Confronted with overlapping global challenges, the AIIB is poised to rise to the occasion, holding high the banner of multilateralism and collaborating with all stakeholders to generate dividends in peace, development, trust, and governance.
Finally, I would like to thank the organizers of the conference for their invitation. I also look forward to continued attention and support from all the distinguished guests for the AIIB's development!
Thank you all!