Tuesday, July 15, 2014

Asian Infrastructure Investment Bank
  • The Asian Infrastructure Investment Bank (AIIB) is an international financial institution proposed by China. 
  • AIIB is regarded as a rival for the IMF, the World Bank and the Asian Development Bank (ADB) which the AIIB says are dominated by developed countries like the USA and Japan.
Progress ?

  • The first news reports about the AIIB appeared in October 2013.
  • In June 2014 China proposed doubling the registered capital of the bank from 50bn USD to 100bn USD and invited India to participate in the founding the bank while Japan shows reluctance to join it . 
  • As of the summer of 2014 the founding process is still underway.

Can AIIB innovate?
  • For sure, Asia needs more than the ADB. The multilateral body’s President Takehiko Nakao admitted that while the ADB’s project lending approvals are growing at US$13bn a year, Asia-Pacific requires an aggregate US$800bn in annual spending on new infrastructure. 
  • On a global scale, the importance of existing multilaterals has also proven insufficient; according to OECD data, total global donor flows (both through ODA and the private sector) had grown dramatically to US$510bn in 2010 but then tapered off to US$474bn in 2012. 
  • Meanwhile, high savings-to-GDP rates and the recent low interest rate environment have failed to stimulate large scale infrastructure build-ups in Asian giants such as India and Indonesia.
  • The fund is sizable to ADB which runs $165 billion capital

What India should BARGAIN for if it JOINS it ?
  • India and China can increase their economic and political network
  • India must ask for a full time membership in the Shanghai Cooperation Organisation (SCO) ...right now it has a observor status
  • China and Russia have signed a $400 billion gas pipeline deal recently ...India must ask for its extension into INDIA.

Conclusion !!

AIIB can be set up in a manner in which it is run professionally, can dissociate itself from global geopolitics, and both compete and cooperate simultaneously with existing heavyweights in the region, the outcome could be a positive one for Asia’s catch-up developing economies.

Print Friendly and PDF

Blog Archive