The discussion of the evolving multilateral financing platform, the AIIB, has risen to an
unexpected level among China’s domestic commentators and international observers alike. Within
the country, the emphasis on China’s leadership in the AIIB has gone so far as to sacrifice many
serious evaluations for merely wishful thinking (or emotional claims) of national revival in the
international financial order and beyond. Partly because of China’s domestic optimism, a
considerable number of Western scholars have warned of the potential challenge, if not threat,
from the AIIB and its principal supporter towards the Breton Woods System. To me, such dual
exaggerations of China’s role in the AIIB and the AIIB’s role in the global financial system have
loomed large at the expense of more rational and objective assessments. For this reason, Professor Injoo Sohn was obliged to demystify and disenchant a China-led AIIB.
The domestic narratives of the AIIB more or less identify the new investment bank as an
instrumental part of China’s foreign economic strategy through which the country could start to
gradually reshape and reform the existing unequal rules and norms. Thus China’s creative
initiation of and active participation in the AIIB’s establishing process would be naturally over-
interpreted as the country’s leading position. Such expectations, strengthened by the domestic
nationalist sentiment, may easily be divorced from reality. In this regard, Chinese government
proves wise enough to eschew any reference to the wording of “leadership”, because it is simply
not the truth. At least, the AIIB Charter, after rounds of negotiations and compromises, will guide
and constrain all signatories including the most powerful one. Given its unremitting stress on
becoming a responsible great power, it is virtually impossible to consider China’s unilateral
actions within the framework regardless of tremendous reputation costs. On the other hand, two
conspicuous outsiders (US and Japan) as well as some of their long-time allies within the Bank are
likely to remain hyper-cautious about China’s every motion and the motives behind it. Insofar as
China voluntarily agreed to allow its voting share to decrease in principle, all the other members
contributing to the capital pool could expect a larger say in the future.
prophecy derived from the deep-seated China Threat logic and unjustified geopolitical anxieties.
Even if China indeed enjoys a larger say in the new Bank, AIIB still has to operate within the
basic framework of an investment bank, seeking development opportunities and commercial
interests rather than revision of current international financial standards. But even its most general
mandates turn out to be a complicated task, especially for China. It is true that all the positive
predictions about AIIB’s future will be invalidated to some degree by multiple difficulties faced
by this institutional latecomer: how to sustain financial cooperation with repeated regional
conflicts over intractable territorial disputes, how to ensure stable return on long-term and capital-
intensive infrastructure investments in politically risky regions, how to deal with financial burdens
on least developed countries, and how to maintain environmental and labor standards. Perhaps a
more pressing challenge comes from home, as many Chinese scholars have opposed such an
expensive scheme from the very beginning. Without clear answers to these questions, no one
could be confident in the successful functioning of the Bank, not to mention its unrealistic
ambition to challenge the dominance of extant global financial mechanisms.
Indeed, the AIIB may provide an experimental opportunity for China’s development model
in the region, despite the vagueness and ambiguity of what this model is. AIIB has ushered in
many hopes in the time of the normative fragmentation (Washington Consensus vs. Beijing
Consensus), but it is still far from a satisfactory answer to the future of multilateral development
financing.
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