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Hong Kong hopes for business services boom from AIIB club
Hong Kong is hoping its professional and financial services will get a big boost when it becomes a member of a Beijing-backed bank created to finance infrastructure across Asia.
The Asian Infrastructure Investment Bank’s (AIIB) board announced on Thursday that Hong Kong was one of 13 new applicants approved for membership, along with Canada. The expansion will extend the lender’s reach into North America and take its total membership to 70.
“The interest in joining the AIIB from around the world affirms the rapid progress we have made to establish the bank as an international institution,” bank president Jin Liqun said.
“I am very proud that the AIIB now has members from almost every continent and we anticipate further applications being considered by our board of governors later this year.”
The 13 prospective members will officially join the lender once they complete procedures in their home countries and deposit an initial cash instalment.
Hong Kong Financial Secretary Paul Chan Mo-po welcomed the decision, calling for the Legislative Council’s Finance Committee to approve the funding quickly.
Chan said Hong Kong’s participation in the AIIB could create new opportunities for services in the city, reinforcing its place as an international financial centre.
The city’s government said this month it hoped the committee would approve funding for the bank in the second quarter, adding that the legislature’s financial affairs panel was supportive of the request.
James Lau, undersecretary for financial services and the treasury, said earlier this month the government was planning to seek Legco approval for HK$1.2 billion next month to be paid to the AIIB over five years, for an equity stake of about 0.7 per cent.
Kenneth Leung, vice-chairman of the Legislative Council’s financial affairs panel and a pan-democrat, also welcomed the AIIB’s decision, saying he did not see the funding application as being a controversial political issue. “Under ‘one country, two systems’, Hong Kong has the right to be a member of international organisations. The city should grasp this opportunity to join the AIIB,” Leung said.
He said the government should actively help Hong Kong companies and professionals take advantage of the opportunity, possibly setting up an office to handle AIIB matters.
Peter Wong Tung-shun, deputy chairman and chief executive of Hongkong and Shanghai Banking Corporation, said he hoped Hong Kong could use its position as a leading offshore yuan hub and become the financial centre for the AIIB.
“Becoming an AIIB member strengthens Hong Kong’s position as the premier financing platform to participate in Asian infrastructure projects – including those of the [“One Belt, One Road”] initiative – through its leadership in fields such as treasury management, debt financing and private equity investment,” Wong said, referring to China’s initiative to expand its trade and commercial links in Asia and into Europe.
Legal sector lawmaker Dennis Kwok said Hong Kong could become the AIIB’s arbitration centre. “If the AIIB sets up an office in Hong Kong, it will need a lot of financial and legal services, which will benefit the legal sector [here],” Kwok said.
Political commentator Johnny Lau Yui-siu said the AIIB accepted Hong Kong’s application but not Taiwan’s, reflecting the greater importance Beijing placed on Hong Kong’s economic role.
“Part of the role of the AIIB is for China to reach political objectives through economic means. In China’s relationship with Taiwan, if Beijing is able to separate politics from economics, then the AIIB could let Taiwan join the AIIB as well, which will benefit the Taiwanese people,” Lau said.
But with pro-independence Tsai Ing-wen now the island’s president, there was “little to discuss” about Taiwan joining the AIIB, he said.
Professor Lau Siu-kai, vice-president of the Chinese Association of Hong Kong and Macau Studies, said Beijing had actively supported Hong Kong’s efforts to join the bank.
“Hong Kong ... can play a role for the countries along the belt and road scheme that mainland cities cannot replace,” he said.
China seeks bigger voice in global finance issues
The AIIB was launched two years ago with 57 founding members. This is the first major expansion with other new members including Afghanistan, Belgium, Ireland, Peru and Venezuela.
Canada is the bank’s first member in North America.
Yu Miaojie, vice-director at the National School of Development at Peking University, said: “The AIIB’s reach into North America indicates its growing influence in the OECD countries and the Western world and it may push the US and Japan to rethink their approach. They may choose to have closer contact with the AIIB.”
The Trump administration’s “American First” policy could also push more countries to join Beijing’s global economic initiatives, such as the AIIB and the “One Belt, One Road” project, according to Henry Chan Hing Lee, an adjunct research fellow at the East Asian Institute at the National University of Singapore.
“There’s a lot of interest in ‘One Belt, One Road’ around the world after the election of Donald Trump. One can interpret it as either a protest against ‘American First’ or a genuine belief in the take-off of ‘One Belt One Road’,” Chan said. “ I believe that more countries will apply [for AIIB membership] down the road.”
Additional reporting by Frank Tang and Kristin Huang
This article appeared in the South China Morning Post print edition as:
Hong Kong hopes for boom from AIIB clubHong Kong hopes for boom from AIIB club