PARPCCL #13 – The Asian Investment and Infrastructure Bank (AIIB) Does she call into question the existence of the World Bank? ?

Par Camille Brugier

If the AIIB is indeed a multilateral institution on paper, it is often called, in the corridors of international organizations, la “China World Bank ». The question we ask ourselves today is whether this bank competes with the World Bank and therefore with the existing multilateral financial system.. ».

In terms of development, China acts in the multilateral arena, notably via the World Bank, which finances development programs around the world with billions. But at the same time, Beijing also created 2016, with 56 other countries, the AIIB (Asian Infrastructure Investment Bank – Asian Infrastructure Investment Bank). This structure has a global scope: France and Germany are members, like many European countries; and the AIIB also lends to Hungary and Romania, even if Asia remains its core target. China is the largest contributor to the AIIB and has 26% voices – far ahead of the second contributor, Russia (5%). China is the third recipient of AIIB funding, after India and Turkey.

The objective of Qian's article, Vreeland and Zhao is to see whether or not this “Chinese World Bank” competes with the World Bank. Their short answer, after reviewing thousands of infrastructure projects awarded by the World Bank in 155 country between 1992 et 2019:  oui. They observe that countries which are developing et founding members of the AIIB partially withdraw from infrastructure projects financed by the World Bank (-22%) over this period. So, challenge to the established order or other phenomenon?

These countries could indeed need less money in general (1), or they might need money more for infrastructure than for health or education (2). Perhaps the World Bank is lending less to these countries because they are now “too” developed. (3). Finally, one might think that giving up the World Bank and choosing the AIIB is just eating from all the racks, rather than strong support for China.

According to the authors, there is indeed a challenge to the established order. These countries are ready to appear alongside China in an institution competing with the World Bank, and this is a very significant indicator of support for China. In effect, the AIIB is not the World Bank and somewhat mirrors the criticisms made against this institution founded after the war:

(1) The AIIB goes all out on infrastructure financing, what is missing a lot, especially in Asia, (2) the AIIB gives voice to developing countries rather than the “usual suspects” and (3) the AIIB is more flexible than the World Bank on the conditions for implementing public policies which are highly criticized by the beneficiary countries and finally, (4) the granting deadlines are much shorter (7 month against 2 years on average at the World Bank).

Qian, Vreeland and Zhao also raise a very important question that goes beyond the scope of their research: Are the Chinese and American giants not politicizing multilateral organizations?, which since the post-war period provided a kind of “common denominator” to promote economic development throughout the world?

The authors doubt it, at least from a western point of view. According to them, countries subscribing to the AIIB are not “punished” by the World Bank when they request funds from it.. But this too can change and does not mean that the USA is not already trying to politicize the Bank, but without much success at the moment.

Others contributions dispute the interpretation of Qian Vreeland and Zhao; and they themselves concede that with a study limited to infrastructure projects it is difficult to draw major conclusions, even if tensions seem more and more palpable in the cozy corridors of the international bureaucracy.

Reference: Qian, Jing; Vreeland, James Raymond; Zhao, Jianzhi (2023), « The Impact of China’s AIIB on the World Bank”, International Organization, vol. 77(1), pp. 217-237.