30 June 2015
The founding members of the Asian Infrastructure Investment Bank (AIIB) recently signed the Articles of Agreement in Beijing. The signing of the articles, and the bank’s subsequent start of operation by the end of this year, is highly significant for economic development in the Asia-Pacific, as well as for China’s role in the international economic system.
The bank aims to be a nimble institution that would help remedy Asia’s massive infrastructure deficit. It also demonstrates China’s willingness to use its capital and will power to tackle this problem within a rules-based framework. This is in keeping with a pattern in China’s foreign policy, by which China is seeking a more active role in shaping global economic governance through large-scale proposals such as the One Belt, One Road initiative.
Why is such a bank needed? The Asian Development Bank has estimated that the Asia Pacific would need to invest a total of $8 trillion in physical infrastructure between 2010 and 2020 in order to maintain economic growth. These abstract-sounding figures have a real impact on daily economic life in many Asian countries. The traffic-clogged roads of many Asian capitals lead to massive difficulties for people getting to work. Over-burdened port facilities can weigh down the development of a vibrant export economy. The dearth of highways or railroads hampers intra-country connectivity, resulting in regional developmental inequalities.
… The author is a research analyst at RSIS’ China Programme, Nanyang Technology University. The opinions expressed are the author’s own.
IDSS / Online
Last updated on 16/11/2015