AIIB, Rival to World Bank, Opens Over the Weekend

For years, the World Bank has represented the only serious player on the block when it comes to raising national level finance needs. However, the World Bank now has a rival in the form of a Chinese organization known as the Asian Infrastructure Investment Bank (AIIB). The new bank’s headquarters is in Beijing, China, and is considered by many to be little more than a direct challenge by China to the supremacy of the World Bank and the economic clout currently held by the United States. 

For years, the World Bank has represented the only serious player on the block when it comes to raising national level finance needs. However, the World Bank now has a rival in the form of a Chinese organization known as the Asian Infrastructure Investment Bank (AIIB). The new bank’s headquarters is in Beijing, China, and is considered by many to be little more than a direct challenge by China to the supremacy of the World Bank and the economic clout currently held by the United States. 

China, however, seeks to make the AIIB stand apart from the traditional way of doing things during the era of the World Bank. It believes that the World Bank does not sufficiently represent the interests of developing nations and that it imposes unreasonable requirements on potential borrowers. The AIIB asserts that it will support any country, even the United States and Japan, despite the objections that those two countries raised to the formation of the AIIB. 

China has an initial subscription in its new global development bank of $29.78 billion in authorized capital stock (out of the total $100 billion shares available). China upped the ante with an additional $50 million investment at the time of launch on Saturday. According to China, the need for services offered by organizations like AIIB, prove enormous for the developing world. China believes it will be able to use AIIB to invest in projects for the developing world that are “high quality, low cost.” To that end, it hopes to lend between $10 and $15 billion a year for the first five to six years of its operation. 

According to the International Business Times, AIIB President Jin Liqun said, “We already have a very good pipeline of co-financing projects (with other international development banks) and standalone projects. Loans will be in U.S. dollars, but the bank may opt to raise funds in other currencies, including the euro and the yuan … As we all know, Asia faces severe connectivity gaps and significant bottlenecks. It’s critical to address the need because building infrastructure is a foundation for robust economic growth and expands economic opportunities and improves the quality of life for everybody.”

AIIB says it will require the projects it finances to be legally transparent and project both social and environmental interests. Those also happen to be the same values claimed by the World Bank.