Anisha Bhaduri says Hong Kong’s unique regional position and global stature can help the investment bank with its focus on ASEAN and other emerging markets

In the last week of June, the Beijing-based Asian Infrastructure Investment Bank (AIIB) signed an agreement with the Hong Kong Monetary Authority (HKMA) for investment in a portfolio of venture capital funds that prioritize investments across emerging markets in Asia.

AIIB described the collaboration as a milestone inked a day after Chinese Finance Minister Lan Fo’an urged the lender to boost support for emerging markets, especially as the global economy was slowing. Speaking at the 10th AIIB annual meeting in Beijing this week, Lan described the bank’s focus on connectivity and regional cooperation as its “comparative advantage” among multilateral development banks. He also urged greater private sector investment in cross-border infrastructure connectivity.

Capitalized at $100 billion, AIIB started with 57 founding members in 2016, and the roster has grown to 110 worldwide, employing 700 international employees from 78 economies. The multilateral development bank’s largest stakeholder is China, holding 26.5 percent of its voting share. The bank has invested more than $60 billion, predominantly in climate finance projects recently, and bond issuances have raised the equivalent of $54 billion in 20 currencies.

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Ahead of the annual meeting in which Zou Jiayi was named the next president of AIIB — set to take over from Jin Liqun in January — the buzz had grown stronger about the lender’s possible expansion into Hong Kong. It is widely speculated that new offices will be also opened in Singapore and London, in addition to its current Abu Dhabi outpost set up in 2023.

After a decade, it does make a lot of sense to want to get closer to capital markets. And especially to Hong Kong.

In February, AIIB's first Hong Kong dollar-denominated sustainable development bond offering raised HK$4 billion ($510 million).

Speaking at the 25th anniversary celebrations of the Hong Kong Exchanges and Clearing Limited in late June, Hong Kong Chief Executive John Lee Ka-chiu pointed out how Hong Kong led the world in IPO fundraising, with 29 listings and nearly $10 billion raised in the first five months of the year, encapsulating a seven-time growth, year-on-year. “A few more telling numbers,” Lee said. “Over the past quarter of a century, our total market capitalization has soared six times, while the average daily turnover has increased nine times.”

But it is more than just stocks muscle and financial clout. As Financial Secretary Paul Chan Mo-po said, responding to the agreement with HKMA, “This collaboration combines and leverages HKMA’s and AIIB’s knowledge, experience, networks, and strengths.” HKMA Chief Executive Eddie Yue Wai-man said he believes “this strategic partnership will provide a demonstration effect on the scaling of capital for emerging Asia’s innovators”.

As an avowed superconnector and “super value-adder” between the Chinese mainland, the region and the world at large, Hong Kong is uniquely positioned to complement the guiding principles and the operational imperatives of AIIB. Jin Liqun, AIIB president, acknowledges that Hong Kong has “played a pivotal role” in the bank’s growth.

Hong Kong joined AIIB in June 2017 by agreeing to pay $155 million over five years. At that time, as reported, Chan had proposed that part of the bank’s operations — such as the Treasury — be moved to the city.

AIIB has a collaborative remit, engaging with peer multilateral development banks, including the Asian Development Bank; the African Development Bank; the European Bank for Reconstruction and Development; the European Investment Bank; the Islamic Development Bank; and the World Bank. As AIIB puts it, “This approach increases impact and demonstrates the value of coordinated development financing.”

As of December, AIIB had approved 303 projects, with 131 co-financed with other multilateral development banks, making it the largest co-financier for the World Bank. In fact, according to AIIB data, the lender and the World Bank have co-financed 56 projects totaling $13.6 billion.

AIIB’s updated corporate strategy blueprint released during its 10th annual meeting mapped out a four-pronged focus list with a 2030 target. It aims to double its annual financing ambition to reach $17 billion in 2030, with balanced support for sovereign and nonsovereign clients and greater direct mobilization of private capital. Second, it is also looking at maximizing climate impact, targeting over 50 percent of its own financing to climate-related investments annually, exceeding $50 billion over the period.

Strengthening regional cooperation and connectivity remains a key initiative, with 25 to 30 percent of financing supporting cross-border connectivity projects by 2030.

Lastly, it is looking to enhance development impact, helping members’ emissions reduction and gender equality objectives as well as other sustainable development goals.

Announcing the updated strategy, Jin said: “We aim to deploy another $75 billion by 2030 to narrow the infrastructure financing gap — but our ambition goes beyond dollar figures.”

Hong Kong can certainly help. As early as 2017, Chan said the Infrastructure Financing Facilitation Office set up in 2016 under the HKMA will work with AIIB on infrastructure financing.

At a side event of AIIB’s 10th annual meeting, Secretary for Financial Services and the Treasury Christopher Hui Ching-yu said Hong Kong shared AIIB’s “mission of providing high-quality financial disclosures as a reliable player that builds trust with stakeholders”.

In line with its deepening regional pivot, earlier this year, the multilateral lender helped launch an ASEAN-focused program to boost cross-border connectivity, which it says, “serves as a model for structured regional development and reinforces AIIB’s commitment to private capital mobilization for sustainable infrastructure.”

Hong Kong’s unique regional position and global stature can also help AIIB with its focus on the Association of Southeast Asian Nations (ASEAN) and other emerging markets.

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In 2024, ASEAN was Hong Kong's second-largest trading partner at HK$1.29 trillion. According to the Trade and Industry Department, in a June 2024 survey covering about 9,960 companies in Hong Kong with overseas parent companies, around 70 regional headquarters, 130 regional offices and 530 local offices were found in Hong Kong, with their parent companies located in ASEAN.

As part of its updated strategy, over the next five years, AIIB aspires to “scale up ambition, deepen partnerships and broaden impact”. Hong Kong has the world’s freest economy and has been ranked third globally in the World Competitiveness Yearbook 2025, compiled by the International Institute for Management Development. It is also an innovation technology and a green finance hub. For AIIB, Hong Kong certainly ticks all the boxes.

The author is an award-winning English-language fiction writer and current-affairs commentator.

The views do not necessarily reflect those of China Daily.