Asian Infrastructure Investment Bank
According to a 2011 McKinsey report, more than $1 trillion of annual investment is required to meet requirements for infrastructure development in Asia – a demand that continues to swell as India, China, ASEAN, and smaller developing nations lead the vanguard of global economic growth. To meet this demand, foreign private sector investment in infrastructure is increasingly being welcomed in these geographies, and many thorny regulatory jungles have been pruned and made accessible. The Bretton Woods Institutions – IMF and World Bank – and the Asian Development Bank have also been committing record sums to infrastructure projects.
The foundation of the Asia Infrastructure Investment Bank (AIIB) in December 2015 passed relatively quietly in the UK media, with most coverage fixating on the appointment of Sir Danny Alexander as one of the new bank’s Vice Presidents. But it is not an insignificant development. On a recent visit to Beijing, I met with AIIB representatives from Sir Danny’s new office and agreed that he would feature in an Asia Scotland Institute event in the New Year.
As background information, the AIIB team explained that the founding of the bank has been led by China, but its other major shareholders include India and Russia. The remaining 54 members include the UK, France, and other members of the ‘big seven’, as well as the members of ASEAN. The United States and Japan are, however, notably absent. They explained that many on the outside perceive the foundation of the AIIB as a deliberate challenge to other multilateral development banks, such as the ADB and WB, and therefore to Japanese and American domination of this supranational arena and their power as a whole, hence the frosty response from Washington and Tokyo. They commented that another concern among some outside onlookers is that the AIIB may simply be a front for implementing China’s One Belt One Road policy – investment in strategically important countries along the ancient Silk Road to increase trade and influence, while simultaneously creating a new maritime trade route.
I was informed that the AIIB aspires towards new working methods embracing the latest technologies and was also told they have a very open and cooperative relationship with the ADB, WB, and others – sharing best practice, pooling insights, and seeking to work together towards common sustainable development goals.
We look forward to welcoming Sir Danny Alexander as one of our speakers sharing his insight on Asia. The ongoing tectonic shift in the global order from United States hegemony to a multipolar global order in which China is a key player has already been well described by commentators, including former Prime Minister of Pakistan Shaukat Aziz, when speaking at the Asia Scotland Institute in September 2016 (incidentally he has also been recently appointed to the AIIB advisory board).
We look forward to hearing about what impact the AIIB will have on the sustainable development of infrastructure in Asia, and on the wider geopolitical picture. Making such predictions of the future will undoubtedly be difficult, particularly in the context of Brexit and Trump’s election victory in the United States, but the world looks to be changing, and as Jin Liqun, the AIIB’s first President remarked, “history has never set any precedent that an empire is capable of governing the world forever.
Asia Scotland Institute