Although China faces a sticky situation with its slowing GDP, there is still ambition as President Xi Jinping looks forward into 2016, particularly with the opening of the China-led Asian Infrastructure Investment Bank, which will be instrumental for Xi to emphasize the "One Belt, One Road" initiative.
Indonesia is in prime position, being strongly considered as the first recipient of an infrastructure loan from the bank (about 450 billion USD). The Philippines, India, and Vietnam are also strong contenders for the first loan; therefore, this is perhaps where it is to Indonesia's advantage to have a much higher voting share than any of the other countries vying for initial loans.
Philippines to keep interest in AIIB involvement separate from South China Sea conflict (Tagalog)
Philippine officials try to make clear that the on-going territorial dispute between the Philippines and China over islands in the South China Sea will not affect the Philippines pending membership status with the Asian Infrastructure Investment Bank. These are two separate issues and the dispute is only one aspect of the multi-faceted relationship between the two countries.
*Translation by Joey Balledos
Is the world REALLY ready for the AIIB?
"The China footprint" by Jason Lee of REUTERS takes the 3rd spot on the top 10 biggest risks of 2016. The concern of this being a risk stems from the fact that China is now asserting its prowess as a major international influence. There is still also the concern that the AIIB's projects and governance will be biased and fall prey to China's poor track record in good governance. It is mentioned that the world might not be adequately prepared for (or agree with) what China has in mind with its new and upcoming projects.
AMRO to launch as Asian version of IMF this spring
The Japan Times reports that an Asian equivalent to the International Monetary Fund, or IMF, will launch this spring. A Singapore-based institution, known as the ASEAN Macroeconomic Research Office (AMRO) is expected to be upgraded to the level of an official international organization. Historically led by Japan, AMRO possesses 13 member countries, ten of which belong to the Association of Southeast Asian Nations, while the remaining three include Japan, China, and South Korea. Known as the largest contributors to AMRO, both Japan and China possess considerable sway within the organization. The Japan Times hypothesizes that China would greatly augment AMRO’s influence, given China’s significant clout following the establishment of AIIB and the introduction of its yuan to the IMF special reserve currency.
China’s Dilemma over Land and Sea Routes
Colarizzi questions whether China may be focusing too much on its development of a high speed rail line between Xinjiang and West Asia. Rathern than stressing connectivity and continental access, Colarizzi questions if the nation is overemphasizing rail development. Colarizzi suggests that as a part of its Silk Road Initiative, China also take time to develop other maritime routes connecting the Asian Pacific to other regions, and also asserts that with enhanced transport should also come the construction of infrastructural entities, like ports and shipping complexes. Colarizzi lastly writes that at the moment, sea transport is the most viable option for transporting goods and exports, as it’s rail line may take several years to complete.
Investors fear 'hollow' US-EU alliance
Due to growing foreign policy differences and the formation of new alliances, some analysts are projecting a decrease in cooperation between the US and European Union nations. Hirano states that a report published by the Eurasia Group ranks the ten biggest risks throughout 2016. Hirano asserts the US and European nations possess differing responses to global security threats, such as the Islamic States, which may contribute to the projected decrease in cooperation. The report also ranked “China’s footprint” third on their list, citing their recently established AIIB, as well as their growing political clout.
Turkey must harmonize laws with China-backed bank before Jan. 16
In order to appoint a representative to AIIB’s board, Tekdal reports that Turkey must forge an agreement between Turkish domestic law and the bank’s legal structure. In order for countries to appoint representative to the Chinese bank, each nation must assure that their local legislation concurs with the AIIB founding agreement. AIIB administration is composed of a board of governors and a board of directors. Tekdal asserts that in order for a country to appoint a director to the AIIB board, they must attain at least 6% of AIIB member’s votes. In order to appoint a Turkish representative, the country has teamed up with other AIIB member-nations, such as Brunei, Azerbaijan, Georgia, Kyrgyzstan, and Pakistan. Tekdal notes that this collectivity has agreed to appoint a Turkish representative for 7 years, and a Pakistani representative for the remaining 3 years of each director’s 10 year term to the AIIB board. Meetings regarding AIIB will next convene on January 16, in Beijing, in order to discuss the agreements.
AIIB funds may be tapped for PPPs
The National Treasurer of the Philippines reports that the country may receive funding from AIIB in order to implement Public-Private Partnership Projects. Within this category, the AIIB could help to finance domestic projects such as mass transit, water, and telecommunications development. The Philippines possess an estimated 55 PPP projects, and will develop and submit proposals for them to AIIB. The Philippines must still ratify AIIB membership before becoming an official member of the bank.
AIIB to focus on investment in information technology infrastructure
AIIB President-designate, Jin Liqun, reports that the bank is devoted to advancing investment in information technology. Jin elaborated that information technology foster integration within regional and global economies by boosting connectivity. Jin also stated that potential investments in technology would include “fixed broadband networks, fiber optic telecommunication cables..wireless sensor networks, satellite services, new generation mobile telecommunication networks, cloud computing, and big data platforms.” Overall, Jin stressed that the AIIB will facilitate “financial support for infrastructure development and regional connectivity in Asia.”
China, Britain vow AIIB cooperation, visa facilitation
Chinese Foreign Minister Wang Yi recently met with his British counterpart, Philip Hammond in Beijing. The two ministers discussed increasing cooperation on industry, culture, and finance. Wang reportedly signaled China’s readiness to cooperate more on nuclear power, rail way development, and AIIB. Additionally, a press release also reported that the two countries would relax visa regulations by mutually issuing “multiple-entry visas for up to two years to each other's citizens.” The two leaders also agreed to communicate more openly within international organizations such as the United Nations and the World Trade Organization.
AIIB tipped as buyer of Wan Chai building
The Standard reports that AIIB is one of several buyers interested in purchasing the Dah Sing Financial Centre in Wan Chai. Worth between $9-12 billion, government officials denied reports that AIIB had purchased the centre.
Media: the first annual meeting of the AIIB will be held in June in Beijing
The AIIB’s first annual meeting, which includes all member countries, will be held this June in Beijing. The meeting will occur at the level of the board of governors, rather than being presented to Finance Ministers of the member countries. Additionally, AIIB’s board of governors and board of directors will meet in mid January to appoint an official bank president. It is expected that the president designate, Jin Liqun, will be selected as president.
Beijing To Host First Annual AIIB Meeting In June, Lending To Start In Q2
The AIIB is expected to begin lending in its second financial quarter, as reported by China Daily. The bank will host an official meeting in Beijing in June. Later this month, the bank’s board of directors and board of governors will meet to elect AIIB’s first president and “12 constituency directors.” The bank has 57 founding members, with more countries projected to join throughout 2016.
US Congress gives in and passed the IMF quotas reform
Rodríguez stresses that the IMF has eased regulations that have increased Chinese influence. For instance, in November 2015 the IMF incorporated the Chinese yuan into the organization’s special drawing rights, reserve currency basket. Most recently, Rodríguez reports that the IMF has reformed its quotas representation system, which allows China and other emerging market-countries to expand their influence. While other European countries will lose power to offset the reforms, the US will retain its veto powers. Rodríguez questions the extent of the reforms, since the US still holds on to considerable influence in the IMF, and could veto the proposals of any emerging powers.
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