51吃瓜

The creation of the AIIB opens up a new chapter in international relations and global finances.

On June 29, under the leadership of China, 50 founding members signed contracts to create the Asian Infrastructure Investment Bank (AIIB), with its main hub in Shanghai. Its three biggest shareholders are China, India and Russia. Interestingly, some nations that are otherwise close American allies鈥攕uch as Germany, France, Italy and South Korea鈥攈ave also become members, although the United States attempted to convince them not to join. For the US, who is still the dominant player in global finances, the creation of the AIIB was thus seen as a heavy diplomatic and financial defeat.

After Chinese President Xi Jinping of the AIIB in 2013, the institution was established in less than two years, an impressively short-term compared to other international projects.

In founding the bank at this moment, China鈥檚 government built on a growing sense of frustration among the developing nations in the Middle East and the Asia Pacific. Ever since the Asian Financial Crisis of 1997-98, when the management of the World Bank and the International Monetary Fund (IMF) was and suppressive, negative sentiments toward the world鈥檚 most important credit granter lingered on and became even stronger.

It was in this context that the Global Infrastructure Facility (GIF) was supposed to allow for a more balanced evaluation of credit requests. However, establishing GIF within the boundaries of the to be a difficult matter.

As countries like China became ever more and the underrepresentation of Asia in global financial institutions, the idea of an Asia-based bank bore fruit.

For Asian countries, the perspective of an alternative to the World Bank with easier access to funding in a less bureaucratic way support quickly. With over 75% of share votes in the hands of Asia Pacific nations, the AIIB holds a promise of more effective money lending for the region鈥檚 infrastructure projects.

Naturally, the creation of the AIIB was accompanied by various levels of American skepticism. The joining of major European nations and other close US allies sparked annoyed reactions from Washington. Indeed, the fast pace of China鈥檚 rise from a developing country in the 1980s to a resourceful global player with still huge untapped future potential has .

In the 1990s, the US was the biggest investor in most Asian countries. With the turn of the millennia or shortly afterward, this . The Chinese have now replaced American investments as number one. It is clear that China鈥檚 foreign policy behavior does not mirror that of a developing country anymore, but instead has become more assertive as can be observed in various fields.

Thus, the creation of the AIIB comes with many overt and undoubtedly some hidden implications. Even if the institution will act rather as a supplement and not as a rival to the World Bank, a Chinese-led international financial institution at the beginning of the 21^st century sends a strong signal. Together with other initiatives, the AIIB is part and parcel of China鈥檚 鈥渙ne belt, one road鈥� strategy that is meant to create a 鈥淣ew Silk Road鈥� that links China to Southeast Asia, the Middle East and Europe.

As of yet, it is too early to fully judge the impact these plans will have. However, two things are clear.

First, concerning the AIIB, the decision over whether to partake and how to deal with it, without a doubt, will continue to be a very political one, which can be seen by the 鈥渂ureaucratic difficulties鈥� the Philippines faces with China over territories in the South China Sea.

Second, although its founders have been careful in their description of their lending institute, the AIIB will effectively be seen as an Asian countermeasure, balancing the weight of institutions such as the World Bank and the IMF, which are perceived as Western-centric. Therefore, with the AIIB, China and its partners have added one more piece to the board that needs to be considered by all players.

While the exact implications will depend on how aggressive China will play this piece and how threatening the US will perceive these moves and react to them in the long-run, it is clear that the creation of an Asia-based international financial institution outside the Bretton Woods system alone makes for a show of strength that fits perfectly in the narrative of Asia rising.

The views expressed in this article are the author鈥檚 own and do not necessarily reflect 51吃瓜鈥檚 editorial policy.

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