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Asian Infrastructure Investment Bank (AIIB) - Structure, Purpose and benefits

Published on Thursday, November 24, 2016


AIIB is projected as an alternate international financial institution for World Bank, IMF and ADB from China. AIIB provides long-term finance to develop infrastructure in the developing nations of the world especially in the Asia Pacific.

What is AIIB?

  • AIIB is a multilateral development bank proposed by Mr Xi Jinping, President of China in Indonesian Parliament in October 2013 
  • 21 founding members signed the bill to open AIIB 
  • AIIB was established on 24th October 2014 
  • Head Quarters located in Beijing, China 
  • The corpus fund is $100 billion with China as the majority shareholder 
  • AIIB will enhance integration and interconnection process of economic development in the region 

list of Banks under this category

  • Asian Infrastructure Investment Bank 
  • International Monetary Fund 
  • New Development Bank – BRICS 
  • Asian Development Bank 
  • World Bank 

Founding Members

  • China 
  • India 
  • Singapore 
  • Thailand 
  • Pakistan 
  • Malaysia 
  • Philippines 
  • Nepal 
  • Cambodia 
  • Brunei 
  • Vietnam 
  • Oman 
  • Sri Lanka 
  • Kazakhstan 
  • Qatar 
  • Uzbekistan 
  • Myanmar 
  • Bangladesh 
  • Laos 
  • Since establishment, 13 additional members have joined AIIB 
  • Now, Total members of AIIB is 57 
  • President of AIIB is Jin Liqun 
  • G7 and developed nations are not members of AIIB 

Purpose of AIIB

  • Aims to develop infrastructure in Asian countries 
  • ADB estimates that nearly $13 trillion is essential for economic development of Asia 
  • AIIB will help in networking Asian nations to boost trade 

Benefits to China

  • AIIB will broaden the regional infrastructure scheme of “One Belt, One Road” (OBOR) 
  • OBOR aims to expand all forms of transport – water, road, air and rail from China to Asia, Europe and the Middle East
  • Propagate Chinese Renminbi in the international economy 
  • AIIB will enable China to play a major role in Asian Affairs 
  • AIIB uses the opportunity of the declining US economy to become a global figure in place of World Bank and IMF 
  • In the name of Infrastructure development, China strengthens its trade routes with its neighbors and Asian ally nations like Laos (Kunming-Singapore Railway) 
  • China and its allies like BRICS form an alternate to the 70 year supremacy of US and allies in the global economy 

Concern Areas

  • Environmental hazards like to happen in the name of infrastructure development 
  • Chinese infrastructure development in Indonesia has witnessed deforestation to a large extent 
  • Infrastructure development will result in increasing the pollution level further 
  • Controversial proposals of AIIB including railway track through Mount Everest and a railway line passing through the middle of the Amazon forest 
  • Ecological disturbance will occur 
  • Habitat loss for many species as a result of infrastructure development 
  • Chinese bank projects earlier have seen the worst record of environmentally friendly behaviour

Way Ahead

  • AIIB shareholding pattern is to be streamlined 
  • China is having disputes with many nations who are members of AIIB like India, Vietnam etc. 
  • The real challenge of AIIB is keeping aside the disputes and coping with each other for overall development of Asia 
  • Leadership of AIIB 
  • Regulatory bodies of AIIB to be established

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