Asian Infrastructure Investment Bank

Abstract

The Chinese-led Asian Infrastructure Investment Bank (AIIB) faces monumental challenges derived from institutional and financial accountability, as well as the ability to deliver on its promises of increased economic integration in the Asia-Pacific region. Nevertheless, China is resolute in cementing its economic position in the global market and expanding its regional influence. The main justification for instituting AIIB is to provide secured loans to underdeveloped Asia-Pacific countries ineligible to obtain funds through other global financial institutions. However, by lessening loan barriers, AIIB’s approach threatens to give rise to regional economic volatility — a vice adamantly despised under the Bretton Woods system. The pivotal element that defines AIIB’s outcome is a well-diversified cofounding member cohort insistent on implementing sound regulatory measures. AIIB needs a divergent membership that considers the socio-economic determinants of individual requestors, allowing for well-diversified and well-balanced opinions on operating principles. Without this element China might be subjugating its clients, the Asia-Pacific countries, to yet another form of manipulation that was shunned under the Bretton Woods system. Would this be another subtle attempt of Chinese influence for a stake in regional hegemony under a guise of alleviating the impoverished regions of Asia-Pacific? Transparency, emphasis on operating principles enacted with democratic accord and accountability should serve as guiding blocks of the well-diversified cofounding cohort. These measures would hold China to its vows of increased prosperity in the Asia-Pacific region, which it is attempting to deliver through AIIB. This paper examines the advantages of the AIIB as well as drawbacks that could place the Asia-Pacific countries into another “golden straitjacket” if these propositions are not taken into consideration.