AIIB President Jin Liqun’s Speech in Denmark

On his first foreign visit after being named president of the Asian Infrastructure Investment Bank, Jin Liqun came to Denmark and Finland, and spoke at a public event organized by Copenhagen University and the Copenhagen Business School. Members of the Schiller Institute attended, asking one of the two questions at the event.

Here are the most important points in Jin Liqun’s speech.

The purpose of the AIIB is to promote win-win economic and social development through infrastructure investment. Jin said that he does not believe in poverty reduction in and of itself. In 1980, when mainland China replaced Taiwan in the Bretton Woods institutions, China had nothing but human population. Then, they started to borrow to build infrastructure, and some were worried about debt creation. (It was the time when Mexico had a big debt crisis.) But the benefits of infrastructure investment appeared 25 years later, when the economy started to take off. At the same time, other countries were borrowing to sustain consumption. This policy enabled China to lift 600 million people out of poverty.

In answer to his own question about whether the AIIB’s purpose is to finance the One Belt, One Road projects, he said that the bank is owned by the 57 member nations, and 50 others want to join, 30 of which have made the decision to join. This is not China’s bank, he said; OBOR will only be a part of the bank’s engagements, and there has to be a balance between financing projects across the regions.

The purpose is to finance sustainable economic development, wealth creation, and infrastructure in Asia which contributes to connectivity in the vast Eurasian land mass, not just Asia proper, with, for example, rapid rail to cut the cost of transportation between Europe and Asia. Now, it is easier to travel from Beijing to Europe, than between Asian nations. Policies also have to be harmonized, for example, to ease border crossing.

The AIIB will do things that have not been done before by the Bretton Woods financial institutions, including the World Bank, because it will learn from their pluses and minuses. Asia is awash with liquidity, but now that money has to go to Europe and the U.S. before it is recycled back to Asia.

Infrastructure investment can be wasteful if there are not good, thought-out projects — like a power plant, without a modern transmission system. The AIIB will help to design coordinated projects.

Yes, there are disputes in the South China Sea, but the joint infrastructure projects between China and the ASEAN nations have built mutual confidence, and win-win cooperation. Look at Syria, we don’t want to see that happen elsewhere, but we must learn to lessen the chaos, and work out differences.

Development also helps environmental protection. You are not worried about the environment, if you are worried about how you are going to get breakfast the next day.

In response to a question from Tom Gillesberg, chairman of the Schiller Institute in Denmark, about how the AIIB will be different from the World Bank, which refused to finance infrastructure projects if, for example, a frog species would be endangered, Jin said that, you sometimes have to sacrifice a little on the environmental impact in order to get development, and the net effect will be positive. Development is the solution.

“We still cannot be weaned from fossil fuels…. But because of development, we humans can come up with a technology, achieve breakthroughs in technology. Eventually, we can tap solar energy directly, but you cannot leapfrog this stage…. People are afraid of nuclear power, but if we could have a breakthrough in nuclear fusion, we may solve the problem once and for all. How can we achieve this? Development! Let’s work together” to achieve breakthroughs.