China’s Asian Infrastructure Investment Bank (AIIB): What You Need to Know

Guest Writer for Wake Up World

The business newswires have been atwitter with talk of the “AIIB” in the past two weeks. What is the AIIB? And why this story is receiving so much attention? James Corbett, founder of The Corbett Report, is here to fill in the pieces of the puzzle.

What is the AIIB?

The AIIB is the Asian Infrastructure Investment Bank, a new multilateral development bank first proposed by Xi Jinping in a speech to the Indonesian parliament in October 2013. At the time, Xi explained that “to support the process of interconnection and integration of the economic development in the region, China has proposed to build the Asia infrastructure investment bank and provide financial support to infrastructure development in developing countries in the region.”

The bank was formally established on October 24, 2014 in a ceremony in Beijing where 21 founding members signed the bill. Negotiations on the articles of agreement for the bank are ongoing and expected to be completed before the end of the year. It is expected that the bank will be capitalized with between $50 billion and $100 billion, most of which will be provided by China.

Who is behind it?

The founding members of the bank were China (obviously), India, Thailand, Malaysia, Singapore, the Philippines, Pakistan, Bangladesh, Brunei, Cambodia, Kazakhstan, Kuwait, Laos, Myanmar, Mongolia, Nepal, Oman, Qatar, Sri Lanka, Uzbekistan, and Vietnam. Since then, 13 more members have joined the bank, perhaps most notably the UK, France, Germany and Italy, as well as New Zealand, while Australia, South Korea and Taiwan are currently considering joining despite America’swell-publicized admonitions to its allies that joining the bank would be tantamount to “accommodation of China, which is not the best way to engage a rising power.”

Of course, that was before the dam broke with the IMF, the World Bank and the Asian Development Bank all coming out in favor of the AIIB. Now, Washington’s tune has changed significantly, with US Treasury Under Secretary for International Affairs Nathan Sheets saying “The US would welcome new multilateral institutions that strengthen the international financial architecture.”

Didn’t this all happen last summer?

No, that was the formation of the BRICS “New Development Bank”, announced at the 6th BRICS Summit in Brazil. The NDB is now very much on the back burner as China throws its weight behind the AIIB, which is more directly under its influence, leaving India and other BRICS partners wondering just how committed China is to the NDB at all anymore.

What will the bank do?

As a development bank, the AIIB will fund infrastructure development and invest in projects to contribute to the economic development of the Asian region. A 2009 report from the Asian Development Bank estimated that between $8 and $13 trillion of investment would be needed through the course of this decade to keep Asia on its economic development path.

Many of China’s neighbors, allies and trading partners in Asia need massive investment in basic infrastructure like reliable electricity, access to clean water, sanitation facilities and transportion. The AIIB, with its $50 billion in registered capital, will obviously only be a drop in the bucket in providing such investment, but it is expected to make a noticeable difference in the region.

CONTINUE READING:

Previous articles by James Corbett:

• So What Does The World Bank Do Exactly?
• Meet the BRICS “New Development Bank”
• Pedophiles in Politics: An Open Source Investigation
• Geo-Engineering: The Real Climate Change Threat

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