CNBC Transcript: Interview with Jin Liqun, President of AIIB

Following are excerpts from the transcript of a CNBC interview by Steve Sedgwick and Jin Liqun, President of AIIB.

SS: I think a tone from a lot of those gentlemen was mildly positive, despite the oscillation in the market. Amidst all that, the Asian Infrastructure Investment Bank, which of course was a Chinese-led initiative, is open for business. The development bank launched last weekend in a sign of Beijing's growing financial influence. The bank expects to lend $10-15 billion per annum for the first five or six years. Russia is at the front of the queue for financing of $1 billion worth of projects. I'm delighted to welcome to the programme Jin Liqun, who is the President of the AIIB. So thank you very much indeed for joining us. Well, look, so many questions, but if I may start off on the oscillation, the concerns we're seeing coming out of China, and indeed the broader Asian region, do you think the markets are getting a little bit overdone?

JL: I think it's quite often then market would overreact to any volatility, so I think the decision makers, investors, and all those who are very much close to this, should stay calm, and indeed the Chinese fundamentals are very good, but of course this economy's growth has slowed down for good reason, because we need to aim at quality, not quantity. After three decades of fast growth, it's only natural for the economy to stay-, move forward on a more solid basis and to achieve better quality, higher level, you know, growth, and in return for better environmental protection.

SS: You mentioned, sir, and it was a very key point, I think, that the regulators, the authorities should remain calm. Do you think they have remained calm throughout this, or actually there's been a little bit of a knee jerk reaction?

JL: Well, I think in the times of volatility, probably some people will be a little bit worried, but if you look at the Chinese regulators and the government, I think they managed to do a very good job. Indeed, you see the outcomes are pretty good, and compared to a couple of months ago, a couple of weeks ago, the Chinese market is more stable.

SS: I guess the point from an investor point of view would be if the Chinese stock market is not a barometer, and the oscillation we are seeing on that market is not a barometer of that slow decline in growth, but to a steady level, a more long term level, that we're seeing, why is there such a whole series of reactions from authorities about the market if they're not so worried about the broader economy?

JL: The Chinese stock market is still in its early stages of development. The correlation between the virtual economy and the real economy is not that close as compared to the relationship between stock market in United States or western countries. So in this regard, I don't think it is right to make judgement on the real sector economy purely by the volatility of the stock market. And also, you see, we have a group of investors in the stock market who are not very mature, and who want to make quick bucks, and sometimes they overreact, but I think for any country, the regulators, the decision makers, are moving on a learning curve. I'm proud to say the Chinese regulators are pretty fast on their learning curve.

SS: It's not just Chinese investors who are on that steep learning curve and need that education! So look, let's get back to your remit, because I think this provides a very interesting opportunity, and perhaps more pressure on you to make the right investments. Am I right?

JL: The AIIB, Asian Infrastructure Investment Bank, is initiated by China, but this bank is owned by, at this moment, 57 member countries. So it's not a Chinese bank, it's a bank of all the founding members, and we have more than 30 countries on the waiting list, eager to join. So we manage this bank by the international highest possible standard and the mandate is to promote sustained economic development in Asia. This should be very good news for the non-Asian countries also. For instance, a more developed Asia will be very good business opportunities for companies in Europe, North America, that is why so many non-regional members are very keen on joining hands with the Chinese and other Asian countries.

SS: Joining and borrowing from, as well, and it's very interesting that Russia is at the front of the queue, wanting a loan, given the fact that this is an oil rich country which has such key links with China and the region.

JL: We focus on connectivity. All of the countries in this region, first the Eurasian land, and also some of the South East Asian countries, connectivity by sea routes, connectivity on the land by road and railways are all very much important. So when AIIB invest in a country, we don't look at the benefit for a particular community, particular country, we look at the connectivity of the entire region.

SS: So just a final question, and I know you've had this one before, but I mean, for those who say it's a competitor to the World Bank, it's a competitor to the Asian Development Bank, I'm sure you've got a well-rehearsed answer for them.

JL: You know, contrary to the expectations of some of the people who are very much worried whether this could be a rival to World Bank, ADB, this is not true. We have already become very close partners. We are very much grateful to the World Bank, the ADB, for their generous support in the course of setting up this bank. You see, when 70 years ago, the World Bank was created, the economy was pretty small. 50 years ago, when ADB was created, the economy was bigger. Now half a century later, we are dealing with a much, much bigger Asian economy, global economy. What's the worry?

SS: Yes. Sir, thank you very much indeed for joining us, it's been a real pleasure. Jin Liqun, who is the President of the AIIB.