TOKYO (TIP): Japan unveiled a plan on Thursday to provide $110 billion in aid for Asian infrastructure projects, as China prepares to launch a new institutional lender that is seen as encroaching on the regional financial clout of Tokyo and its ally Washington.
The amount of Japanese funds, to be invested over 5 years, tops the expected $100 billion capitalization of the Asian Infrastructure Investment Bank (AIIB), the Beijing-sponsored lender scheduled to begin operations next year. Japanese officials said the plan, announced by Prime Minister Shinzo Abe at a symposium of Asian officials and experts, represents a 30% increase over Tokyo’s past infrastructure funding.
Japan said it wants to focus on “high quality” aid, for example, by helping recipients tap its expertise in reducing pollution while building roads and railways. That’s an implicit contrast with the AIIB, whose projects Washington has said may not adequately safeguard the environment. “We intend to actively make use of such funds in order to spread high-quality and innovative infrastructure throughout Asia, taking a long-term view,” Abe said announcing the plan. About half the funds will be extended by state affiliated agencies in charge of aid and loans and the rest in collaboration with the Asian Development Bank (ADB). Japan hopes the aid will help draw private funds to help meet the vast demand for infrastructure in Asia. The US and Japan were caught off guard when a total of 57 countries, including Group of Seven members Britain, Germany and France jumped on board the AIIB bandwagon by March.