ADB President Open to Idea of Cooperating with New Chinese Investment Bank

Asian Development Bank President Nakao Takehiko, at a press conference in Tokyo on March 25, expressed readiness to cooperate with the planned Chinese-backed Asian Infrastructure Investment Bank. Nakao stated he is not looking to compete with the AIIB, which will serve a role similar to the ADB, and hopes the two financial organizations can form a complementary relationship. “Opposing the AIIB is not a viable option as long as there remains growing demand for infrastructural funding in the Asian region,” Nakao said. “We are open to cooperating in jointly funded projects and other programs as long as they meet ADB standards.”

China plans to establish the AIIB by the end of this year, with the goal of funding infrastructural development in Asia. Countries that have expressed an intention of joining include the members of the Association of Southeast Asian Nations as well as both industrialized and developing countries like Britain, Germany, France, South Korea, Russia and Brazil.

Nakao said the decision to join the AIIB rested with each individual country, but refrained from commenting as to whether Japan might consider membership as an option. He did, however, leave the door open to such a move, saying he hopes to use the trust the ADB has garnered through its vast capital, financial experts, and established offices to build a cooperative relationship with the AIIB.

Co-Funding and Technical Cooperation as an Option

As of the end of 2014 the ADB has a total of $153.1 billion in capital and 2,990 employees, including 1,074 experts in various fields. In 2014 it approved $13.1 billion in investment and loans, raising the balance of its developmental assistance to approximately $84.3 billion.

Nakao responded positively to the possibility of working with the AIIB, pointing to the options of providing joint funding and technical support through the governmental and private-sector organizations in each country, such as Japan’s ODA arm, the Japan International Cooperation Agency.

If China goes ahead with the AIIB it would establish alongside the ADB a second development bank in Asia geared to providing infrastructural investment. Addressing the issue of whether the ADB will focus specifically on eradicating poverty in the region, Nakao pointed to the need for strengthening basic infrastructure, saying, “We have to give equal consideration to each aspect in seeking to meet the growing demand for infrastructural investment in Asia.”

United States Remains Wary

The AIIB is slated to start with $50 billion in total capital, which is only a third of the ADB’s capital. However, the abundance of Chinese money makes future increases likely. Nakao refused to speculate, but instead stressed the continued influence of the ADB by pointing to the large amount of capital it controls.

The United States, the ADB’s largest contributor along with Japan, remains cautious regarding the prospect of joining the AIIB. Both countries have said they would need to see measures ensuring transparency of AIIB operations, the establishment of equitable loan procedures, and other steps before considering aligning with the organization.

(Banner photo: ADB President Nakao Takehiko at a press conference in Tokyo on March 25, 2015. © Jiji.)