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Xi vows to revamp AIIB as model for multilateral cooperation

Beijing-led Lender's Top Executive Reelected As Only Candidate

Economy 2020-07-29 075057
Chinese President Xi Jinping speaks via video link to the Asian Infrastructure Investment Bank's annual meeting on July 28, 2020. 

Chinese President Xi Jinping proposed on Tuesday to turn the Beijing-led Asian Infrastructure Investment Bank into an inclusive platform for the promotion of international cooperation amid the global fight against the coronavirus pandemic.

In a message delivered online to the annual board meeting of the AIIB, Xi said China will walk the talk on multilateralism.

"China always supports and adheres to multilateralism, and pursues development with the rest of the world," he said. "Let us stay open and inclusive and make the AIIB a new paradigm of multilateral cooperation."

The proposal comes amid skepticism that China is using its economic clout to advance its national interests at a time of when countries are overwhelmed by the pandemic.

Founded in January 2016, the AIIB has approved $19.06 billion worth of projects to 24 economies to date, extending financing to sectors that include energy, finance, transport and water, according to its website.

India, which has the second-largest voting share of 7.6% after China's 26.6%, received the most funding from the AIIB over the past year, at about 18% of the total $11.08 billion, according to Global Times, an affiliate publication of the Chinese Communist Party.

A brainchild of Xi, the lender doubled its funding for COVID-19 recovery mitigation to $10 billion in April, extending credit facilities to countries including India, Indonesia and Pakistan.

Also on Tuesday, the AIIB reelected JinLiqun as its president for a second five-year term, starting in January 2021. Jin, who has led the lender since its inception, was the only candidate nominated, according to Caixin.

The Beijing-based AIIB, set up with a mission of supporting social and economic developments in the region, has 102 members to date. The lender is seen as a rival to the Japan-led Asian Development Bank and the International Monetary Fund. Neither the US nor Japan are members.

Analysts have noted the AIIB's growing importance as a source of infrastructure funding among emerging markets, given the toll of the pandemic on their economies.

China has been hit by criticism surrounding the origin of the pandemic and geopolitical tensions with neighboring countries, as well as an escalating dispute with the US.

"Given the escalating tension between China and the West, especially the US, China desperately needs the support of the developing world," Adam Ni, director of China Policy Centre in Australia, told the Nikkei Asian Review. "China's increasing support of the AIIB both has developmental and geopolitical implications."

With many countries' economy being weakened by the pandemic, any optional credit facilities will be welcomed by developing countries, said Thomas Daniel, senior analyst at Malaysian think tank ISIS.

"China has excelled at using its economic influence to support its strategic aims," said Daniel.

The AIIB, Daniel noted, is a vehicle for China to demonstrate it can successfully manage a multinational financial institution that seeks to cooperate and compete with established peers that include the International Monetary Fund.

"This is an approach that China would be keen to emphasize, especially as it seems to slide deeper into geopolitical competition with the US."