AIIB: the green in­vest­ment bank?

China misses Q2 growth tar­get

Financial Mirror (Cyprus) - - FRONT PAGE - XIN­HUA IN­SIGHT

At an eco fo­rum in Guiyang, south­west China, one i mpor­tant player is draw­ing much at­ten­tion from en­vi­ron­ment or­gan­i­sa­tions, re­searchers and busi­ness peo­ple, de­spite be­ing ab­sent.

The Asian In­fra­struc­ture In­vest­ment Bank (AIIB) was about to be of­fi­cially founded with its 57 prospec­tive founders meet­ing in Bei­jing to sign its char­ter in an­tic­i­pa­tion of be­gin­ning for­mal oper­a­tions by the end of the year.

The mul­ti­lat­eral in­vest­ment bank, with au­tho­rised cap­i­tal of $100 bln, will change the land­scape of de­vel­op­ment in Asia. In­ter­na­tional en­vi­ron­ment or­gan­i­sa­tions are al­ready clam­our­ing to work with the AIIB in­terim sec­re­tar­iat on “green pol­icy.”

Many are ea­ger to form part­ner­ships with the bank.

Zhang Shi­gang, co­or­di­na­tor of the United Na­tions En­vi­ron­ment Pro­gramme (UNEP) China Of­fice, said that UNEP wants to in­cor­po­rate an eco-friendly strat­egy into AIIB in­vest­ment pol­icy to avoid pol­lut­ing first and clean­ing up later.

“We have reached some un­der­stand­ing about co­op­er­a­tion. UNEP has ex­pe­ri­ence in green fi­nanc­ing and AIIB has fi­nan­cial tools. To­gether we could de­velop in­fra­struc­ture in Asia in a sus­tain­able, eco-friendly way,” Zhang said.

UNEP wants


in­di­ca­tors in­cluded in the ba­sic frame­work from the be­gin­ning and en­vi­ron­men­tal im­pact assess­ments on each in­vest­ment.

The In­ter­na­tional Union for Con­ser­va­tion of Na­ture (IUCN) is also work­ing with the bank. Its pres­i­dent Zhang Xin­sheng told Xin­hua that the green is­sues can­not be ig­nored when build­ing in­fra­struc­ture in re­gions with a frag­ile en­vi­ron­ment.

“We sug­gest that the bank adopt a green men­tal­ity. Not only are highways and air­ports in­fra­struc­ture, but also air, wa­ter and forests. The bank should con­sider in­vest­ing in en­vi­ron­men­tal in­fra­struc­ture,” he said.

It is too early for the bank to pub­lish any strat­egy, but the AIIB has al­ready shown will­ing­ness to be cre­ative and in­clu­sive. In April, Jin Liqun, sec­re­tary-gen­eral of the in­terim sec­re­tar­iat, said in Sin­ga­pore that all mem­bers will be com­mit­ted to build­ing a bank which is “lean, clean and green.”

Chi­nese Pres­i­dent Xi Jin­ping told the Boao Fo­rum for Asia in March that the AIIB will be open, in­clu­sive and fol­low best in­ter­na­tional prac­tice. Zhu Shouqing of the World Re­sources In­sti­tute China branch told Xin­hua that although green fi­nanc­ing is new, there are enough in­ter­na­tional prece­dents. The AIIB can in­stall stan­dards and pro­ce­dures to con­trol en­vi­ron­men­tal risk and is­sue bonds on re­new­able energy, energy ef­fi­ciency and pol­lu­tion con­trol, he said.

“Us­ing gov­ern­ment money, the bank can draw in pri­vate in­vest­ment. In the worst case, one dol­lar of public money brings in two or three dol­lars of pri­vate fund­ing. In the best cases, that can be as much 10 or 20 dol­lars,” he said. “There could be huge in­vest­ment in green in­dus­try and en­vi­ron­men­tal pro­tec­tion if AIIB is so dis­posed.”

China’s pri­vate com­pa­nies with tech­no­log­i­cal and busi­ness ad­van­tages are in­ter­ested in over­seas mar­kets and Asia is their most nat­u­ral op­tion.

“If we want to ex­plore abroad, we will have a new choice of fi­nanc­ing, be­sides the Ex­port-Im­port Bank of China,” said Colin Yang, vice pres­i­dent of Trina So­lar, a Chi­nese pho­to­voltaic sys­tem sup­plier. Yang wants to see smooth com­mu­ni­ca­tion chan­nels be­tween the bank and pri­vate com­pa­nies in green in­dus­tries.

“With­out the pri­vate sec­tor, the bank may not know where to spend its money. We will cer­tainly ap­proach the bank and pro­mote our­selves when we have the chance,” he said.

This is where net­works like Den­mark’s Global Green Growth Fo­rum (3GF) want to step in.

The or­gan­i­sa­tion is keen to have the AIIB in its pri­vate-public part­ner­ship net­work work­ing on promis­ing en­vi­ron­men­tal projects.

“Now we two are look­ing at each other and ask­ing if we are a match. Do we want pri­vate-public part­ner­ships? We would very much like to have the bank around the ta­ble,” said 3GF’s Lisbeth Jes­persen at the Guiyang fo­rum.

China’s econ­omy will grow by 6.93% year on year in the sec­ond quar­ter, said a re­port by the Na­tional Academy of Eco­nomic Strat­egy (NAES), af­fil­i­ated to the Chi­nese Academy of So­cial Sciences.

Re­leased at a meet­ing co-hosted by NAES and the Eco­nomic In­for­ma­tion Daily on Fri­day, the re­port made the quar­terly-based anal­y­sis on China’s mi­cro-econ­omy.

The growth forecast is lower than the 7% an­nual growth tar­get, but 0.13 per­cent­age points higher than the ear­lier NAES forecast.

Econ­o­mists took var­i­ous fac­tors into con­sid­er­a­tion, in­clud­ing a con­tin­u­ous fall in for­eign trade, steady con­sump­tion and an in­vest­ment in­crease, said NAES deputy di­rec­tor Wang Hongju, who is also one of the chief econ­o­mists that drafted the re­port.

NAES head Gao Peiy­ong xpects more cuts to bank in­ter­est rates and re­serve re­quire­ment ra­tio (RRR) in the sec­ond half of the year, and ad­vised the coun­try to boost in­fra­struc­ture in­vest­ment to shore up growth.

“The an­nual growth tar­get is at­tain­able as China is in­tro­duc­ing more pro-growth mea­sures,” ac­cord­ing to the re­port.

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