• <div class="header-image" style="background-image: url(/live/image/gid/4/2957_V6N10_Header.rev.1542820788.jpg);"/><div class="header-background-color"/>

What will China-led AIIB bring about?

December 03, 2015
On June 29, 2015, representatives from 57 prospective founding member states signed the Articles of Agreement for the Asian Infrastructure Investment Bank (AIIB) in Beijing. The AIIB is a multilateral development bank (MDB) initiated by China and embraced by countries from Asia, Europe, Africa and South America. Interestingly, 16 of the World’s 20 largest economies are on the list of prospective funding members, excluding the United States, Japan, Mexico and Canada.[1]

By Lexin Cai, SPP ’15

With an initial investment of $100 billion, the AIIB will be officially launched by the end of this year. China will contribute $29.78 billion of the bank’s capital base and gain 26.06% of the voting powers.[2] The AIIB is generally seen as a ‘China-led World Bank’ to compete with the traditional global economic system dominated by the United States.[3] Why does China want to create the AIIB and what are the potential impacts that it could have on the dynamics of global economic governance?

The official reason to establish the AIIB is to fund infrastructure development in Asia. There is a significant gap between Asia’s massive infrastructure needs and the available multilateral financing resources. A study conducted by the Asian Development Bank (ADB) in 2010 estimated a gap of $8.22 trillion for infrastructure investment in Asia during 2010-2020 (Table 1).[4] Of all the investment, 48.7% would be for electricity, 35.3% for transportation, 12.6% for tele-communications, and 3.4% for water and sanitation. Looking at different regions, East and Southeast Asia account for 66.6% of the total required investment.

Table 1. National Infrastructure Investment Needs in Asia, 2010–2020 (2008 US$ billion)

Sector or Subsector

East and Southeast Asia

South Asia

Central Asia

























Water and sanitation














Source: Bhattacharyay Biswanath, 2010

This financial gap is larger than any single countries budget and exceeds the current resources held by an existing multilateral development bank. Prior to the AIIB, the World Bank and ADB were the two major MDBs in Asia. The World Bank has a capital base of $223.2 billion[5] and the ADB has $175.4 billion[6]. None of these MDBs are capable to meet Asia’s massive needs for infrastructure investment. Addressing this problem requires new mechanisms to attract investments for Asian infrastructure investment. With a capital base of $100 billion, the AIIB can partly help by appropriating Asia’s large savings, as well as international reserves, into infrastructure investment. Besides, the World Bank and the ADB have prioritized poverty alleviation, but the AIIB will focus on infrastructure investment to promote economic growth.

The AIIB serves important economic objectives for China. First of all, the AIIB is a key component of China’s “One Belt, One Road” strategy.[7] This strategy includes two routes to connect with Central Asia, South-east Asia, South Asia, Europe and Africa. China plans to acquire resources from Central Asia and Africa and encourage Chinese firms to “go out” to trade with or invest in other countries. The AIIB is meant to fund infrastructure construction along “One Belt, One Road.” Furthermore, the AIIB is an effort to internationalize the Chinese currency, yuan. However, which currency will be used for settlement in the AIIB is unknown and the yuan is far from a global currency. China will still seek opportunities to promote a broader use of Chinese currency through AIIB.

There is no doubt that China’s establishment of AIIB has a political motive as well. With increasing economic power, China has been frustrated by some rules and practices in the international organizations dominated by the United States and Western countries. For instance, China has a voting share of 3.81% in the International Monetary Fund (IMF)[8], 5.45% in the ADB[9] and 2.21%-5.45% in the World Bank[10] separately, despite China’s GDP accounts for 12.2% of the world GDP (Table 2)[11]. The United Kingdom and France each hold a 4.29% share in the IMF, however they are around one-third of China, economically speaking. Japan has the largest voting share in the ADB, 12.85%, which is twice that of China. The existing international economic governance system is unwilling to give China a fair voting share in line with its economic power. It’s not surprising that China strategically chose to launch and lead a multilateral organization in Asia.

Table 2. Voting powers in multilateral institutions


United States




United Kingdom
















World Bank,  IBRD







World Bank,  IBRD







World Bank,  IFC 







World Bank,  MIGA







GDP as share of world GDP







Note: International Monetary Fund (IMF), Asian Development Bank (ADB), World Bank, International Bank for Reconstruction and Development (IBRD), International Finance Corporation (IFC), International Development Association (IDA), Multilateral Investment Guarantee Agency (MIGA)

Source: IMF, ADB & World Bank

China’s establishment of the AIIB is an effort to advocate a greater role in the international order. On the one hand, countries involved in the AIIB can benefit from infrastructure development, but on the other hand tensions are clearly on the rise between China and the United States in Asia. The United States considers the AIIB as a threat to the U.S.-led global financial order. America’s key European allies, including United Kingdom, France and Germany, joined the China-led AIIB, which is viewed as a U.S. loss. The China-led AIIB may pose some challenges to U.S.’s influence in Asia, but it is important to keep in mind that the goal of the AIIB is pretty limited and the capital base is relatively small. The AIIB views itself as a complement and supplement to existing multilateral organizations. Cooperation and competition between various multilateral institutions will benefit Asia and the world as a whole.

  [1] “Prospective Founding Members.” Asian Infrastructure Investment Bank (AIIB).  Accessed June 25, 2015. http://www.aiibank.org/.

  [2] Zheng Yangpeng. “China gets 30% stake in AIIB as bank takes shape.” China Daily.  June 29, 2015. http://africa.chinadaily.com.cn/business/2015-06/29/content_21130594.htm.

  [3] S.R. “Why China is creating a new “World Bank” for Asia.” The Economist. November 11, 2014. http://www.economist.com/blogs/economist-explains/2014/11/economist-explains-6.

  [4] Bhattacharyay Biswanath. “Estimating Demand for Infrastructure in Energy, Transport, Telecommunications, Water and Sanitation in Asia and the Pacific: 2010–2020.” Asian Development Bank. September, 2010. http://www.adb.org/sites/default/files/publication/156103/adbi-wp248.pdf.

  [5]“Everything you always wanted to know about the World Bank.” The World Bank. Accessed June 26, 2015. http://treasury.worldbank.org/cmd/pdf/WorldBankFacts.pdf.

  [6] “Media Advisory - ADB’s Capital Base.” Asian Development Bank. October, 2014. http://www.adb.org/news/media-advisory-adbs-capital-base.

  [7] “Prospects and challenges on China’s ‘one belt, one road’: a risk assessment report.” The Economist Intelligence Unit. Accessed June 29, 2015. http://www.eiu.com/public/topical_report.aspx?campaignid=OneBeltOneRoad.

  [8]“IMF Members’ Quotas and Voting Power, and IMF Board of Governors.” International Monetary Fund. Accessed June 29, 2015. https://www.imf.org/external/np/sec/memdir/members.aspx.

  [9] “Members, Capital Stock, and Voting Power.” Asian Development Bank. December, 2014. http://www.adb.org/sites/default/files/institutional-document/158032/oi-appendix1.pdf.

  [10] “Voting Powers.” The World Bank, Accessed June 25, 2015. http://www.worldbank.org/en/about/leadership/VotingPowers.

  [11]“Gross domestic product 2013.“ The World Bank. April 2015. http://databank.worldbank.org/data/download/GDP.pdf.

Student Blog Disclaimer
  • The views expressed on the Student Blog are the author’s opinions and don’t necessarily represent the Penn Wharton Public Policy Initiative’s strategies, recommendations, or opinions.


  • <h3>MapStats</h3><p> A feature of FedStats, MapStats allows users to search for <strong>state, county, city, congressional district, or Federal judicial district data</strong> (demographic, economic, and geographic).</p><p> Quick link: <a href="http://www.fedstats.gov/mapstats/" target="_blank">http://www.fedstats.gov/mapstats/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>The Penn World Table</h3><p> The Penn World Table provides purchasing power parity and national income accounts converted to international prices for 189 countries/territories for some or all of the years 1950-2010.</p><p><a href="https://pwt.sas.upenn.edu/php_site/pwt71/pwt71_form.php" target="_blank">Quick link.</a> </p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>USDA Nutrition Assistance Data</h3><p><img width="180" height="124" alt="" src="/live/image/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg" class="lw_image lw_image485 lw_align_right" srcset="/live/image/scale/2x/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg 2x, /live/image/scale/3x/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg 3x" data-max-w="1233" data-max-h="850"/>Data and research regarding the following <strong>USDA Nutrition Assistance</strong> programs are available through this site:</p><ul><li>Supplemental Nutrition Assistance Program (SNAP) </li><li>Food Distribution Programs </li><li>School Meals </li><li>Women, Infants and Children </li></ul><p> Quick link: <a href="http://www.fns.usda.gov/data-and-statistics" target="_blank">http://www.fns.usda.gov/data-and-statistics</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>National Bureau of Economic Research (Public Use Data Archive)</h3><p><img width="180" height="43" alt="" src="/live/image/gid/4/width/180/height/43/478_nber.rev.1407530465.jpg" class="lw_image lw_image478 lw_align_right" data-max-w="329" data-max-h="79"/>Founded in 1920, the <strong>National Bureau of Economic Research</strong> is a private, nonprofit, nonpartisan research organization dedicated to promoting a greater understanding of how the economy works. The NBER is committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic community.</p><p> Quick Link to <strong>Public Use Data Archive</strong>: <a href="http://www.nber.org/data/" target="_blank">http://www.nber.org/data/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>The World Bank Data (U.S.)</h3><p><img width="130" height="118" alt="" src="/live/image/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg" class="lw_image lw_image484 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg 2x, /live/image/scale/3x/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg 3x" data-max-w="1406" data-max-h="1275"/>The <strong>World Bank</strong> provides World Development Indicators, Surveys, and data on Finances and Climate Change.</p><p> Quick link: <a href="http://data.worldbank.org/country/united-states" target="_blank">http://data.worldbank.org/country/united-states</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Congressional Budget Office</h3><p><img width="180" height="180" alt="" src="/live/image/gid/4/width/180/height/180/380_cbo-logo.rev.1406822035.jpg" class="lw_image lw_image380 lw_align_right" data-max-w="180" data-max-h="180"/>Since its founding in 1974, the Congressional Budget Office (CBO) has produced independent analyses of budgetary and economic issues to support the Congressional budget process.</p><p> The agency is strictly nonpartisan and conducts objective, impartial analysis, which is evident in each of the dozens of reports and hundreds of cost estimates that its economists and policy analysts produce each year. CBO does not make policy recommendations, and each report and cost estimate discloses the agency’s assumptions and methodologies. <strong>CBO provides budgetary and economic information in a variety of ways and at various points in the legislative process.</strong> Products include baseline budget projections and economic forecasts, analysis of the President’s budget, cost estimates, analysis of federal mandates, working papers, and more.</p><p> Quick link to Products page: <a href="http://www.cbo.gov/about/our-products" target="_blank">http://www.cbo.gov/about/our-products</a></p><p> Quick link to Topics: <a href="http://www.cbo.gov/topics" target="_blank">http://www.cbo.gov/topics</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>NOAA National Climatic Data Center</h3><p><img width="200" height="198" alt="" src="/live/image/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg" class="lw_image lw_image483 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg 2x, /live/image/scale/3x/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg 3x" data-max-w="954" data-max-h="945"/>NOAA’s National Climatic Data Center (NCDC) is responsible for preserving, monitoring, assessing, and providing public access to the Nation’s treasure of <strong>climate and historical weather data and information</strong>.</p><p> Quick link to home page: <a href="http://www.ncdc.noaa.gov/" target="_blank">http://www.ncdc.noaa.gov/</a></p><p> Quick link to NCDC’s climate and weather datasets, products, and various web pages and resources: <a href="http://www.ncdc.noaa.gov/data-access/quick-links" target="_blank">http://www.ncdc.noaa.gov/data-access/quick-links</a></p><p> Quick link to Text & Map Search: <a href="http://www.ncdc.noaa.gov/cdo-web/" target="_blank">http://www.ncdc.noaa.gov/cdo-web/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Federal Reserve Economic Data (FRED®)</h3><p><strong><img width="180" height="79" alt="" src="/live/image/gid/4/width/180/height/79/481_fred-logo.rev.1407788243.jpg" class="lw_image lw_image481 lw_align_right" data-max-w="222" data-max-h="97"/>An online database consisting of more than 72,000 economic data time series from 54 national, international, public, and private sources.</strong> FRED®, created and maintained by Research Department at the Federal Reserve Bank of St. Louis, goes far beyond simply providing data: It combines data with a powerful mix of tools that help the user understand, interact with, display, and disseminate the data.</p><p> Quick link to data page: <a href="http://research.stlouisfed.org/fred2/tags/series" target="_blank">http://research.stlouisfed.org/fred2/tags/series</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Internal Revenue Service: Tax Statistics</h3><p><img width="155" height="200" alt="" src="/live/image/gid/4/width/155/height/200/486_irs_logo.rev.1407789424.jpg" class="lw_image lw_image486 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/155/height/200/486_irs_logo.rev.1407789424.jpg 2x" data-max-w="463" data-max-h="596"/>Find statistics on business tax, individual tax, charitable and exempt organizations, IRS operations and budget, and income (SOI), as well as statistics by form, products, publications, papers, and other IRS data.</p><p> Quick link to <strong>Tax Statistics, where you will find a wide range of tables, articles, and data</strong> that describe and measure elements of the U.S. tax system: <a href="http://www.irs.gov/uac/Tax-Stats-2" target="_blank">http://www.irs.gov/uac/Tax-Stats-2</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>National Center for Education Statistics</h3><p><strong><img width="400" height="80" alt="" src="/live/image/gid/4/width/400/height/80/479_nces.rev.1407787656.jpg" class="lw_image lw_image479 lw_align_right" data-max-w="400" data-max-h="80"/>The National Center for Education Statistics (NCES) is the primary federal entity for collecting and analyzing data related to education in the U.S. and other nations.</strong> NCES is located within the U.S. Department of Education and the Institute of Education Sciences. NCES has an extensive Statistical Standards Program that consults and advises on methodological and statistical aspects involved in the design, collection, and analysis of data collections in the Center. To learn more about the NCES, <a href="http://nces.ed.gov/about/" target="_blank">click here</a>.</p><p> Quick link to NCES Data Tools: <a href="http://nces.ed.gov/datatools/index.asp?DataToolSectionID=4" target="_blank">http://nces.ed.gov/datatools/index.asp?DataToolSectionID=4</a></p><p> Quick link to Quick Tables and Figures: <a href="http://nces.ed.gov/quicktables/" target="_blank">http://nces.ed.gov/quicktables/</a></p><p> Quick link to NCES Fast Facts (Note: The primary purpose of the Fast Facts website is to provide users with concise information on a range of educational issues, from early childhood to adult learning.): <a href="http://nces.ed.gov/fastfacts/" target="_blank">http://nces.ed.gov/fastfacts/#</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Federal Aviation Administration: Accident & Incident Data</h3><p><img width="100" height="100" alt="" src="/live/image/gid/4/width/100/height/100/80_faa-logo.rev.1402681347.jpg" class="lw_image lw_image80 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/100/height/100/80_faa-logo.rev.1402681347.jpg 2x, /live/image/scale/3x/gid/4/width/100/height/100/80_faa-logo.rev.1402681347.jpg 3x" data-max-w="550" data-max-h="550"/>The NTSB issues an accident report following each investigation. These reports are available online for reports issued since 1996, with older reports coming online soon. The reports listing is sortable by the event date, report date, city, and state.</p><p> Quick link: <a href="http://www.faa.gov/data_research/accident_incident/" target="_blank">http://www.faa.gov/data_research/accident_incident/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>HUD State of the Cities Data Systems</h3><p><strong><img width="200" height="200" alt="" src="/live/image/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg" class="lw_image lw_image482 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg 2x, /live/image/scale/3x/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg 3x" data-max-w="612" data-max-h="613"/>The SOCDS provides data for individual Metropolitan Areas, Central Cities, and Suburbs.</strong> It is a portal for non-national data made available through a number of outside institutions (e.g. Census, BLS, FBI and others).</p><p> Quick link: <a href="http://www.huduser.org/portal/datasets/socds.html" target="_blank">http://www.huduser.org/portal/datasets/socds.html</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>