## The Legacy of Jin Liqun and the Future of the AIIB
When China wanted to set up its answer to the World bank, it picked Jin Liqun-a veteran financier with experience at the World Bank, the Asian Progress Bank, China’s ministry of finance and the China Investment Corporation, the country’s sovereign wealth fund-to design it. As 2014, Jin has been the force behind the Asian Infrastructure Investment Bank, including a decade as its first president, starting in 2016.
Jin’s decade-long tenure comes to an end on january 16, when he will hand over the president’s chair to Zou Jiayi, a former vice minister of finance. When Jin took over the AIIB ten years ago, the world was still mostly on a path to further globalization and economic integration, and the U.S. and China were competitors, not rivals. The world is different now: Protectionism is back, countries are ditching multilateralism, and the U.S.and China are at loggerheads.
The AIIB has largely managed to keep its over-100 members,which includes manny countries that are either close allies to the U.S.-like Germany, France and the U.K.-or have longstanding tensions with Beijing, like India and the Philippines.
But can the AIIB-which boasts China as its largest shareholder, and is closely tied to Beijing’s drive to be seen as a “responsible stakeholder”-remain neutral in a more polarized international surroundings? And can multilateralism survive with an “america First” management in Washington?
After his decades working for multilateral organizations-the World Bank, the ADB, and now the AIIB-Jin remains a fan of multilateralism and is bullish on the prospects for global governance.
“I find it very hard to understand that you can go alone,” Jin tells Fortune in an interview. “If one of those countries is going to work with China, and then China would have negotiations with this country on trade, cross-border investment, and so on-how can they negotiate something without understanding the basics, without following the generally accepted rules?”
“Multilateralism is something you could never escape.”
## Why did China set up the AIIB?
Beijing set up the asian Infrastructure Investment Bank almost a decade ago, on Jan. 16,2016. The bank grew from the aftermath of the Global Financial Crisis, when Chinese officials considered how best to use the country’s growing foreign exchange reserves. Beijing was also grumbling about its perceived lack of influence in major global economic institutions, like the International Monetary Fund and the World Bank, despite becoming one of the world’s most important economies.
With $66 billion in assets (according to its most recent financial statements), the Asian Infrastructure Investment Bank is smaller than its U.S.-led peers, the World Bank (with $411 billion in assets) and the Asian Development Bank (with $130 billion). But the AIIB was designed to be China’s first to design its own institutions for global governance and mark its name as a leader in development finance.
Negotiations to establish the bank started in earnest in 2014, as several Asian economies like India and Indonesia chose to join the new institution as members. Then, in early 2015, the U.K. made the shocking decision to join the AIIB as well; several other Western countries, like France, Germany, Australia, and Canada, followed suit.
Two major economies stood out in abstaining.The U.S., then under the Obama administration, chose not to join the AIIB, citing concerns about its ability to meet “high standards” around governance and environmental safeguards. Japan, the U.S.’s closest security ally in East Asia, also declined, ostensibly due to concerns about human rights, environmental protection, and debt.
“They chose not to join, but we don’t mind.” Jin says. “We still keep a very close working relationship with U.S. financial institutions and regulatory bodies, as well as Japanese companies.” He sees this relationship as
Shifting Alliances and Scrutiny: The Asian Infrastructure Investment Bank Amidst US-China Competition
Table of Contents
The Asian Infrastructure Investment Bank (AIIB), a multilateral development bank founded in 2016, has become a focal point in the intensifying strategic competition between the United States and China. Initially envisioned as a collaborative effort to address infrastructure gaps in Asia, the AIIB is now facing increased scrutiny, particularly from Washington, which views China’s growing influence in global governance as a challenge to U.S. power. This has led to re-evaluations of membership and allegations of undue Chinese Communist Party (CCP) influence within the bank.
The Rise of the AIIB and US Concerns
China’s economic rise and increasing assertiveness on the global stage prompted the creation of the AIIB as an alternative to institutions like the World bank and the Asian Development Bank,which are seen by some as being dominated by Western interests. Beijing initiated the bank with the goal of financing infrastructure projects across Asia,fostering regional connectivity,and promoting economic development.
Though, the AIIB’s emergence coincided with a shift in U.S. policy under the Trump administration, which increasingly framed China as a strategic competitor.Washington began to view China’s involvement in multilateral institutions, including the AIIB, with suspicion, fearing that Beijing would leverage thes platforms to advance its geopolitical agenda. This viewpoint continues to influence U.S.policy.
Allegations of CCP Influence and Membership Reconsiderations
Concerns about Chinese influence within the AIIB came to a head in 2023 when Canada suspended its membership following allegations made by a former Canadian AIIB director, Bob Pickford. Pickford claimed that the CCP had exerted undue influence over the bank’s operations, including appointments and lending decisions. He specifically alleged that the AIIB wasn’t adhering to its stated international norms and that party members held notable sway within the organization. https://www.reuters.com/business/finance/canada-freezes-ties-with-china-led-aiib-probes-allegations-communist-domination-2023-06-14/
The AIIB strongly refuted these accusations, calling them “baseless and disappointing” and stating its commitment to maintaining a merit-based and self-reliant operational environment. https://www.aiib.org/en/news-events/news/2023/AIIB-Statement-on-Leadership-Team-changes.html Following Pickford’s resignation and the Canadian government’s inquiry, Canada announced it would cease future business with the AIIB pending the outcome of the investigation. As of December 2023, Canada remains a member but has frozen its ties.
It’s critically important to note that in March 2024, the Canadian government concluded its investigation and found no evidence to support the allegations of CCP influence. Though, Canada has not yet resumed full engagement with the AIIB, citing ongoing concerns about governance and transparency. https://www.cbc.ca/news/politics/canada-aiib-investigation-report-1.7154999
Diverse Responses from Regional Players
Despite the concerns raised by the U.S. and Canada,several countries with complex relationships with China,including India and the Philippines,have continued to maintain their membership and engagement with the AIIB. This suggests that the benefits of accessing AIIB financing for crucial infrastructure projects outweigh the geopolitical considerations for these nations.
The AIIB’s Vice President, D.J.Pandian, highlighted the bank’s ability to navigate geopolitical tensions, stating that “Staff of different nationalities did not become enemies as their governments were having problems with each other. We never had this kind of problem.” This underscores the AIIB’s internal efforts to foster a collaborative environment despite external pressures.
China is currently the largest shareholder in the AIIB, holding approximately 26.06% of the voting shares as of November 2023. https://www.aiib.org/en/about-aiib/shareholders/ This significant stake gives China considerable influence over the bank’s decision-making processes. For comparison, the United States holds around 16.38% of voting