Study Notes

Asian Infrastructure Investment Bank (AIIB)

AQA, Edexcel, OCR, IB

Last updated 22 Mar 2021

The Chinese-led Asian Infrastructure Investment Bank (AIIB) is designed to raise hundreds of billions of dollars to finance railways, ports and other key development projects. AIIB will also play a growing role in fostering regional economic integration including a rise in intra-regional trade and investment.

Initially there will be around one hundred billion dollars of capital which might provide financing of 12-15 times this amount as the capital of the bank is leveraged.

There will be around forty founder members including Russia, Taiwan, South Korea, Germany, Brazil, Australia and the United Kingdom, but with no official representation from the USA who are suspicious that the AIB will be a vehicle for increasing Chinese dominance in the Asian continent.

Japan is another noticeable absentee (for the moment) from the list of founding member nations although it is expected to join within a matter of months.

China set about building its own development bank largely because it was frustrated by a relative lack of influence at the World Bank (a U.S.-based institution) and the Asian Development Bank (where Japan is a major force).

China is planning to build new maritime and land routes between China and Asia - known more commonly as their new Silk Road

The AIIB might in time threaten the influence of the World Bank and the International Monetary Fund (IMF).

The AIIB, as well as the New Development Bank (better known as the “Brics bank”) and the “one belt, one road” initiative, is also seen as a way for China to deal with its huge excess capacity in industries ranging from cement and glass to iron and steel.

Suggestions for reading on this issue

Guardian: Australia confirms it will join China's Asian Infrastructure Investment Bank

More articles on AIIB from the Guardian

Economist (November 2014) Why China is creating a new "World Bank" for Asia

Linda Yueh (March 2015) Why does the UK want to join the China-led development bank?

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