“Crossing the River by Feeling the Gold”: The Asian Infrastructure Investment Bank and the Financial Support to the Belt and Road Initiative

Abstract

China's Belt and RoadInitiative (BRI) is, above all, a connectivity project. As connectivity requires financial support, in the past few years China has undertaken several institution-building activities at the national and international level, mainly in the financial and economic sector, showing a new propensity to influence global economic governance. In particular, the establishment of the Asian Infrastructure Investment Bank (AIIB) has drawn attention worldwide. How does this institutionbuilding process connect with BRI? Are these institutions just a vehicle for exporting China's capital and overcapacity, or do they signal a potential wider challenge to the post-World War II liberal international order? By analyzing the first loans approved by the bank, the present paper argues that far from representing a China-led challenge to the Western-led liberal order, the AIIB, while promoting Chinese commercial and geopolitical interests, shows the resilience of the global financial regime created by the West.

Does the Belt and Road Initiative Promote Sustainable Development? Evidence from Countries along the Belt and Road

“…This Initiative has the potential to promote the growth of underdeveloped regions as a new dynamic economic pillar and facilitate policy communication to achieve successful cooperation among emerging market economies [15]. However, the construction of the "B&R" also faces high risks and barriers [16][17][18][19], such as the lack of an intermediary coordination mechanism, potential conflicts that may arise between different political systems and concepts, and the financial viability of multinational projects. Therefore, it requires China to carefully plan its own national blueprint, rationally invest and manage projects based on market economy, and take a cautious military and strategic engagement to avoid the urgent challenge of a world order headed by the United States.…”

China, the EU and multilateralism: the Asian Infrastructure Investment Bank

“…In short, the obvious lack of financing was a very good reason to set up the AIIB. The AIIB is an important vehicle to finance infrastructures that will enhance the integration of markets within Asia and to Europe, and the first wave of projects has evidenced that the construction of infrastructure is one of the major targets of the bank (Gabusi 2017). Consistently with the principles guiding China's foreign aid programs, which include mutual benefit and non-intervention, Chinese leaders have expressed that the AIIB will not impose conditions on its investment (Peng and Keat Tok 2016).…”

“…And some others underline that most of the loans approved by the AIIB have been co-financed by other MDBs (the WB, the ADB, etc. ), which shows that, "these projects were not dominated by China's narrow interest only, and were based on international credit standards" (Gabusi 2017).…”

“…Some scholars even consider that "many European countries thought they needed the AIIB as a means of engagement with China more than China needed them to establish the bank" (Callaghan and Hubbard 2016). In any case, it is thanks to the warm response of the Europeans that the AIIB so rapidly has become a substantial part of the global financial architecture for development (Gabusi 2017). More importantly, European support for the AIIB can be interpreted as part of a strategy to encourage China to play a larger role in the multilateral global system (Renard 2015).…”

The Difference between Financial Support and International Capacity Cooperation under the “Belt and Road Initiative”

“…Carrying out international capacity cooperation is an important strategic measure for China to adapt to the new normal of the economy. It is also an inevitable choice for Chinese enterprises to actively adapt to the changing trend of economic globalization, participate in the international industrial division of labor, and utilize two markets and two resources (Gabusi, 2017). With the introduction of the national "Belt and Road" initiative in 2013, international capacity cooperation has become the key content of government work, an important choice for enterprise development, and a hot topic of social concern.…”