Nine of the 16 founding countries, namely China, South Korea, Thailand, Vietnam, Malaysia, Singapore, Brunei, the Philippines, and Indonesia, are also part of APEC. Cooperation within APEC, however, is disproportionate, especially since the U.S. and certain APEC members signed the Trans-Pacific Partnership Agreement (TPP). Setting up the AIIB is vital to China and various APEC member nations. On the one hand, establishing the AIIB will contribute to building an APEC financial cooperation platform. This will foster balanced development of APEC's trade and financial cooperation. On the other hand, the AIIB could change the general trend of wealthy countries, great powers, or APEC member nations taking the lead in regional economic cooperation. It could thus enable less developed member countries to obtain maximal benefits from APEC.
The Asian Development Bank (ADB) has in recent years played an indisputably important role in facilitating the economic advance of developing Asian countries, and accelerating their infrastructure construction. However, when facing the actual needs of Asian developing countries, the ADB is generally unable to accomplish all it sets out to, let alone achieve a cooperative balance with APEC. The ADB predicts that, by the year 2020, there will be an annual US $800 billion input of infrastructure construction in Asia. But the ADB can only offer annual infrastructure project loans of US $10 billion. Under this scenario, establishing the AIIB will offer a new financing channel for Asian developing countries.
Necessary Competition
The forthcoming AIIB and the long-existing ADB have many overlapping functional orientations as regards providing assistance for Asian developing countries in infrastructure construction.
As is universally known, China's economic growth is inextricable from follow-up infrastructure. Indeed, a considerable number of China's infrastructure construction projects over past years, such as railways, highways, and environmental protection facilities, have been financed by ADB loans.
What should be borne in mind, however, is that although ADB serves Asian countries, its shareholder composition is complicated. Japan and the U.S. are two principal ADB shareholders. Others include a number of developed countries. At present, Japan, the U.S., Eurozone countries, Australia, and New Zealand jointly own 50.6 percent of ADB's voting power. It is consequently hard to judge whether or not ADB milestone decisions embody the actual needs of developing countries, let alone enable more of them to benefit from APEC's development.
In the current world economic pattern, developed countries headed by the U.S. may still be the main players, but their unilateral predominance faces a challenge. Or at least, the world economy leadership is due for reelection. As the world's second largest economy and largest trading nation, China stands a fighting chance of membership in this leading group. At present, China's ADB shareholding is 6.429 percent, as compared with Japan's 15.571 percent and the U.S.'s 12.756 percent. China also has only 5.442 percent of voting power. But neither China's ADB shareholding ratio nor voting power fully reflects the country's economic status. China's proposal to establish the AIIB originates in deep-rooted deliberations on offering a fresh financing option for Asian infrastructure construction. It is, moreover, conducive to changing the situation where the same handful of developed economies in APEC calls the shots.