Jin Liqun: China's helmsman to establish AIIB

When Chinese President Xi Jinping announced in October 2013 his country’s plans to establish another multilateral development bank called the Asian Infrastructure Investment Bank, reactions were mixed. Some stakeholders welcomed the idea, mainly as a way to fund Asia-Pacific’s huge infrastructure investment needs, but others have serious doubts over the Chinese government’s capacity to actually establish — not to mention operate — such an institution. China appears unfazed about those concerns and insists it can have the AIIB up and running by next year. Mongolia was the first country to sign a memorandum of understanding to join the bank, while Japan and South Korea are currently studying membership offers. However, one of the biggest signs that Beijing is dead serious about setting up the institution is the appointment of Jin Liqun, chairman of the China International Capital Corp., as the head of the group tasked with making the AIIB a reality. In a speech at the Boao Forum for Asia, Jin explained the rationale behind the establishment of the China-led bank saying that Asia-Pacific — and the rest of the world — needs additional help not just financially but also in terms of leadership. “In recent years, many Asian countries have stepped up their investments in infrastructure and made some success. It is, however, still far from enough and needs to be accelerated,” he said. “Currently [the Asian Development Bank] and World Bank alone cannot provide all the funds necessary to infrastructure development of Asian countries and therefore we have to set up a new bank.” Jin added that “what the world and Asia lack is not money but motivation and leadership.” Background Who is Jin Liqun and how can he make the AIIB a success? Is he the right official to lead the working group to set up the bank? While the head of China’s sovereign wealth fund is not considered a newcomer in international development — some experts view his appointment a no-brainer with his previous stints at the country’s finance ministry and the ADB — the decision was never fully discussed and put under the microscope. Over the past six years, Jin divided his time between the CICC and the China Investment Corp., where Jin made his name managing billions of dollars of Chinese sovereign wealth and overseeing the public listing and offering of Chinese firms in stock exchanges around the world. CICC, which Jin has led since 2013, is an international investment bank established in 1995 as the partnership arm of the Chinese government with other global financial institutions engaging in capital market, wealth and asset management services for a host of private firms. At CIC, he served as the chairman of the board of supervisors from 2008 to 2013 to manage China’s sovereign wealth fund and foreign currency reserves. And while Jin’s stints at CIC and CICC increased his profile in international investment banking and sovereign wealth funding, his five years at the ADB also gave him a solid background in international development finance. After more than two decades at China’s finance ministry and representing his country at the World Bank and the Global Environment Facility, Jin joined the Manila-based institution in 2003 as one of the bank’s vice presidents, and worked on infrastructure, capital market development and partnerships. He also provided direct assistance to private sector projects with clear development impact. That experience will surely be useful for setting up the AIIB. Views on development “China’s development methodology is logical. China’s experience can be transplanted to any other country. If China can make it, there is no reason why another country cannot.” This is how Jin concluded his speech in July explaining the establishment of the AIIB. A bold statement, yes, but one that also encapsulates the real essence of the goals the Chinese government set out for the infrastructure bank to achieve. But is this statement true and, if so, how can the objective be accomplished? To resolve this question, one can look at how the man tasked to lead the infrastructure bank China is so eager to lead has established his views on international development and the way to move the region — and the rest of the world — forward. One of Jin’s most striking statements is the straightforward answer he gave to address concerns over China’s notorious track record on environmental and social safeguards when implementing development programs. “This is not some game. We will dutifully follow every standard set for a project or a product. We will observe the international standards while assessing the effects of a project on the local environment, culture, sustainable development and standards of living,” he said. This underscores, according to Jin, not only China’s firm commitment to adhere to international safeguards, but also an awareness of some of the problems the AIIB will face very soon. It has to be understood, however, that development is not a one-approach effort as has been discussed time and again. In a 2012 speech at London’s Center for Policy Studies, Jin was keen to argue and discuss that China has its own ways and traditions — something that the rest of the developing world should try to understand and respect. “To understand China, it is necessary to learn about the Chinese institutional setup and the governance structure. Categorical rejection of China’s system as undemocratic and authoritarian is not a rational approach,” he said. “This will lead to misjudgment about China‘s development, and the role China can play in the international political and economic arena.” In a 2003 speech in Hong Kong about corporate governance, Jin — at the time representing ADB — shared a Chinese proverb that goes: “Those who do not prepare for troubles far ahead will definitely find their hands full of problems soon.” Or in his own words, “one should feel the worst when one feels the best.” It remains to be seen, though, whether Jin and his team are prepared for all the obstacles that lie ahead. Check out more insights and analysis provided to hundreds of Executive Members worldwide, and subscribe to the Development Insider to receive the latest news, trends and policies that influence your organization.