China has been striving to take the lead in reshaping regional and global economic governance by creating a fresh network that connects Eurasia and South Pacific through a multilateral development financing institution, the Asian Infrastructure Investment Bank.
In 2013, China’s President Xi Jinping expressed the country’s aim to leverage and realize its centerpiece foreign policy, the “One Belt, One Road” initiative. Since 2015, China has encouraged 65 countries to participate in the initiative to boost their economic links.
The China-led AIIB was key to spurring infrastructure development. Policy-wise, the banking institution did not require deregulation or privatization from a borrower in exchange for the loans, unlike the World Bank or the International Monetary Fund.
The institution began operation in January 2016 and has since approved loans for 13 projects worth $2.18 billion in total revolving around energy and water supplies and other infrastructure including transportation systems.
So far, 80 nations have gained approval to contribute to the bank -- 57 signatories of the AIIB, including South Korea, and 23 prospective members, 13 of which won approval in March, seven in May and three in June. The US and Japan have not joined.
The Beijing-headquartered AIIB expects the financing to foster sustainable economic development and improve infrastructure connectivity within the network, while collaborating with other multilateral development institutions, such as the World Bank and the Asian Development Bank, according to the Articles of Agreement.
The AIIB is now considered a part of China’s institutional statecraft, along with other funding mechanisms such as the Silk Road Fund, as well as the New Development Bank, which was founded in collaboration with Brazil, Russia, India and South Africa.