AIIB could play role in stabilizing region: expert

Updated: 2015-06-18 11:41

By Jack Freifelder in New York(China Daily USA)

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Some countries naturally are looking to the China-led AIIB for infrastructure help, but the bank could play a role in political stability in the Asia-Pacific region, according to one expert.

"The only way to avoid conflict in this region is to further regional economic cooperation, and the AIIB can probably play a positive role in this regard," said He Fan, a senior research fellow at the China Finance 40 Forum. "But the AIIB can also create potential risk. If Japan and the US join, then there will be more balance - there's no question about that."

Fan spoke at Demystifying the AIIB: Implications for China, Japan & the US, an event co-hosted by the China Institute and Japan Society at the Japan Society on Tuesday in New York.

Also speaking were Jeffrey Shafer, founder and principal at JRShafer Insight, a global consultancy; Masahiro Kawai, a professor at the University of Tokyo's Graduate School of Public Policy; and Eisuke Sakakibara, a professor at Aoyama Gakuin University in Tokyo.

"Over the last 20 years or so, an awful lot of the infrastructure needs around the globe were being met by banks, funds and other organizations in the private sector," said Shafer. "But that's fallen down, and now there's a much greater need for a public sector response.

"There is plenty of Asian capital out there, and I think the Asian Infrastructure Investment Bank can play an important role in identifying those projects and some of that capital," he said.

"For countries with different views on territories, we can put those questions off until later and come back to them. But let's not wait to develop these resources because the AIIB is really a way to start resolution."

"Infrastructure investment is the first priority for the AIIB, but for the new institution to work successfully, the AIIB should clarify its vision," said Kawai.

Debate about the AIIB, which would finance rails, roadways and other infrastructure projects, has made headlines around the world.

Some countries, like the US, have voiced concerns over the bank's management structure and the potential that it could increase China's influence.

The bank will have authorized capital of $100 billion.

"Governance is the most important issue," Kawai said. "China's share in the AIIB is clearly large, so we can assume that China is going to have great influence over how the organization will be run. But there is a great deal of uncertainty on this question."

More than 50 countries have already opted to back the China-led initiative, with South Korea, the United Kingdom, Australia, France, Germany and Italy all signing up as founding members. Among the 57 AIIB founding members, 37 are Asian countries.

AIIB could play role in stabilizing region: expert

Founding members have the right to help define the bank's rules, including its charter, while countries considered ordinary members, those that applied to join after the deadline of March 31, hold voting rights but have less say in the rule-making process.

Canada, the US and Japan remain among the noteworthy holdouts from the pact.

With the signing of the charter slated for the end of June, the AIIB could launch by the end of the year.

Fan said there is a "gradually forming" consensus on the importance of infrastructure investments in Asia.

"But the AIIB is not trying to duplicate the World Bank or the Asian Development Bank," Fan said. "So we should expect trial and error to find what is the best model for this organization."

Sakakibara, who is also a former Japanese vice-minister of finance, said both Chinese and Japanese leaders realize there's a "dire need" for infrastructure investments in China and throughout the Asian region. And "China wants the AIIB to be a genuine international organization," Sakakibara said.

"It's a gradual strategy, and China is still in the very early stages of playing a more active role in global governance. It's a long march and we are just taking the first steps," Fan said.

Xinhua contributedto this report.