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WEEKLY DIGEST: October 18-24, 2015

10/26/2015

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The Asian Infrastructure Investment Bank

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The AIIB's President Designate Says it’s China's Time to Contribute to Asia, and the World.

President Designate of the AIIB, Jin Liqun, addresses the public at Brookings in order to introduce the bank's early projects and road blocks. More the 60 countries have joined the AIIB, demonstrating a view of the bank as a complement to the World Bank and IMF, rather than a threat.  The AIIB will work with the ADB to fill the infrastructure gap, according to Liqun. The former also assured the group that the AIIB is taking a new approach that will avoid the issues that other organizations have run into.


Polar Opposites: U.S.-China Relations vs. U.K.-China Relations.

British officials have made it clear that Britain wants to be China's greatest asset in Europe in order to secure jobs and economic growth. As for the United States, the story could not be more different. The upcoming U.S. elections have sparked an increase in negative dialogue concerning China.


U.S.-British Relations Diminishing as Britain Allies with China.

Cooperation between UK and China has expanded from being mainly economic to involving issues included the controversial South China Sea. Furthermore, the U.S.'s consideration of becoming a presence in the South China Sea is viewed by the U.K. as a unilateral power move to establish rights of passage. U.K. officials have made it clear they will not continue to support Washington if they start to "go in the wrong direction".


Kazakhstan’s Love Affair with China Reaches New Heights.        
                                              

China and Kazakhstan have entered negotiations to integrate the Chinese Silk Road Economic Belt and Kazakhstan’s “Bright Road” economic policy. Through such developments, the two countries plan to establish cross-border transportation infrastructure, which will create favorable conditions for Chinese cargo through Kazakh rails. There is also a $600 million partnership to establish a dry port between the two countries. This will allow Kazakhstan, China, and other countries of the Eurasian region to access world markets more easily. As of today, Chinese foreign direct investment in Kazakhstan is valued at over $17 billion dollars. By utilizing the AIIB and Silk Road funding, Kazakhstan will be able to fund infrastructure developments far beyond any fiscal support it might glean from the Eurasian Economic Union member, Russia, or the World Bank or International Monetary Fund.


China’s AIIB ‘still open to U.S.’ despite TPP snub.

In a statement issued by the AIIB’s president-designate, Jin Liqun, the Chinese have asserted that they still welcome the US to join as a founding member within AIIB, despite the US’ reticence to include China in TPP. Though Jin Liqun has asserted that the Chinese would potentially join TPP, the US has not made any moves to include China in the agreements.


Chinese Legislature to ratify AIIB Agreement.

The Chinese legislature will vote on the AIIB Articles of Agreement throughout Oct 30 - Nov 4.


Britain becomes first Western Country joining China-led AIIB.

China is expanding its relationship with the UK, encouraging Chinese investment in northern England. Chinese President Xi asserts that China seeks British support in joining the European Bank for Reconstruction and Development, and also anticipates extending the two nations’ cooperation on finance, energy, and visa policy. British Prime Minister Cameron has issued a statement supporting China in their goals to establish a free trade agreement with Europe, report Daily Times.


AIIB Chief says it will be “mean, clean, green.”

AIIB President designate, Jin Liqun, declared that the new bank would be “mean, clean, and green.” In a statement issued at the Brookings Institute in Washington, Jin emphasized that the AIIB would seek governance to the highest possible degree, develop a green economy, and fight internal corruption. The statement also stressed that the AIIB might help fight issues around systemic poverty in the Asian region by targeting problems of inefficiency and connectivity. Jin stresses that the AIIB can support infrastructure construction while also connecting transportation and trade in the region. Commenting on Western skepticism of the AIIB, Jin asserted that the AIIB does not stand in competition to other western-led institutions, like the IMF and World Bank. Rather, Jin underscored that the banks act as “siblings.”


Full text of interview with future AIIB chief, Jin Liqun.

AIIB President-designate, Jin Liqun, met with reporters from Mainichi Shimbun in this full-text interview. Jin stressed that the AIIB already possesses working relationships with lending institutions like the World Bank or IMF, and that the AIIB officials have met regularly with other banks and think tanks while consolidating the AIIB. Jin told reporters that the AIIB hopes to have nearly seventy member-countries, and that the bank is open to adding members after the bank if officially established; the AIIB will therefore dilute voting and member shares as new members are added. Jin asserts that the AIIB is open to co-financing projects with the World Bank, ADB, EBRD, EIB, and other institutions who possess high standards for environmental protection and regulatory checks. Overall, Jin seems to emphasize that the AIIB will aspire to high standards of quality when it comes to identifying, selecting, and screening projects. He hopes to see AIIB expand its financial capital by issuing AIIB bonds in the market.


Chinese investment important drive for Peru’s economy.

Peru is hopeful of gaining increased supports from China’s AIIB. Roberto Urrunaga, Dean of Economics at the University of the Pacific, is quoted in the article when he reports on China’s bid to help fund the trans-oceanic railway linking Brazil’s Atlantic coast with Peru on the Pacific. Urrunaga also asserts that there is increasing competition amongst the World Bank and Chinese-led banks throughout Latin America, as Western-led institutions have historically dominated the region. The article asserts that presently, China is Peru’s largest trading partner, export market, and source of imports. Peru-Chinese relations are expected to continually increase with the advent of AIIB.


AIIB president talks about initial project financing for 2016.

The Chinese Asian Infrastructure Investment Bank president-designate, Jin Liqun, informed media outlets that the bank will dispense around 2 Billion in loans by April 2016. During the interview, Jin stressed that the AIIB will cooperate with the World Bank and the Asian Development Bank (ADB), yet Mr. Jin counters this statement by stating that the AIIB can and will meet infrastructure demand in Asia with or without US and Japanese support.


That's a wrap for the AIIB this week. Check back with our blog next Monday for another weekly update.


Interested in other IPD updates? Check out our all-team IPD BLOG!
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WEEKLY DIGEST: October 10-17, 2015

10/20/2015

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The Asian Infrastructure Investment Bank
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Is South Korea's membership with the AIIB problematic for the U.S.?
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South Korea attempts to remain neutral between China and the United States. How could South Korea membership with the AIIB be a blow to U.S./Korean relations?


China Ignores India's Disapproval of CPEC
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India, the second largest investor in the AIIB, discourages China's investment in CPEC, but to no avail. India should accept that the CPEC could benefit through increased cooperation in the region. 


Cyprus Aims to Actualize the Silk Road Initiative via AIIB.

Cyprus officials state that the AIIB is the institutionalization of the One Belt, One Road development strategy, a strategy which the government of Cyprus supports. In applying to become a founding member of the AIIB, Cyprus hopes to increase cooperation both within Asia and Europe. 


What's Really Behind the Lack of US Support for the AIIB?

The U.S. is rumored to have not joined the AIIB due to criticism by the IMF and World Bank, both mainly led by the U.S. However, U.S. officials claim that the lack of support is due to the AIIB's questionable governance and environmental standards. Despite the lack of U.S. support for the AIIB, U.S. President Barack Obama and Chinese President Xi Jinping have agreed to "handle their differences constructively". In contrast, the U.K. and China are expected to expand their trade relations. 


Is China's Exclusion from the TPP about High Standards of the Balance of Power?

China has been locked out of the TPP due to the high standards on labor, the environment, and intellectual property. China is not suspected to be concerned about the TPP due to other economic projects, including the Silk Road Project and the New Development Bank. The U.S. is suspected to be using the TPP in order to balance against China. 


More Discussions this week....​


Can the AIIB's new sleek platform better aid development in the third world more so than the World Bank or IMF?






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Once again,  another week full of developments for the Asian Infrastructure Investment Bank. Check back with our blog next Tuesday for another weekly update.


Interested in other IPD updates?   Our  all-team IPD BLOG!
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WEEKLY DIGEST: October 3-9, 2015

10/12/2015

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The Asian Infrastructure Investment Bank

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Pakistan Pledges Full Support to the AIIB
 
A meeting between the president - designate of the AIIB, Jin Liqun, and Pakistani Prime Minister Nawaz Sharif solidified the AIIB and Pakistan's relationship of mutual support.
 
 
Azerbaijan has put the Promise of $50 Million behind their Support for AIIB
 
Despite the relatively low amount of voting shares Azerbaijan will have in AIIB, they have put their full financial and political support behind the AIIB. The Azerbaijan Government asserts that supporting development in Asia will increase cooperation within the region and with multilateral financial organizations.
 
 
Indonesia becomes 8th largest shareholder in AIIB.
 
Yesterday, the Head of the Fiscal Policy Office in Indonesia, Mr Suahasil Nazara, promised to make 3.73 million rupiah next year alone. Three times as much is promised over the next 5 years.
 
 
Indian Central Bank Governor Calls for Major Banks to Adapt to the Changing World Economy
 
Indian Central Bank Governor, Raghuram Rajan, calls for increased investment in the World Bank and IMF by industrialized nations. Specifically, he recommends a "global safety net" to bolster emerging economies and allow them to join policy discussions earlier in the game.
 
 
Excluding China from the TPP will Raise Political Tensions
 
China is being excluded from the TPP as a move to prevent Chinese control over the Atlantic. This political move will only raise tensions between the world's largest economies and will not benefit US interests in the short or long run.
 
 
AIIB President meets with Pakistani Officials
 
Proposed AIIB President, Jin Liqun, has met with representatives in Pakistan concerning the development of infrastructure projects in the region. Pakistan, an emerging­ market, perspective founding member of AIIB, wishes to initiate projects relating to energy, transport, sea port, and other urban developments. Jin is also said to have reported that AIIB will broker partnerships amongst other multilateral banks, such as the World Bank and Asian Development Bank.
 
 
KDB Chairman recommended as AIIB Vice President ­
 
The Korean government expects to nominate the head of the Korea Development Bank, Chairman Hong Ki­taek, as one of the 4 or 5 vice presidents of the AIIB. Previously, several Koreans had been nominated to these posts. Jung Suk­yee reports that given how the Trans ­Pacific Partnership has stratified relations in the Asia­-Pacific, China is likely to appoint a Korean national. The status of Chairman Hong Ki­taek's recommendation is not known.
 
 
AIIB to invest in Pak Infrastructure Development
 
President­ elect of the AIIB, Jin Liqun, has met with Pakistani Prime Minister Nawaz Sharif to discuss the sponsorship of infrastructural projects in Pakistan. Pakistan has already been aided by China in developing its transport, seaport, and energy sectors. The Chinese foreign minister lauded Pakistan's economic progress in the region, and anticipates further cooperation between the two countries.
 
 
Should Japan join a Chinese led banking body? ­
 
Emphasis on how AIIB membership could pose several benefits to Japan. For example, exclusion from AIIB membership could isolate Japan from a majority of the Asia Pacific nations, as well as most of Europe. Miller stresses that the Japanese­ led Asian Development Bank will have to adapt to working conditions with AIIB, and that cooperation would only be enhanced with Japanese incorporation into AIIB. Miller also asserts that both American and Japanese exclusion in AIIB may only fuel regional tensions; with the recent agreements on the Trans Pacific Partnership, rivalries between the US and Japan versus China may ensue.
 
 
China hits the road ­ East Asia Forum
 
Hypothesizing several trends that may emerge from China's AIIB. Writer Zhiqun Zhu first stresses that China will not only pursue infrastructural projects in developing countries; they will also interact with developed nations, as a result of their transition to outward ­based economic growth. Zhu cautions that AIIB should still seek out American and Japanese inclusion in the bank, so as to provide legitimacy and a higher credit rating to the project. Additionally, Zhu relates that as a part of China's "One Belt One Road" initiative, the country aims to build a high-speed rail involving 65 countries. China will need to demonstrate its capabilities to deal with the securities and logistical issues arising from this initiative. Lastly, Zhu stresses that infrastructural projects of AIIB must be centered on local governments; the AIIB must develop mechanisms, which ensure that localities follow through on negotiations made amongst top governmental affiliations.
 
 
Kazakhstan's revival of the Silk Road Initiative: The Challenges Ahead
 
Targeted as one of the main markets for Kazakhstan, the country has brokered numerous partnerships with China in recent years. Abazov asserts that the Kazakh government has reiterated its support for the Beijing-instigated “Silk Road Economic Belt” initiative and has agreed to continue working on Chinese-led infrastructure projects. However, opinions of the SREB are divided within Kazakhstan. Some believe China’s financial backing will strengthen trade and economic growth, but others are skeptical, cautioning it would conflict with the USA’s “New Silk Road” initiative.
 
 
 
That wraps up another week in the news for the AIIB. Check back with our blog next Monday for another weekly update.
 
 
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WEEKLY DIGEST: September 26-October 2, 2015

10/5/2015

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                                Photo by Win McNamee | Getty Images

Obama Accepts Xi's Assertion of High Standards for the AIIB's Governance

The AIIB's Standards for Self-Governance are at last accepted by the US. As Western allies have ignored Washington's calls to reject AIIB membership, this ends an embarrassing political period for the US. In the meeting with Washington last week, Xi committed to increase funding to the IMF and the World Bank's International Development Association.


Is the AIIB China's Attempt to Reorder the International System?

The establishment of the AIIB is a signal China wants to be a leader in the international system. The question is: is this revisionist or simply an attempt to shoulder its load of the humanitarian burden? Experts discuss this question and how the US and Japan should respond.  


China's Influence Expands with a Railway Project in Indonesia

China's investment in Southeast Asia continues to challenge Japanese influence. With the AIIB and the win for the bid to build a high speed railway in Indonesia, Japan will need to increase its commitment to development in order to keep up.



China Aims to Increase Connectivity by Investing in Underdeveloped Countries

China will likely use the One Belt, One Road Initiative as well as the AIIB to invest in countries lacking sufficient infrastructure. Chinese officials deny that this investment is a political game and assert its efforts are largely to simply increase connectivity.  


Thailand signs AIIB agreement

The Kingdom of Thailand is the 52nd of 57 countries to officially sign the AIIB's articles of agreement. The remaining five countries await domestic approval, the deadline to sign being December 21, 2015. The bank hopes to officially open in early 2016.


Diplomatic rivals China, Taiwan to discuss relations this month

Leaders of Taiwan and China are expected to meet in mid October to discuss the name under which Taiwan might join the AIIB. A province broken-off from China, Taiwan wishes to retain its name as a member of the bank. Among other issues, the two leaders will discuss how they might work together to diffuse economic crime between the respective countries.



Five Overlooked Developments from the Obama-Xi visit

Author Graham Webster includes US-China stances on development as one of five key topics discussed this week by respective presidents Obama and Xi-Jinping. Following their meetings this week, both presidents issued statements in support of joint-cooperation on the AIIB. The US recognizes China's economic capacity as a means to instill development in the Asia-Pacific region, and also commits to consider inclusion of the Chinese currency in the International Monetary Fund's 'special drawing rights' basket of currencies. Webster regards this as 'modest progress' between the two nations.


Asian opportunities there for the taking

Expected to be the sixth largest shareholder in the AIIB, Australia hopes to benefit from capital investments in the Asia Pacific region. In comparison to other Asia-Pacific countries, Australia's GDP is slated to significantly decrease by 2050; the country is therefore expecting to receive much more intra-country investment. Australia seems to be latching on to the promise that the AIIB, as well as the NDB, offer advancement to the region.



Spotlight on US-China Relations

This Xinhua News article states that trade relations between the U.S. and China are nothing but beneficial, especially given the interdependence of these two growing economies. Though not specifically addressing the development of the AIIB, there is emphasis placed on the fact that both countries can utilize their relative free trade agreements in correspondence with one another. While the U.S. is developing its Trans-Pacific Partnership, China is creating its Regional Comprehensive Economic Partnership. The two organizations share the goal of trade liberalization as separate entities.


Singapore Plans Ahead

Singapore can benefit from China's expansionist Silk Road policy. To ensure mutual gains, Singapore must take a pragmatic approach and exploit opportunities that arise while insisting on certain safeguards. This way, Singapore can leverage the skillsets and geography  it possesses to benefit from China's Silk Road Asian economic policy.


Additional Articles this week….



Proposed cooperation agreement between ASEAN, Australia, China, India, Japan, New Zealand and South Korea.


Philippine Vice President Jejomar Binay wants the Philippines to join the AIIB, despite conflicts in the South China Sea over territorial waters.    


How does the  AIIB differ from typical development banks?

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Can the UK, as a premier military ally to the U.S, also develop its relationship with China?


The UK develops a new stance in its foreign policy initiatives; greatly geared towards China.



Due to the lack of regional frameworks, rival institutions have emerged throughout Asia; exemplified by US-led development of the Trans-Pacific Partnership and China-led creations of the AIIB and "Silk Road" initiative.


The AIIB as a means through which some new policies will be implemented between China and the U.S.


Chinese President Xi Jinping affirms the country's commitment to the UN's goals; pledges an initial $2 billion.



That wraps up another week in the news for the AIIB. Check back with our blog next Saturday for another weekly update.
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​Interested in other IPD updates?

Check out the IPD BLOG.


The IPD-AIIB team is tracking global news and opinions regarding the AIIB as it rolls out in the coming months. Check in on our blog for regular updates and policy briefs.
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