Reservations over motives behind China bank

Transcript

An Australian National University researcher says it's important a new investment bank set up by China supports development projects in the Pacific that will have long-lasting benefits.

The Asian Infrastructure Investment Bank is being established to invest in new infrastructure across Asia and is expected to begin operations before the end of the year.

New Zealand announced this week that it had joined the organisation as a foundation member and would provide initial funding of $NZ125 million dollars to be paid over five years.

Bridget Tunnicliffe asked development policy researcher Terence Wood if the region needs another infrastructure bank.

TERENCE WOOD: Certainly given how rapidly the Chinese economy's growing and given how much sort of capital there is available to the Chinese government and given that there's still a need for infrastructure in South East Asia and in the Pacific, tapping in to some of that capital through a new investment bank could be a good thing, definitely. Although questions have to be asked about why the Chinese feel like they need to set up their own development bank to sort of make this capital available for development purposes. Indeed the fact that they are setting up their own development bank almost certainly speaks to an element of geo-strategy in the choice that they've made. I think it's widely recognised that they've set up this bank as something of a counter-foil to what they see as the influence of the Japanese dominated Asian
Development Bank and also the World Bank which the Chinese tend to view as being sort of overly influenced by the United States.

BRIDGET TUNNICLIFFE: In terms of investing in new infrastructure across the Pacific region, is there a significant gap in infrastructure in that area do you think?

TW: Yes there is, I mean certainly say if you travel around a country such as the Solomon Islands and you see the state of the roads or you see the state of infrastructure such as wharves or if you you know travel around parts of particular islands which are completely bereft of infrastructure you can see the hurdles that this places on people who would like to get produce to markets and you can see how more infrastructure would help. However you don't want to be too naive and think that the main barriers to establishing successful infrastructure in parts of the Pacific are always simply to do with an absence of money being available. Often there are other tricky issues afoot such as land rights and just who can build what, where and also a reluctance on behalf of Pacific Island governments, or an incapacity, a want for capacity on behalf of Pacific Island governments to actually maintaining infrastructure. So if you travel around Pacific island countries it's easy to find many examples of sort of large infrastructure projects built in the 1970s which are now in a state of decay such as they can no longer be used.

BT: Could better infrastructure help lift more people in the region out of poverty if it was done well?

TW: Yes, and the key phrase in your sentence is 'if it's done well' and I guess tying us back to the Asia Infrastructure Development Bank, the million dollar question with the bank is - will it be working intelligently to deliver infrastructure projects that are designed so that they will not only be built now but still be up and running 20 years from now. And here I mean the Chinese have some track record, they're certainly good at getting things done but at the same time there are already examples I think of Chinese infrastructure development projects in Africa where the roads are decaying and look like they're to become replicas of some of the sort of white elephant projects that Western development agencies built during the sort of epoch of infrastructure investment.