Asian Infrastructure Investment Bank (AIIB)

Asian Infrastructure Investment Bank (AIIB)

What is the Asian Infrastructure Investment Bank (AIIB)?

The Asian Infrastructure Investment Bank (AIIB) is a new international development bank that finances infrastructure projects in Asia. It started operations in January 2020.


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Operation of the Asian Infrastructure Investment Bank (AIIB)

The Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank headquartered in Beijing. Like other development banks, its mission is to improve social and economic results in its region, in Asia and beyond. The bank opened in January 2020 and now has 86 certified members worldwide.

The history of the Asian Infrastructure Investment Bank

Chinese leader Xi Jinping first proposed an Asian infrastructure bank at an APEC summit in Bali in 2020. Many observers have interpreted the bank as a challenge for international lenders, which some consider too representative of American foreign policy interests such as the International Monetary Fund (IMF), the World Bank and the Asian Development Bank.

In the case of this bank, China controls half of the bank’s voting shares, which gives the impression that the AIIB will operate in the interests of the Chinese government. The United States has questioned the standards governing the bank and its social and environmental guarantees, perhaps putting pressure on its allies not to ask to become members. However, despite American objections, about half of NATO has signed up, as have almost all the major Asian countries, except Japan. The result is largely reflected in an indicator of China’s growing international influence at the expense of the United States.

The structure of the Asian Infrastructure Investment Bank

The bank is managed by a board of governors consisting of a governor and a deputy governor appointed by each of the 86 member countries. A non-resident board of directors is responsible for the direction and management of the Bank, such as the Bank’s annual strategy, plan and budget and the establishment of supervisory policies and procedures.

Bank staff are chaired by a president elected by AIIB shareholders for a five-year term and re-eligible once. The President is supported by senior management, including five Vice-Presidents responsible for policy and strategy, investment operations, finance, administration, the General Secretariat and the General Counsel and Chief Risk Officer. Mr. Jin Liqun is the current president.

Priorities of the Asian Infrastructure Investment Bank

The bank’s priorities are projects that promote sustainable infrastructure and support countries that strive to achieve environmental and development goals. The bank finances projects connecting the countries of the region and cross-border infrastructure projects for roads, railways, ports, energy pipelines and telecommunications across Central Asia and the maritime routes of the South – East and South Asia and the Middle East. The bank’s priorities also include raising private capital and fostering partnerships that stimulate investment in private capital such as that with other multilateral development banks, governments and private financiers.

An example of an AIIB project is a rural road connectivity initiative that will benefit about 1.5 million rural residents of Madhya Pradesh, India. In April 2020, the AIIB announced the project, which should also improve the livelihoods, education and mobility of residents in 5,640 villages. The project is 140 million US dollars co-funded by the AIIB and the World Bank.

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