And here comes the AIIB. As a financial catalyst of the region, it plans to start with $50 billion from governments and at least another $50 billion from financial institutions and private capital. Its mandate is to focus on financing in infrastructure development that helps Asia at both the national and regional levels. The AIIB, as a multilateral development institution, will be a highly professional and efficient platform of infrastructure financing. It will tap into the expertise of experienced MDBs to build the capacity to assess and implement projects successfully.
The AIIB is an open and inclusive platform that welcomes not just countries from Asia but others as well, including the United States and European countries in accordance with the principle of first Asian countries and then non-Asian countries.
In view of the huge financing gap in the infrastructure and differentiated mandates and priorities, the relationship between the AIIB and existing MDBs will be complementary and cooperative rather than substitutive and duplicative, As Lou Jiwei, China’s Minister of Finance said, China will promote cooperation between the AIIB and its counterparts so as to jointly advance the sustainable and stable development of Asian economies.
However, reportedly, the United States has applied pressure behind the scenes on South Korea to refrain from joining the AIIB. And Japan has expressed its reluctance to accept an invitation to be one of the founding members of the AIIB on the excuse that Tokyo is “not convinced” of the necessity of launching a new bank.
It seems that the United States and Japan view the AIIB as a threat, claiming that it would not only undermine the ADB but also marginalize American and Japanese influence in the region. The underlying assumption is simply a reflection of zero-sum mentality and obsession to dominate international financial organizations.
In fact, as mentioned previously, the demand for infrastructure finance in Asia is so huge that there is plenty of room for the AIIB and other MDBs to accommodate and cooperate with each other on deals across the region. And more new development banks can only add resources and help to place Asia in a better position to cope with current challenge of infrastructure finance.
In short, by initiating the AIIB, China demonstrates its willingness and capability to provide more public goods to the international community. Rather than a rivalry to challenge existing MDBs such as the World Bank and the ADB, the AIIB will be a partner to work together with its counterparts for economic development and prosperity in Asia.
Wu Zhenglong is a senior research fellow at the China Foundation for International Studies.
This article was first published at Chinausfocus.com To see the original version please visit http://www.chinausfocus.com/finance-economy/the-benefits-of-the-asian-infrastructure-investment-bank/