The Asian Development Bank is to work with the Asian Infrastructure Investment Bank on a loan project as the pair seek to counter perceptions they are rivals, according to the ADB’s chief.
The China-led AIIB is also consulting the ADB, which is dominated by Japan and the US, on procedures to ensure loan projects include labour, environmental and anti-corruption safeguards, said Takehiko Nakao, ADB president, yesterday in an interview.
“People want to depict ADB and AIIB as rivals and [AIIB president] Mr Jin [Liqun] and I as rivals. But actually we are friends, and ADB and AIIB can be partners,” said Mr Nakao.
“We’re already identifying projects for the first batch of AIIB loans. One of them should be co-financing between AIIB and ADB.”
China launched the AIIB last year, with 57 countries joining as founding members, despite US objections. The bank was an effort to increase China’s influence in multilateral institutions after years of grumbling that the International Monetary Fund, World Bank and ADB were dominated by developed economies, analysts said.
Japan has held the presidency of the ADB since the bank was founded in 1966, while informal agreements have meant that US and European nationals lead, respectively, the World Bank and IMF.
Some officials have expressed concern that the AIIB will lack transparency and adhere to lower standards for labour and environmental protection. But Mr Nakao said that he and Mr Jin had discussed the need for safeguards.
“We agreed that social and environmental protection considerations are important, safeguard processes are important. We have been supporting the AIIB to produce these policies and guidelines,” he said.
Mr Nakao has been a staunch advocate of engagement with China, despite some critics saying that as a middle-income country, China no longer needs support from development banks.
The ADB approved a total of $1.7bn to Chinese local and central government in 2015 and an additional $700m to companies, of $27bn in total loan approvals. ADB’s focus in China is on projects related to climate change and the environment.
The ADB has issued renminbi bonds both in China and offshore to support its lending to the country, although Mr Nakao said there were no plans to make renminbi loans to other borrowers. The AIIB also said in January that it would lend in US dollars.
Last year the ADB approved a $300m anti-pollution loan to the government of Hebei, China’s most polluted province. Critics said the so-called budget support loan was a fiscal subsidy to Hebei to help plug a gap in its operating budget. However, Mr Nakao said the loan was an opportunity to deploy ADB expertise to influence policy.
“We’re doing this to have a stronger process upstream instead of just individual projects. We are discussing how this money is used. It’s not just a checking account.”