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Interview: Too early to fret over AIIB's stake structure: Japanese economist

Xinhua, April 15, 2015 Adjust font size:

Concerns that China's large stake in its new initiative of a multilateral development bank would lead to an unchallengeable status for the country within the framework have not abated since the concept of the Asian Infrastructure Investment Bank (AIIB) came into being.

However, a Japanese economist, who calls on his country to join the AIIB at an early date, said it is unnecessary to worry about the shareholding structure of the bank at a time when details related to the bank's governance and stake structure are still pending.

Kiyoyuki Seguchi, research director of the Canon Institute for Global Studies, told Xinhua during an exclusive interview Tuesday that as the AIIB is open to all, China's shareholding will gradually decline with more countries being included in the multilateral development bank and the trend would also be acceptable to all members.

He further pointed out "It is a convention that countries should negotiate first and then decide whether or not to join an international mechanism," adding it is premature to be concerned over transparency and governance issues.

"Compared to the shareholding structure, the way members use their stakes will be more important after the structure is settled, " the expert said.

"However, China's economic scale is so large already, and, according to the International Monetary Fund, its economic scale will be 2.3 times as much as Japan's this year, so it is natural for China to have its stake as 2.3 times as large as Japan's," if Japan decides to join the AIIB, said Seguchi.

The former Rand Corporation international visiting fellow suggested that large shareholding proportions will not necessarily lead to a monopoly since China understands that credibility is significant for the AIIB and it would plunge if China makes decisions at its own will based on its large share.

China has reiterated on different occasions that the AIIB will uphold high standards and learn from the best practices of existing multilateral financial institutions.

Jin Liqun, secretary general of the interim multilateral secretariat of the AIIB, said Saturday that all members will be committed to building a bank which would be lean, clean and green. "Lean is cost effective; clean, this bank will have zero-tolerance on corruption; green means it's going to promote the economy," Jin detailed.

"If China pays enough respect to and follows the traditions of international developmental banks well enough in terms of transparency, governance, environmental protection and energy saving to manage the AIIB, every member will support and respect China's proposals," Seguchi said.

"To this extent, I am confused over Japan's stance to stay out of the AIIB," Seguchi said, saying that Japan should join the AIIB soon so as to be involved in the mechanism's establishment, rather than complaining as an outsider asking for change.

He said that more than half of the Japanese business circle hope Japan joins the AIIB since its cause to develop the Asian region could boost Japanese companies' performances and Japan's participation will also help the AIIB as a financing screen so as to prevent the AIIB from possible distressed debt in the future, as Japan is a seasoned country when it comes to managing a multilateral development bank.

"The AIIB and Japan could forge a win-win situation for both sides. The success of the AIIB will not only benefit China, but also Japan and the entire region," said Seguchi, who maintains an optimistic attitude toward the China-proposed bank and believes that the AIIB will play a constructive role in improving the regional economy and infrastructural development.

"It is known to all that the Asian Development Bank (ADB) is trapped by its limited financing capability and the United States is opposed to the bank's enlarged scale. Therefore, China proposed the AIIB framework to complement the ADB," Seguchi said, adding "A lot of Asian countries will benefit from the AIIB since they face severe financial deficit in infrastructure construction."

Besides Seguchi, other Japanese economic heavyweights and former senior diplomats also urged Japan to join the AIIB at an early date so as to cooperate with other members to boost regional development.

Former Finance Minister Hisahiro Fujii told Xinhua that the AIIB will play a key role of broad cooperation in the region and it could also serve as a platform for regional countries to develop friendship that could lead to regional peace and prosperity.

Meanwhile, Ukeru Magosaki, former chief of the Intelligence and Analysis Bureau at the Japanese Foreign Ministry, said that the most ideal situation for Japan is to forge interdependent relations with regional countries based on pragmatic interests from cooperation.

To this extent, Japan should be the first to announce its decision to join the AIIB, Magosaki told Xinhua, adding that Japan, right now, missed a good opportunity to join the new initiative and, therefore, it needs to reflect on its miscalculation and make a final decision soon.

Seguchi also said that Japan should make its own decision, although there are pressures exerted on it by the United States. Endi