Xi Again Proposes an ASEAN Infrastructure Bank

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Chinese President on tour visiting Indonesia & Malaysia prior to APEC Summit

Oct. 3 – Chinese President Xi Jinping has again suggested the development of an ASEAN Bank that would invest in infrastructure throughout the region and that China would be prepared to invest in. China is not a member of ASEAN.

Xi was speaking in Jakarta yesterday following his two day State visit to Indonesia, during which he addressed the Indonesian Parliament and signed off trade deals worth billions of dollars.

“We want to promote cooperation between both countries to fly as high as possible to space and go as deep as possible in the sea,” Xi stated.

The leaders of both countries signed off six agreements to improve cooperation in sectors including maritime, fisheries, tourism and space exploration and said they have upgraded ties to a “comprehensive strategic partnership.”

Concerning the ASEAN bank project, Xi did not elaborate but China’s large pool of foreign reserves can help meet the demand for road, rail, port and power facilities in ASEAN countries like Indonesia. Bilateral trade between the two countries jumped to US$66.6 billion last year, up from US$29.6billion in 2009.

Xi also announced that China would open a new Consulate-General in Bali, where one million Chinese tourists are expected to visit in the course of the next year. The two countries also announced a US$20.5 billion bilateral currency swap agreement, as well as plans for China to issue scholarships via the Confucius Institute to over 1,000 Indonesian students over the next five years.

Muslim scholars and leaders have also been invited to China to discuss cultural and religious exchanges, an issue we’ve touched upon in China’s new tolerance to “traditional” faiths.

President Xi has arrived in Kuala Lumpur today on a two day state visit. China is Malaysia’s largest trade partner, and bilateral trade between the two countries has increased by a multiple of ten in the last decade. Trade has risen 14.9 percent in 2013, reaching US$59.72 billion in the first seven months, and is expected to overtake last year’s total of US$94.8billion. Malaysia is an important source to China for products such as crude oil & gas, palm oil, rubber and electrical components. China exports electronics and electronic products, machinery and appliances.

Xi and the Malaysia Premier Najib Razak are expected to sign a five year bilateral development plan, a deal concerning the two countries sovereign wealth funds, and extensive trade agreements running into the billions of dollars. The two countries have also just agreed to recognize each other’s university degrees.

Chinese President Xi will then fly to Bali on Saturday to attend the annual invitation-only APEC CEO Summit, where he will make a speech concerning China’s involvement with the trade body. APEC is a forum for 21 Pacific Rim countries to discuss, explore and develop multilateral ties, and is attended by the most senior levels of government, including prime ministers, foreign ministers and financial ministers, as well as selectively chosen business leaders. Member nations and territories include Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, Philippines, Russia, Singapore, South Korea, Thailand, Taiwan, United States & Vietnam.

Dezan Shira & Associates’ Founding Partner, Chris Devonshire-Ellis, will also be attending. His comments on the various sessions and discussions held at the APEC Summit will appear next week on our Asia Briefing website.

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