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AIIB: Driving forward with global power

Editor: Li Kun 丨CCTV.com

02-02-2016 16:35 BJT

By Lou Ji-fang, Phd. of Economics, China Welfare Lottery Management Center of Ministry of Civil Affairs

The much-anticipated Asian Infrastructure Investment Bank (AIIB) was inaugurated 800 days after it was first proposed on Nov. 2013.

 

By the end of January, USD 98.15 billion was subscribed among public offering capital, while only USD 1.85 billion is unsubscribed. As the largest shareholder, China subscribed USD 29.78 billion, 30.34% of total subscribed capital and has 26.06% in voting rights.

How would China handle its relationship with the AIIB? According to AIIB President Jin Li-qun, the status of the largest shareholder is not a privilege, but a responsibility. AIIB embodies China's development concepts of "innovation, coordination, greenness, opening and sharing" for "mutual benefits."

Highlighting China's global governance idea of "mutual consultation, building and sharing" and "constructing a wide community of benefits" and revealing China's accountability as the world's second largest economy.

Since the 18th CPC National Congress convened in November 2012, China's economy has faced challenges, including "three-trend overlapping" and a global economic slowdown. The country has been overcoming the difficulties and making progress while learning to adapt to the New Normal. Beijing had switched to "decelerating growth and improving quality." The economic growth rate of 6.9% in 2015 keeps the country as the second largest in the world.

Since the 2008 financial crisis, Beijing had implemented an active macroeconomic policy, accruing notable GDP (gross domestic product) growth rates at around 10%, making it an engine of growth for the global economy.

Beijing is reshaping the international financial order and global economic system. The "One Belt One Road" (OBOR) Initiative and AIIB could revitalize OBOR countries.

The 2008 financial crisis has kept the global economy sluggish. In 2015, economic growth rates of the emerging economies had consecutively dropped for five years, while Asian developing countries were struggling with negative economic conditions.

In wake of an interest rate increase by the United States Federal Reserve and capital backflow to developed countries, the developing countries in 2016 might be confronted with more pressing challenges.

The AIIB would focus on infrastructure investments in the fields of energy and power, transportation and telecommunication, rural and agricultural infrastructure, water supply and treatment, environmental protection, urban development and logistics.

The first loans will be granted in mid-2016, contributing to more speaking rights and financial support for Asian developing countries that encourage more regional integration.

For Western developed countries, the AIIB could enrich their demand for investment, inject more energy into a weak economy and offer new opportunities for expansion.

Huge capital demand for infrastructure construction in Asia would create numerous business opportunities. Western countries could widen the investment area via the AIIB, esp. for European nations in the AIIB, who can help revitalize their own economic growth.

The AIIB requires huge sums of capital to boost international financial markets and help developed economies increased demand of financial investment markets.

The AIIB helps to enrich the international economic and financial system. The US-dominated international monetary systems, such as the IMF (International Monetary Fund) could no longer follow the changes of international economic pattern at present.

After the Subprime Crisis erupted in Wall Street in 2008, the international financial order did not adjust timely to the transformation of global economic power, which highlights a severe flaw of the lack of emerging economies power in the international monetary system.

The multi-lateral financial organization has been set up to support the emerging economies. The AIIB gives strong momentum to overcome the global economic slowdown, while it is expected to offer its precious experiences to reform the global economic and financial system.

 

( The opinions expressed here do not necessarily reflect the opinions of Panview or CCTV.com. )

 

 

Panview offers a new window of understanding the world as well as China through the views, opinions, and analysis of experts. We also welcome outside submissions, so feel free to send in your own editorials to "globalopinion@vip.cntv.cn" for consideration.

Panview offers an alternative angle on China and the rest of the world through the analyses and opinions of experts. We also welcome outside submissions, so feel free to send in your own editorials to "globalopinion@vip.cntv.cn" for consideration.

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