A new China-led lending institution to finance infrastructure projects in Asia aims to differentiate itself from the World Bank and the Asian Development Bank with a leaner structure meant to showcase Beijing’s reputation for speed and efficiency in building large projects.
Articles of incorporation for the Asian Infrastructure Investment Bank (AIIB), adopted at a meeting of its 57 founding member countries last month, call for the bank to be overseen by an unpaid, non-resident board of directors, the Wall Street Journal reported.
The bank’s voting structure means that China, as the bank’s largest shareholder, will most likely have a veto over major decisions, according to the articles and people close to the bank.
The bank, which will be based in Beijing and use English as its operating language, will open bidding for projects to all, unlike the ADB, which restricts contracts to member countries, according to a copy of the articles reviewed by the newspaper.
It also gives a bigger voice to developing nations, unlike in the International Monetary Fund and World Bank, where China lobbied for years for greater representation.
“China benefited a lot from existing multilateral organizations, but it was also frustrated in a lot of ways that they didn’t increase the weight of China and other developing markets, that they are often slow and bureaucratic,” said David Dollar, a senior fellow at Brookings Institution and former World Bank and US Treasury official in China who has done unpaid consulting for the new bank.
The bank has been seen as an ambitious bid by Beijing to expand its international influence and challenge US clout while at the same time bolstering opportunities abroad for Chinese construction and engineering companies, the Journal said.
A low-key lobbying campaign by China exceeded expectations, attracting 56 other countries, among them US allies Australia and South Korea that faced pressure from Washington not to join.
“China can’t lose from having an economically rational, transparent governing structure at the AIIB that it can showcase in response to the US,” Leslie Young, an economics professor with the Cheung Kong Graduate School of Business, was quoted as saying.
“This is going to change the game and expand its soft power,” he said.
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