The sign of Asian Infrastructure Investment Bank (AIIB) is pictured at its headquarters in Beijing, China July 27, 2020. REUTERS/Tingshu Wang Purchase Licensing Rights
HONG KONG, Nov 11 (Reuters Breakingviews) - When China set up the Asian Infrastructure Investment Bank a decade ago, Washington warned the new lender would serve as a diplomatic tool of the People's Republic and fall short of the standards upheld by leading U.S.-led institutions like the World Bank. That prediction has proved inaccurate. The Beijing-based body has established itself as a credible, collaborative, climate-focused lender. As President Donald Trump scoffs at global warming and wavers on how the U.S. will engage with multilateral bodies, new president Zou Jiayi may need to reset the AIIB too.
Jin Liqun, the bank’s outgoing boss, has succeeded in establishing a “lean, clean and green” institution. Since its launch in 2016, the AIIB - capitalised at $100 billion - has approved $67 billion in financing across 39 countries. Among its 345 projects, it has funded three solar plants in Uzbekistan, 7,000 kilometres of rural roads in Ivory Coast, and telecommunications satellites in Indonesia. It boasts a triple-A credit rating while 67% of its lending contributes to climate adaptation and mitigation outcomes. Though smaller than its global peers, the AIIB plans to deploy at least another $75 billion by 2030.
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While developing countries hold a majority of the AIIB's shares, many advanced economies — including the United Kingdom, Germany, France, and Australia — signed up too despite Washington's warnings. Its 110 shareholders make it the world’s second-largest multilateral lender by members, after the World Bank. Despite invitations from Chinese President Xi Jinping, the United States and Japan declined to join.
Crucially, the AIIB has positioned itself as a more transparent alternative to China Development Bank and the Export-Import Bank of China, two of the country's top policy banks, which have committed over $470 billion in overseas finance. Those lenders are deeply entwined with the Belt and Road, Beijing's infrastructure initiative, which has faced widespread criticism for creating debt traps by being reluctant to reduce interest rates or write off loans when problems arise.
By comparison, the AIIB has emerged as a complementary force for the established international financial order. Half of its financing is done in partnership with other multilateral institutions: it’s one of the largest lenders alongside the World Bank and Asian Development Bank. These partnerships have helped AIIB win trust with borrower countries and reduced its due diligence requirements. They also speed up development because they help lenders share the financing risk on ambitious infrastructure projects.
The AIIB has further burnished its international credibility by taking positions that are at odds with Beijing. In contrast with China's other development banks, it swiftly suspended activities with Russia following Vladimir Putin's invasion of Ukraine in 2022. It has also called for multilateral lenders to retain preferred creditor status in sovereign debt restructurings, contradicting Beijing's earlier arguments that the International Monetary Fund and others should suffer the same haircuts on international loans as Chinese banks.
Perhaps most surprisingly, the AIIB has also established a welcome bridge between two big Asian countries that are often at odds. Despite periodic border clashes and its imposition of barriers to Chinese investment, India remains both the bank’s second-largest shareholder and its biggest beneficiary.
This enduring engagement underscores the institution’s ability to rise above geopolitical tensions and deliver on its development mandate. Southern Asia accounted for 37% of the bank's $1.57 billion revenue from loans and guarantees in 2024. The AIIB has helped to finance Chennai's Metro Rail, Haryana's Orbital Rail Corridor that eases congestion around the capital, and a vast solar project backed by Enel Power in India's Thar Desert in Rajasthan.
Of course this does not mean the AIIB is perfect. Its critics say it defers too much to borrower countries to deal with any complaints, especially on environmental, social and governance standards. But if China's objective was to establish a multilateral institution to demonstrate to other countries that it could be a trustworthy global partner the AIIB has delivered.
Keeping the AIIB lean and green will be Zou's top challenge. The new president has held positions at global multilateral institutions and rose to the rank of vice minister of finance in China. The former anti-corruption official who Chinese state media has called a "tiger fighting lady general" looks well-placed to steer the bank through its next challenges. Her immediate priority will be to find the new common ground with the AIIB's partners.
Though Trump has not withdrawn from the World Bank and IMF, as some feared he would, the U.S. wants the institutions to adjust their focus. U.S. Treasury Secretary Scott Bessent is demanding that the World Bank drop its target for 45% of financing to be climate-related and instead champion a broader definition of energy security to propel economic growth in borrower countries. It's not yet clear if that instruction will just change the words banks use to describe their projects, or shift the substance of their work. If the latter, that would shrink the space for the AIIB to collaborate with its peers.
Multilateral banks are unlikely to start financing coal mining projects, as Bessent wants the World Bank to do. But the AIIB could opt to support nuclear energy. Artificial intelligence will dramatically increase electricity demand and create constraints on top of Asia's existing $43 trillion infrastructure gap that could leave the developing world behind. The World Bank has lifted its prohibition on financing nuclear power generation and, if new technologies help to limit nuclear waste, the AIIB and other peers might follow.
Jin built a bank that defied expectations by being lean, green, and geopolitically agile. His successor inherits an institution that has earned trust by working with, not against, the global financial order. Her challenge will be to preserve that credibility as climate goals clash with energy demands and multilateralism frays. If AIIB stays the course it may not just complement the World Bank but could help redefine what global development looks like in a divided world.
Context News
- Zou Jiayi, a former vice-finance minister and senior official in the Chinese Communist party's anti-corruption body, will be the next president of the Asian Infrastructure Investment Bank. Her five-year term will begin January 16, the day after founding President Jin Liqun concludes his second five-year term.
Una Galani