Hong Kong, which last week joined the Beijing-led Asian Infrastructure Investment Bank by agreeing to pay US$155 million over five years, is now lobbying the AIIB to set up a regional office in the city, Financial Secretary Paul Chan Mo-po told the Sunday Morning Post on Saturday.
Speaking on the sidelines of the two-day AIIB annual meeting on the South Korean resort island of Jeju, Chan said Hong Kong was also seeking to become an alternate governor on the bank’s board, which would give the city a bigger say in the institution.
The AIIB is Beijing’s answer to the Asian Development Bank led by Japan and the World Bank, which is heavily influenced by the United States.
Chan said Hong Kong had made its wishes clear to AIIB president Jin Liqun and Minister of Finance Xiao Jie, proposing that part of the bank’s operations – such as the treasury – be moved to the city. The proposal had received a “positive” response from Beijing, he said.
“They know our advantages,” Chan said. “Compared with cities like Shanghai, we have the advantage … of our wider reach to international investors, in particular institutional investors.”
He added that Hong Kong also had the “China advantage” over cities like Singapore and London.
The AIIB, with a capital base of US$100 billion, is a big economic diplomacy win for Beijing. The idea of creating a China-led regional bank was raised by President Xi Jinping in 2013, but it initially met with resistance from the US and Japan. Only 22 countries signed the founding agreement in Beijing in late 2014.
But attitudes changed after the United Kingdom’s then chancellor of the exchequer George Osborne in March 2015 announced that the UK would join the bank – becoming the first major Western nation to do so.
Now, the AIIB has 80 members – including all the Group of Seven countries except for the United States and Japan. Argentina, Madagascar and Tonga are the latest countries to get on board.
Chan said Hong Kong’s investment in the AIIB would be managed by the Financial Secretary’s Office, with assistance from the Monetary Authority and in particular the HKMA’s recently set up infrastructure investment office.
He said the decision to join the bank, at a cost of US$155 million for a stake of less than 1 per cent, was the right one because “we need to know what is going on around us so that we can stay relevant”.