Hong Kong may join China-led AIIB development bank by year’s end, says lender’s president

Hong Kong may join the Beijing-led Asian Infrastructure Investment Bank as a sub-sovereign member by the end of the year, the bank’s president Jin Liqun said at the Boao Forum for Asia on Friday.

Jin said he also hoped to tap Hong Kong’s financial market to raise funds for the new 57-member multinational bank.

“We are working on accepting new members. I think the new-member problem will be solved before the end of this year,” Jin said in China’s Hainan province.

Finance secretary says Beijing ‘very positive’ about Hong Kong joining new Asian infrastructure investment bank

“As an international financial centre, we believe Hong Kong has a role to play to facilitate financing the AIIB”, such as in bond issues and the arrangement of currency swaps in the city, he said.

“We are very happy to be able to work with Hong Kong,” Jin said.

Hong Kong and Taiwan had applied to join the lender but their status in the organisation remained unclear when the bank debuted last year.

“I don’t think it would be a problem for Hong Kong as a sub-sovereign member,” Jin said.

The AIIB president added that Hong Kong representatives had already been involved in the negotiation of a charter to settle the bank’s institutional issues.

Christopher Cheung Wah-fung, a lawmaker for the city’s financial services sector, said it would greatly benefit Hong Kong if the city joined the lender.

“It would upgrade the status of Hong Kong’s financial sector in the international world if the city could become a member of the AIIB,” Cheung said.

“The AIIB would play an important role in the international financial community. If AIIB chooses to use the Hong Kong platform to issue bonds or other products to raise funds, it would attract more international firms to set up shop here while the city’s investment banks would also expand their businesses here.

“It would provide more job opportunities and benefit the Hong Kong bond market development. This shows [Beijing] is supportive of Hong Kong’s financial sector.”

Benefits of Hong Kong joining the AIIB outweigh any costs

As he did during his other public appearances, Jin dispelled rumours that the setting up of the AIIB reflected Beijing’s ambitions to challenge the present global financial governance regime.

It was “very absurd” to say that the new lender was designed to bring an end to the existing system, he said, comparing establishing the AIIB to opening a new Chinese restaurant with the aim of offering good catering services.

Even if [the US] doesn’t join [the AIIB], we have a lot of expertise who have US passports

Jin Liqun, AIIB president

On whether the United States would change its mind to join the bank, Jin said:“We are very ­patient. We will give [the US] time to think ... Even if it doesn’t join, we have a lot of expertise who have US passports.”

To further downplay speculation that Beijing might favour Chinese firms in projects funded by the new bank, Jin said the AIIB would stick to best international practices and would not impose preferential treatment towards Chinese companies.

“But I have to warn you that Chinese companies are very, very, very competitive,” he added.

The bank is expected to kick off its first batch of projects by June. Observers said Jin was very concerned about the lender’s rating, which would determine its funding costs in the global market.

Alex Wong, Ample Finance Group director, said Hong Kong as a potential AIIB member was unlikely to affect the stock market in the short term.

China-led Asian bank challenges US dominance of global economy

“The AIIB is part of China’s ‘One Belt, One Road’ initiative. The market has grown tired of the issue as no specific policies have yet been released to stimulate any sector in the stock market,’’ he said.

The AIIB has become one of China’s biggest foreign policy successes. Almost all major US allies – including Australia, Britain, Germany, Italy, the Philippines and South Korea – have joined despite opposition from Washington.

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