New China-Led Bank Pledges to Fend Off Graft
SINGAPORE — China’s new development bank will strive to be corruption free, maintain environmentally sound policies and work with a streamlined bureaucracy, the interim head of the institution, Jin Liqun, said on Saturday.
“We are committed to building a lean, clean and green bank,” Mr. Jin told the Singapore Forum, a gathering of Asian business and political leaders.
The bank, known as the Asian Infrastructure Investment Bank, will be run by a “core group of professionals,” and the top management will be appointed according to ability, not political connections, he said. There will be “zero tolerance” of corruption, he said.
Mr. Jin, who did much of the negotiating that attracted 46 countries, including Britain, Germany, Australia and South Korea, as founding members of the new bank, went out of his way to persuade his audience that China will not dominate it. “Leadership is not a privilege,” he said, “it’s an obligation.”
The bank, first proposed by President Xi Jinping of China in 2013 and expected to have starting capital of $100 billion, is intended as a way to build badly needed railways, roads and pipelines in underdeveloped areas of Asia.
The United States declined to become a member, and as China invited countries to sign up, the Obama administration advised its allies not to join on the grounds that the new institution would undermine the World Bank, led by the United States, and the Asian Development Bank, dominated by Japan.
After some of Washington’s closest friends, including Britain and Australia, ignored that advice, the administration amended its opposition, saying it would encourage the World Bank and the Asian Development Bank to cooperate with the new institution provided its projects meet certain standards of transparency and governance. Fourteen of the advanced economies in the Group of 20 industrialized nations have become founding members.
The bank is expected to start operations at the end of the year, and as it gears up, some founding members, including Australia, say they will press China hard to ensure that it adopts transparent rules.
How the new institution will withstand pressure from interest groups in China, particularly large state-owned enterprises that are expected to push for contracts to work on the infrastructure projects, is a major question for officials from some of the founding countries.
Mr. Jin sought to allay those concerns at the gathering here, stressing that the new bank, with so many major countries as members, was a multilateral institution. “China is just a leading member,” he said.
China, based on its gross domestic product, will be the biggest shareholder, but as new members join, China’s shares will diminish, he said. The bank will have its headquarters in Beijing, in the city’s financial district.
Still, a former minister of trade for Indonesia, Mari Pangestu, whose country is a member of the bank, asked Mr. Jin on Saturday how the bank would meet demands for environmental and social standards, given what she called the “mixed” results of China’s investments in developing countries.
The new bank will ensure that people displaced by new infrastructure projects will be taken care of, Mr. Jin replied. Local communities and countries interested in projects financed by the bank will have the opportunity to be involved from the projects’ early stages and have a say through their “full life cycle,” he said.
Implicit in Mr. Jin’s pledge to make a “lean, clean and green” bank was a contrast with the World Bank and the Asian Development Bank, which were founded as part of the international economic architecture after World War II, dominated by the United States.
Critics have assailed both banks as large bureaucracies whose staff members are often appointed on the political whims of member states.
Despite the problems in the existing institutions, there is still a lot to learn from them, Mr. Jin said.
A former vice minister of finance in Beijing who held a senior position at the Asian Development Bank in Manila, he said that the World Bank had already begun to help the infrastructure bank, sending experts to consult on environmental and other standards.
And the United States, he said, is “always welcome to come into the kitchen” and help make the new institution
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