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Room for One More? Rising Chinese Influence on the Global Stage

After numerous regional visits in 2013 – laying the groundwork for China to showcase a vision of its foreign policy – Chinese leader Xi Jinping’s signature organisation, the Asian Infrastructure Investment Bank (AIIB), has taken shape. The 29 June signing ceremony, which saw 57 prospective founding members sign the Articles of Agreement, ushered the AIIB into a global-multilateral economic order previously dominated by the World Bank (WB) and the Asian Development Bank (ADB). Yet the creation of the AIIB raises questions about what China hopes to achieve. The answer to this question is threefold:

  1. Reenergise focus on regional infrastructure;

  2. Increase international acceptance for the direction of Chinese foreign policy;

  3. Increase global influence.

Soaring regional economic growth has been a welcome development in Asia. However, the region’s inability to increase infrastructure in-line with urbanisation and industrialisation has thrown up potential barriers to continuing and sustainable economic growth. A recent Asian Development Bank (ADB) study highlighted that the level of infrastructure investment needed to achieve ‘European-level’ living standards in Asia by 2050 is around US $8 trillion. This raises questions about the role of the AIIB when infrastructure financing is already a core function of the WB and ADB. However, two key issues undermine perceptions of the WB and ADB.

First, there are issues surrounding voting power. China and developing states have grown economically yet voting powers have not changed. The WB relies on US Congressional approval for changes to voting power calculations. Lacklustre bureaucratic reforms have been criticised as an attempt to maintain the status quo in terms of global influence, particularly in Asia.

A further issue concerns conditionality. Essentially, WB loans include state-focused policy conditions that recipient countries must fulfil. Behind this concept is the idea that adopting economic policies successful in highly developed states offers a way to secure repayments and to reduce further loan assistance. Conditionality has been heavily criticised in Asia as being patronising and ineffectual. The rise of Asia as a growing global voice has seen the region call for resolutions. Seeking to lead this change, the AIIB is China’s first attempt to firmly control an international-governmental organisation, increasing its regional influence while also helping to raise the voices of developing states calling for broader participation.

For China in particular, broadening the AIIB’s membership base has significant built-in benefits. By enticing vast array of member states, China has found a way to advance its ‘One Belt, One Road initiative’. This initiative includes infrastructure (predominately road and rail) projects between China and Europe as well as port projects connecting China to Southeast Asia, the Middle East and Europe. China’s ability to attract numerous and diverse member states as the AIIB’s “founding members” – using enticements to win over influential members like the United Kingdom – highlights how China is willing (and capable) of opening its organisation in order to increase international acceptance of its foreign policy goals. Furthermore, the AIIB increasingly highlights a ‘flexing’ of China’s geopolitical capacity.

The US ‘Pivot to Asia’ policy represents the US' desire to maintain some form of leadership in the region. Chinese movement on the ‘One Belt, One Road’ policy, Air Defence Identification Zone and now the AIIB increasingly feeds into US unease about China’s soft and hard power projection. The potential for China to fortify a grander stature within Asia, reshape the political and strategic landscape and to become the ‘epicentre’ of Asia, challenges US perceptions of its role both in the region and globally. A China-controlled bank potentially allows China to apply pressure or entice support for Chinese foreign policy goals and to support its global influence. Nonetheless, the US/Japanese response should not be walking away from the bank. The AIIB has a role to play.

The AIIB offers an opportunity to close a small gap in infrastructure needs. Initial bank capital will be set at US $100 billion and it is a welcome addition to the current shortfall. Concerns about diminished global influence should not be enough for the US and its allies to walk away from the project. By joining the AIIB, the US has the opportunity to influence the direction of the bank and to build better relations with China. The possibility for the US and China to cultivate stronger bonds over economic matters and to work together to achieve mutual economic and trade benefits via increased infrastructure investment outweigh the United States' geopolitical concerns.

Charles Bryant is a Second Year Masters student at the Sir Walter Murdoch School of Public Policy and International Affairs at Murdoch University.

This article can be republished with attribution under a Creative Commons Licence. Please email with any questions or for more information.

Image Credit: Bernd Thaller (Flickr: Creative Commons)

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