Arab Today, arab today new bank another brics
Last Updated : GMT 07:16:54
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Arab Today, arab today

In Beijing’s diplomatic wall

New bank another BRICS

Arab Today, arab today

Arab Today, arab today New bank another BRICS

A new $100 billion bank for major emerging nations
Shanghai - Arab Today

A new $100 billion bank for major emerging nations will sign agreements to establish its headquarters in China on Saturday, the latest step in Beijing’s efforts to re-engineer the world’s financial institutions.

The New Development Bank (NDB), set up by the so-called BRICS nations of Brazil, Russia, India, China and South Africa, has been viewed as a challenge to Washington-based institutions.

Its website explicitly describes it as an “alternative to the existing US-dominated World Bank and International Monetary Fund” which will address needs for infrastructure and sustainable development.

It comes after the formal establishment in December of the Chinese-led, Beijing-headquartered Asian Infrastructure Investment Bank, a $100 billion institution that counts several major European countries among its members after they signed up despite Washington’s objections.

Earlier, following a long campaign by Beijing, the IMF announced China’s yuan will be included in its elite Special Drawing Rights reserve currency basket.

The NDB represents an attempt to put financial meat on the bones of the BRICS grouping, whose members represent more than 40 percent of the world’s population but who only became an acronym courtesy of a Goldman Sachs economist in 2001.

Establishing the bank at the financial heart of the world’s second-largest economy is another landmark in China’s efforts to have a greater say in global institutions, and to exert greater financial and diplomatic influence despite a slowdown in growth.

Societe Generale China economist Claire Huang in Hong Kong, speaking to AFP, said that the new bank will offer loans with fewer strings attached than existing multilateral lenders.

“Borrowing from NDB won’t have as many obligations as borrowing from the IMF,” she said, saying the institution would act as “a small IMF” and discussions will be more streamlined because of the limited membership.

But NDB president K.V. Kamath, a former private banker from India, insisted on Friday that the institution “will function like a prudent bank should” and offer loans on the basis of the cost of funds and an appropriate margin.

The first approvals are expected in April and he expects 10 to 15 projects to be given the go-ahead this year, he added, more than half of them in green energy.

Each country has a 20 percent share in the bank, with none holding veto power, and it will confine its loans to them.

– One Belt, One Road –

As well as the development banks, President Xi Jinping’s One Belt One Road plan calls for boosting the country’s loans and investment in infrastructure projects from Central Asia and the Middle East to Europe. Railway links now connect Chinese cities such as Suzhou to Warsaw, and Zhengzhou to Hamburg.

Xi paid his first official to the Middle East this year as Beijing seeks to deepen its ties in the oil-rich region, which it depends on for energy imports, and which it hopes to develop into new markets for its oversupply of steel, aluminium, and industrial goods.

But sceptics say the plan’s ambitions to export China’s excess may outstrip reality.

“The magnitude of the overcapacities and the size of One Belt One Road is a complete mismatch, it will not put even a minor dent in the overcapacities in China,” said Joerg Wuttke of the EU Chamber of Commerce in China.

The belt-and-road vision “remains a grandiose and abstract wish list rather than a coherent blueprint of interconnected international investments”, wrote analysts Michal Meidan and Luke Patey in a report for the Danish Institute of International Studies.

“Once it is set into motion many of the infrastructure projects will encounter financial uncertainties as well as political and security risks.”

The NDB faces challenges of its own.

It formally opened last year, but has yet to begin disbursing funds or move into its permanent offices. Bank representatives will sign formal agreements with the Shanghai government and the People’s Republic of China on Saturday to establish its headquarters in the city.

But it comes with several of its member nations slammed by rock-bottom oil and commodity prices and global shortfall in demand.

Like the AIIB, the bank will have authorised capital of $100 billion, with initial subscriptions set at $50 billion. But it said Friday members have only paid in $1 billion so far.

Asked whether the turmoil facing its members would hinder the bank, its chairman Anton Siluanov, Russia’s finance minister, told reporters in Shanghai: “On the contrary, in a period of some difficulties… the bank has become particularly important in terms of raising investment resources”.
Source :AFP

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Arab Today, arab today new bank another brics Arab Today, arab today new bank another brics

 



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