The AIIB and China’s Normative Power in International Financial Governance Structure

Abstract

This article examines the role of the Asian Infrastructure Investment Bank (AIIB) in China's emerging normative power in international financial governance area. Based on the existing framework of normative power concept, the AIIB's role in China's normative power is examined from three angles: normative principles, norm diffusion, and external perception. As a Chinese initiative, the AIIB's policy framework has inherited Chinese norms of unconditionality and infrastructure construction. The management structure of this new bank also manifests China's preference of a lean internal arrangement. Moreover, Asian developing countries hold the majority of voting power of the AIIB. This distribution of votes also falls in line with China's appeal of a fair governance structure in international financial institutions. The analysis reveals that with the endorsement of 57 member states, the AIIB will significantly enhance China's normative power in the international society. Some other international institutions have changed their policies to adapt Chinese norms. Moreover, the cooperation between the AIIB and the other financial institutions is a chance to improve the external perceptions of China's normative power in western society, including European states and the United States. However, it is still necessary to observe whether China will be able to maintain its normative principles during the operation of the AIIB.

China's Role in Global Development Finance: China Challenge or Business as Usual?

“…It is also seen as challenging Western geoeconomic dominance, with China's push into development banking portrayed as the lynchpin of its Belt & Road Initiative for Afro‐Eurasian economic integration (Yu, ). Some authors, such as Wang (, ), have suggested that China could abide by and indeed reinforce Western best practice norms for development finance, but most either worry (Condon, ) or cheer (Ren, ) that China will reshape a development finance arena that has long been defined and governed by Western‐dominated institutions (Peng and Tok, ). The United States in particular has actively resisted China's sponsorship of new regional development banks like the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB), both of which began operations in 2016.…”

China, the EU and multilateralism: the Asian Infrastructure Investment Bank

“…Increasing the influence of the PRC in the WB and the IMF would represent a new step towards a "multipolar international order" (Geeraerts 2011) or a "multilateralised multipolarity" (Grevi and Vasconcelos 2008). China has criticized the USA veto power in the IMF and has suggested that IMF management should have more representatives from developing countries (Peng and Tok 2016). If the US transferred part of its power, it would reinforce China as a trustworthy partner, but up to present Washington has preferred to keep the status quo.…”

“…The establishment of new international financial institutions reflects China's frustration with the slow pace of reform of the WB and the IMF (Wihtol 2015). In Chinese rhetoric, the aim is to establish a fair governance structure in multilateral organizations (Peng and Tok 2016). According to the US view, reform would be a step towards hegemonic transition.…”

“…Coherently with its critics to the IMF and the WB, the PRC has tried to propose a fairer distribution of voting rights (Peng and Tok 2016). To this purpose, the distribution guarantees that Asian developing countries have larger influence than in the WB and the ADB (Asian countries have around 75% of voting rights), reserving a comparatively small proportion of shares to countries and regions outside Asia (about 25% of voting rights).…”

BRICS, soft power and climate change: new challenges in global governance?

“…While it is true that these countries have not renounced their participation in 'traditional' international institutions, but rather giving life to these new institutions, the question remains, will they be able to challenge the Washington Consensus (Bagchi 2012)? There are also other important differences to consider, such as the principle of non-interference: unlike the IMF and the WB, the AIIB and the NDB are not 'interested' in how projects are put into practice in each country, but only grant funds based on the validity of a project (Abdenur and Folly 2015;Peng and Tok 2016).…”