The development of the Asian Infrastructure Investment Bank (AIIB) reveals several movements within the International Politics despite the new international institution being designed as “an inter-governmental regional development institution” (Xinhua 10/24/2014). While China wants the AIIB to primarily facilitate regional developments in the Asian region, there is the inevitable political implication of the growing Chinese influence in the international stage.
The first immediate political impact has been the appearance of the shrinking American influence not only in Asia but also in Europe. Not only Australia but South Korea and Turkey are in the process of joining (New York Times 3/28/2015) the new Chinese led institution. Other existing international financial institutions, such as the IMF and the World Bank, are held closely to Western interests with the President of World Bank being American and the Managing Director of the IMF being European.
With the World Bank and the IMF are openly welcoming the establishment of the AIIB (Reuters/New York Times 3/22/2015), the US government, which previously warned against the new institution, was forced to reassess the situation (Reuters 3/26/2015) as increasing number of US allies joined AIIB.
In the long run, the area of regional developments would be impacted positively by the addition of AIIB’s efforts in conjunction with other international institutions. However, this currently marks the time of another sign of the decreasing American influence in world politics.
But in another news, North Korea’s failed attempt to join the AIIB shows the continuous strained ties between China and North Korea. It has been reported that North Korea has asked China to join the new international institution, which was quickly rebuked by the reasons of North Korea’s failure of providing “‘proper snapshot of North Korea’s finances’, including all economic activity broken down by industry, and the state of the country’s public finances, including its tax base.” (Emerging Markets 3/28/2015)
The Chinese refusal to admit North Korea to the AIIB reveals two points. First, North Korea either cannot or will not share basic financial data with the country’s closest ally, China. Perhaps the true financial information might reveal layers of economic corruption that North Korea does not want China to see, but given that China is North Korea’s closest ally, it is quite unusual for North Korea to not share its financial information.
Second, China’s refusal signifies that the country is prioritizing its international legitimacy by denying favorable treatment to North Korea. Refusing North Korea to join the AIIB under the circumstance signals to other potential members that China is ready to abandon political favoritism in favor of acting as a global player to focus on development projects for Asia as a whole.
Being just recently established, AIIB’s potential impact on development in the Asian region is still too early to judge. However, the organization has already made significant changes to the political landscape in the global arena. China’s expanding global influence is a huge anticipation for years to come.