China-backed Asian Infrastructure Investment Bank won’t create ‘debt trap’ for borrowers, chief says
- President Jin Liqun says the bank’s lending will help to cut the debt burden of borrowing countries, with membership having grown to 102 in four years
- He also pledges transparency in bank operations and special efforts to address climate change by boosting green lending to support ‘low carbon’ development
Lending by the China-led Asian Infrastructure Investment Bank will not create a “debt trap” for its borrowers, the bank’s president said, rejecting concerns that Beijing could use similar institutions to advance its geopolitical agenda.
Asian Infrastructure Investment Bank (AIIB) president Jin Liqun told the Asian Financial Forum in Hong Kong this week that the bank’s efforts to support infrastructure investment in Asia are made with the best of intentions.
“A debt trap will not emerge in the countries that borrow from us. Our support for infrastructure development will improve the fiscal situation of those countries and help them reduce debt rather than increasing debt,” Jin said.
The establishment of the bank has been seen as a big win for Beijing’s economic diplomacy, having won the support of 102 member countries since it started operation four years ago, including many allies in the United States, despite resistance by Washington and Tokyo. China remains the single largest participant in the multilateral lending institution with a 26.5 per cent share of its voting rights.
A debt trap will not emerge in the countries that borrow from us. Our support for infrastructure development will improve the fiscal situation of those countries and help them reduce debt rather than increasing debt
The bank says it has lent US$12 billion to support dozens of projects across Asia and the Middle East, in projects in Nepal, Turkey, Uzbekistan, Egypt, India and Pakistan, attracting an additional US$40 billion in capital, according to Jin.
As part of it remit, the bank will also work towards boosting green lending to support “low carbon” development, Jin said.