White elephants out but China-backed AIIB still keen on infrastructure with room for growth
Bank chief tells World Economic Forum that a certain amount of inbuilt extra capacity is a good thing
The China-backed Asian Infrastructure Investment Bank will steer clear of white elephants but invest in some New Silk Road projects that go beyond immediate needs, the lender’s chief said on Wednesday.
At the World Economic Forum in Davos, AIIB president Jin Liqun said the bank wanted to back to some projects in China’s “Belt and Road Initiative” that had some inbuilt extra capacity.
“I’d like to draw your attention to a very critical distinction between ‘white elephant’ projects and projects which are designed with certain amount of excess capacity,” the former Chinese finance minister and World Bank executive said.
Ji said it would be a “failure” to build a road that reached full capacity at completion, saying a “certain or appropriate amount” of excess was valid.
Since its start in 2015, the AIIB has focused on funding infrastructure projects in countries along the land and sea routes of China’s ambitious infrastructure and trade push.
But there have been concerns that some projects are not a good fit with the level of economic development of the host countries.
Jin said the bank wanted greater private sector involvement in its projects to avoid the waste caused by politicians wanting to use public money to build “giant toys”.
Stressing the bank should not back loss-making or unwanted projects, Jin said the AIIB’s three criteria for financing were financial sustainability, environmental responsibility, and local support.
The AIIB, which has 80 member countries, is expected to help with the estimated US$26 trillion need for infrastructure spending in Asia through 2030.