AIIB: the green investment bank?
China misses Q2 growth target
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.
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.