China-backed AIIB maintained loans to India during border dispute in ‘first major test’, says president
- Jin Liqun says AIIB kept loans to India when border tensions escalated last year, despite facing pressure at home
- AIIB is a ‘truly international multilateral institution’ and does not get caught up in bilateral disputes, the banker says
The Beijing-based Asian Infrastructure Investment Bank (AIIB) kept lending to India despite domestic pressure during last year’s deadly border dispute between the two countries, said the bank’s president Jin Liqun, refuting claims the lender is simply a tool for China’s strategic interests.
The AIIB, which began operations in 2016 and now has 103 members worldwide, has long been viewed as Beijing’s answer to the Western-dominated international financial system, and is seen as a potential rival to the World Bank and Asian Development Bank, as well as a way to jumpstart the Belt and Road Initiative.
But Jin, who has led the bank since it was founded, said the AIIB had no intention of overthrowing the established world economic order, and was instead aiming to become a “truly international multilateral institution that adheres to best practices and apoliticism”.
Bilateral conflicts between member states should not concern a multilateral institution
“Bilateral conflicts between member states should not concern a multilateral institution,” he said during the conference on May 16, according to a transcript published on Thursday by efnchina.com, a Chinese financial news website.
“How could I know they would fight at that time? Moreover, the funds were not given to them for free, they have to repay the principal and interest.”
Soldiers from the two nuclear-armed neighbours clashed in June last year along the Himalayan border, leading to the deaths of 20 Indian and four Chinese troops.
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Jin said the incident was “the first major test” for the AIIB as an international institution, and admitted he faced pressure at home over the bank’s call to maintain loans to India.
Ultimately, defending the bank’s reputation by insisting it upheld international standards won “very positive” reactions around the world, he said.
“We cannot keep talking about international standards and best practices in normal times, but change when encountering difficulties,” Jin said in his speech.
“Once trust is broken, it is very difficult to restore your reputation.”
India was a founding member of the Beijing-headquartered bank and has been one of the top borrowers, with around 25 per cent of approved loans going to the South Asian country.
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Jin, who began his second term as president this year, said creating the AIIB was an attempt by China to reform an outdated global financial system.
Seventy years after the end of the second world war, international financial institutions are still mostly controlled by the United States and Europe, which had shown “double standards” during times of crisis and been unfair when extending financial support to developing countries, Jin said.
He argued China had strengthened its right to speak in the global financial system by opening up its economy.
“The economic centre of gravity, international influence is gradually shifting from the US to China, or fifty-fifty,” Jin said.
“Since we are already a big country, it is very important for us to have the demeanour and tolerance of a big country.“
