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(Bloomberg) — China’s Finance Minister Lan Fo’an warned emerging countries are running short of money to spend on cross-border infrastructure, in remarks at a meeting of a multilateral lender based in Beijing.
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“World economic growth is slowing down, international development aid funds are declining, and developing countries are generally facing a funding gap for cross-border connectivity investment due to limited public resources,” Lan said Wednesday.
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Speaking in Beijing at the annual meeting of the Asian Infrastructure Investment Bank, Lan said a key issue at the moment is how to “stimulate the potential” of private investment in cross-border infrastructure and build what he called a sustainable funding guarantee mechanism.
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Marshalling private capital for development is becoming a priority after international aid from official donors fell in 2024 after five straight years of growth, according to the Organisation for Economic Co-operation and Development. A United Nations agency estimates developing countries face a $4.3 trillion annual financing gap for sustainable development.
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Established in China as an international development lender similar to the World Bank, the AIIB has committed almost $52 billion in funding to 38 member countries, according to its website, with India the largest single recipient.
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Chinese companies — especially state-owned enterprises — have meanwhile been expanding their overseas investment and construction projects in recent years with a focus on countries along President Xi Jinping’s flagship Belt and Road Initiative.
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The boom has helped absorb domestic manufacturing overcapacity, offset slowing demand for infrastructure at home, and strengthened China’s access to critical energy and mineral resources.
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China is the AIIB’s largest shareholder with almost 27% voting rights. The bank has roughly doubled the number of member countries to about 100 since operations started in 2016.
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While the US and Japan both declined to join due to concerns that the bank would be controlled by China, American allies in Europe — as well as Canada, Australia and New Zealand — all became members.
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During his remarks on Wednesday, Lan said China wants the AIIB to “deepen partnership and mobilize various resources to strengthen communications with the governments of member countries so that public funding will play a leading role.”
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The finance minister also called for efforts to reduce “private capital’s concerns over risks associated with issues such as geopolitics and defaults.”
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“Mobilizing private funding more thoroughly and more efficiently will help tackle the bottleneck of insufficient public sector investment,” Lan said.
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