GIB2015_Instruments for Increasing Capital Flows_Zhang

This presentation was held during the 5th GIB

Summit, May 27-28 2015. The presentation and

more information on the Global Infrastructure Basel Foundation are available

on www.gib-foundation.org

The next GIB Summit will take place in Basel, May 24-25, 2016.

The information and views set out in this presenation are those of the author(s) and do not necessarily reflect the opinion of the Global Infrastructure Basel Foundation. Neither the Global Infrastructure Basel Foundation nor any person acting on its behalf may be held responsible for the use of the information contained therein.

China Silk Road Fund and AIIB Initiative Within the “One Belt One Road” Framework

Alex Zhang Executive Director Eco Forum Global 28 May 2014

I. Chronology of One Belt One Road Initiative

The 5th Chief Negotiators' Meeting on Establishing the AIIB was held on May 20-‐22, 2015 in Singapore.

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Sep 13

The "Silk Road Economic Belt" concept was initiated by Chinese President Xi Jinping during his visit to Kazakhstan.

President Xi Jinping announced that China will contribute 40 billion U.S. dollars to set up the Silk Road Fund.

Nov 14 May 15 Oct 14

21 Asian countries signed the Memorandum of Understanding on Establishing AIIB

Xi proposed to build a 21st Century Maritime Silk Road and to establish the Asian Infrastructure Investment Bank (AIIB) in a speech at the Indonesian parliament

Oct 13 Apr 15

57 countries were ofVicially approved as prospective founding members of AIIB

II. Background and Objectives of Silk Road Fund and AIIB

•  Silk Road Fund -‐-‐ set up by China with $40 billion to boost connectivity across Asia by investing in infrastructure, resources and industrial and Vinancial cooperation.

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•  AIIB as an international financial institution between governments, it will target infrastructure projects across Asia, with a focus on Association of Southeast Asian Nation (ASEAN) members. The bank's goal is to raise $100 billion for projects.

•  Silk Road Fund and AIIB would foster economic connectivity and a new-‐type of industrialization in the Asia PaciVic area, and thus promote the common development of all countries as well as the peoples’ joint enjoyment of development fruits

65% 15%

20%

China's foreign exchange reserves

China Investment Corp

the Export-‐Import Bank of China and China Development Bank Capital Co

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-‐-‐Vision and proposed actions outlined on jointly building Silk Road Economic Belt and 21st-‐Century Maritime Silk Road, Mar 2015

II. Background and Objectives of Silk Road Fund and AIIB

One Belt One Road Promote economy and integration in Asia

Achieve the effective allocation of capital

Expand global investment demand and support world

economy

Strengthen international cooperation

It is aimed at promoting orderly and free Vlow of economic factors, highly efVicient allocation of resources and deep integration of markets; encouraging the countries along the Belt and Road to achieve economic policy coordination and carry out broader and more in-‐depth regional cooperation of higher standards. ”

“

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III. Why Both Silk Road Fund and AIIB?

Energy Railway

Highways

Telecommunications

Ports

Electricity

Source: Strait Times

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Infrastructure Investment DeSicit Ø  It was estimated by PwC that US$8 trillion was required spending of infrastructure investment between 2010 and 2020. Very little (comparatively) has been done in Asia during the period 2010 to 2013 if one excludes the enormous infrastructure programme of China.

Ø  To sustain current growth levels, it will be necessary to inject between US$800 billion and US$1.3 trillion annually into infrastructure projects between now and 2020. This infrastructure deMicit for Asia (excluding Australia, New Zealand and PaciMic countries in North and South America) is most acute in governmental infrastructure

Table: Asia governmental infrastructure deSicit

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AIIB


Silk Road Fund

l  Focused on Asia, with the 21 founding members all Asian countries and a mandate to provide infrastructure Minancing for Asian developing countries

l  Taking much longer to create, and decision-‐making is more cumbersome than expected

l  China has vowed that AIIB will deliver funding more efMiciently and effectively than the WB and the ADB

l  57 founder member countries. Not aims to reshape the global development Minance architecture

l  Unilateral $40 billion endowment by China to fund infrastructure, resources, industrial cooperation, Minancial cooperation and other projects

l  The priority is to seek investment opportunities and provide monetary services throughout the Belt and Road Initiatives

l  Bilateral lending through Silk Road Fund is easier to negotiate, quicker to implement

l  Welcomes domestic and overseas investors to join

Combine resources from developing and developed countries, and control risks by balancing high-‐proVit resource projects with low-‐proVit infrastructure projects.

Draw from international experience eg. World Bank and Asian Develop Bank by creating a market-‐oriented business structure

Look for special arrangements in terms of market entry and administrative requirements of different countries

Balance political aspirations and economic performance

IV. Challenges and Concerns

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Governance？

——We have conMidence that we can build a bank to high international standards, and we will do our best in project evaluation, environment protection, local culture conservation, promoting continuous economic growth and improving people’s livelihood. ——Jin Liqun, AIIB Secretary General

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Environmental Standard?

Many countries concern that the AIIB will fail to meet environmental standards, procurement requirements, and other safeguards applied by the World Bank and ADB, including those to prevent the forced removal of vulnerable populations from their lands

IV. Challenges and Concerns

Sustainability and Resilient Infrastructure

Efforts should be made to promote green and low-‐carbon， or sustainable infrastructure construction and operation management, taking into full account the environmental impact on the

construction, by employing standard like GIB rating

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ü  The opportunities across the Asia PaciMic region as well as Africa and Latin America are substantial when considering the need for infrastructure cooperation with China

ü  The demand for foundations in the Asia PaciMic region to invest in infrastructure, or sustainable infrastructure, is very apparent.

ü  The mature markets across Asia PaciMic face a different set of challenges – how to upgrade aging infrastructure with more sustainable, resilient standard is urgent

IV. Opportunities From the Initiative

•  Green Silk Road Fund as the Virst private-‐equity fund has started operation to promote environmental improvements and clean energy development along the Silk Road economic belt

•  The fund, which has Virst round investment of US$ 4.8 billion, was launched by several top enterprises in China including Elion Resources, China Oceanwide etc., UNCCD, UNEP and other international organizations are supporting the initiative

•  First project is to establish an ecological solar panel industrial chain in the corridor between Beijing and the city of Zhangjiakou, To help create a renewable economy for electricity generation, tree planting, grass planting and farming


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p  Develop cooperation with international Vinancial institutions, such as the ADB and WB to give Vinancial support in the regions

p  Boost economic development, social equality and eco-‐civilization; Should be a real chorus comprising all countries along the routes, not a solo for China itself

p  Investment opportunities in infrastructure connectivity as well as in new technologies, new products, new business patterns, and new business models are constantly springing up

p  Encourage out countries and regions, e.g. Japan to invest 100 billions into infrastructure around Asia over the next Vive years, the number of which is just the same to AIIB

V. About Eco Forum Global

Highlight of EFG (2009-‐2014)

u  30 International Organizations

u  100 Topics u  120 Universities u  180 Events u  200 Media u  200

Governmental Agencies

u  700 Enterprises u  9000 Guests

Shared Platform Incubator

Ideas Lab Network EFG

Four Pillars of Construction of Eco-‐Civilization

Green Industries

•  Energy •  Finance •  Architecture •  Smart City •  Advanced Manufacturing

•  IT •  Environment and Energy Conservation …

Inclusive Developm

ent

• Education •  Job • Rule of Law

• Women • Youth • Public Interest …

Eco Safety

• Water • Air • Soil • Food • Ocean • Forestry • Wetland • Biodiversity …

Ethics

•  Sustainable Consumption

• Lifestyle • Civilization Dialogue

• CSR • Religion …

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Eco Forum Global Annual Conference 2015

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“Embracing a New Era of Eco-‐Civilization

New Agenda, New Normal, New Action”

June 26th – 28th, 2015, Guiyang, China

p  Sino-‐Swiss Dialogue 2015 p  Climate Change and SDGs p  Green Finance and Industry Upgrade

p  Eco-‐city, Circular Economy p  Biodiversity and Green Development

…… Welcome!

Thank You!

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GIB2015_Instruments for Increasing Capital Flows_Zhang

Government & Nonprofit

Transcript of GIB2015_Instruments for Increasing Capital Flows_Zhang