CHINA-ECONOMY & INDIA: AIIB PRESIDENT JIN LIQUN REFERS TO BORDER CLASHES WITH INDIA IN HIS SPEECH AT CHINA INTERNATIONAL FINANCE 30 FORUM ON MAY 16

Zichen Wang of Pekingology translated a speech by Jin Liqun, President of the Asian Infrastructure Investment Bank (AIIB) and once China’s Vice Finance Minister, at the 3rd symposium of the China International Finance 30 Forum, on May 16, 2021. The speech is available on some Chinese websites, including on Tencent News and the public WeChat blog. A version of the speech was also published on Financial News, a newspaper under China’s central bank, on June 7. (Till now, there appears to be no English coverage of the speech). The main points of Jin Liqun's speech are: 1) Bilateral contradictions among member States should not be dragged into multilateral institutions. When there was a conflict on the border between China and India, the AIIB still offered loans to India. Some people in China couldn't figure it out: why we are fighting here and you (AIIB) are offering loans to India? I told our companies and banks about this, and they all understand it very well. Our enterprises can't get in even if they want to go in, why shouldn’t the AIIB make the loans? Besides, the funds are not given to India for nothing, India has to repay the principal and interest. Some others thought, why do you have to provide loans to India at that time? How did I know you would be fighting at this time? We have long already arranged the schedule. And we went to the Board of Directors according to the progress of the project, at which time, the two sides (China and India) engaged in fighting - how could we (AIIB) change it? I couldn’t change it. When the Sino-Indian border conflict occurred, the management of AIIB still adhered to international standards, and the international response was very positive. This is the first severe test of the nature of AIIB as a multilateral institution. 2) Not long ago, I held a video conference with a German think tank, which surprised the Germans. India accounts for 25% of the total loans of AIIB and is the No.1 borrower. I said, what's so surprising about this? Isn't this an international institution? We can't talk about international standards and best practices at ordinary times but when we encounter practical problems we lost our thinking and resorted to something else. Once you break your promise, it is very difficult to restore your reputation. The borrowing countries are not required to cooperate with Chinese-funded institutions - the principle of mutual consent always holds at AIIB. The AIIB has cooperated with Silk Road Fund and is also negotiating with some Chinese-funded enterprises, but all of them are based on the needs of the borrowing countries themselves. 3) We just want to establish an international multilateral institution in the true sense, adhere to best practices and be apolitical. Bilateral contradictions among member States should not be dragged into multilateral institutions. 4) Under Jin’s leadership, the AIIB has steered clear of coal financing. A senior Chinese official recently said Some countries want our country to help build coal-fired power plants, but coal-fired power plants have reputation problems, so China feels very entangled. To which Jin replied that if China can clearly declare that the Belt and Road Initiative will not engage in coal power and only support clean energy, it will greatly enhance the reputation of the BRI. 5) If the existing governance structure and operation mode of international multilateral institutions are not reformed, it will be difficult to adapt to the requirements of the new era. Hence, new bodies like the AIIB are needed. Every single provision in the Washington Consensus does not seem to make a big mistake, but putting them together for implementation is a huge risk for developing countries. The Washington Consensus appears to represent the truth, but it is not applicable to many countries.  6) China has grown a lot. Does it mean that China can naturally play a leading role in the international economic order and that we have a lot of power? In fact, not so much. 7) It is always correct that we should be modest and prudent. We are already a big country, it is very important for us to have the demeanour and bearing of a big country in our relations with developed countries and many developing countries. 8) Jin also answered three main problems that make the United States very worried. First, will the AIIB initiated by China invade the territory of the World Bank? Second, will the AIIB be dedicated to cooperating with Chinese-funded institutions to promote Chinese-funded institutions to go global? Third, is the AIIB a tool to promote China's Belt and Road Initiative, or is it simply a bank of the BRI?

(Comment: His entire speech is interesting and reveals to an extent China's long-term thinking about reforms in the international economic institutions.)






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