Fourteen EU States Already in, Japan and USA Still not Interested – What Lies Behind China-led AIIB?

Summary

Introduction

The Asian Infrastructure Investment Bank (AIIB) has gained a lot of attention recently, mainly due to the geopolitical context of China's proposal. A newly established development bank has been described by observers as an unprecedented project by a Northeast Asian emerging market with hegemonic ambitions.

The AIIB was proposed by the Chinese president, Xi Jinping, and the prime minister, Li Keqiang, during a series of visits in Southeast Asia in October 2013. Massive interest of both regional and non-regional states in obtaining a Prospective Founding Member (PFM) status, as well as quasi-ostentatious absence of the United States and Japan in the proposed framework, assign an extra meaning to discussions over new financial institution.

The aim of the paper is to study the evolution of Asian financial regionalism through the prism of the China-led Asian Infrastructure Investment Bank (AIIB) in order to understand hegemonic aspirations of Beijing, draw implications of establishment of new financial institution on mega-regional relations between China and Asian and non-Asian prospective founding members of AIIB. The author would like to study China's project addressing the scope of membership, investigating motivations laying behind the decisions of individual states such as the United States, Japan, Australia or the EU countries, including the United Kingdom and Poland. A theoretical context is drawn basing on the theories of financial regionalism and hegemonic stability.

Theoretical frameworks

Financial regionalism

The author would like to address the concept of financial regionalism as proposed by Hamanaka, while indicating lack of cohesive definition of this term.

Following Hamanaka, there are two types of financial regionalism, namely financial or macroeconomic forum or meeting, engaging regional states, and regional financial arrangement, involving two or more states.

The financial forums used to act as platforms for the purposes of regular information exchange between representatives of regional financial authorities. In this context, extra importance is assigned to regional, macroeconomic surveillance forums, gathering various market and fi- nancial data, enabling policy coordination and peer pressure. Such meeting may involve senior, deputy or deputy-deputy level of ministries, as well as directors of national central banks. Noteworthy, involvement of institutional apparatus gives an opportunity for constructive discussion and provision of reliable commitments.