AIIB update, mid-2016

 •  Filed under China, International economics, PIIE

Some useful history

Japan’s Asian Monetary Fund Proposal

  • AIIB birth: Foreign policy malpractice?
  • Final list of 57 founding members of the AIIB
  • Monica de Bolle: China's Pivot to Latin America
  • How China decided to redraw the global financial map

    The bank's successful establishment is likely to bolster Beijing's confidence that it can play a leading role in supranational financial institutions, despite the economic headwinds it is facing at home.

    "At the start, China wasn't very confident," one of the sources said in reference to Beijing's AIIB plans. ...

    ... Internal government debates about the AIIB lasted for at least six months from spring 2013 and included the Finance Ministry, the Ministry of Commerce and the China Center for International Economic Exchanges (CCIEE), a state think-tank, sources said.

    Government skeptics questioned China's ability to run a multilateral bank given its inexperience and, fearing the AIIB might incur losses, suggested China set up its own state investment fund to finance foreign infrastructure deals, sources said.

    Others challenged the need for China to start a new bank given it was already a member of the BRICS development bank with Brazil, Russia, India and South Africa, and had held talks with Russia about jointly establishing another lender.

    But the suggestion to start an investment fund was rejected on the basis that a unilateral effort by China could cause other governments to suspect its motives, one of the sources said.

via Hongying Wang: The New Multilateral Development Banks: Promises and Potential Problems

  • Steven Hess: Multilaterals Playing Growing Role in Funding Global Development
  • Hongying Wang: From “Taoguang Yanghui” to “Yousuo Zuowei”: China’s Engagement in Financial Minilateralism: "This paper argues that the Chinese government seeks to use financial minilateralism to stimulate reform of global financial institutions, provide financial public goods for its regional neighbours and fellow developing countries, as well as directly promote China’s economic and political interests. China’s financial minilateralism is not meant to overthrow the existing multilateral institutions, but this could change depending on the interaction between how the world responds to China’s new activism and the domestic political dynamics in China. Western countries should understand and accommodate China’s aspirations and encourage China to keep its minilateralism open."