Donald Trump is well known for his hostility toward internationalism and international businesses. The US senator made the announcement to leave the Paris Agreement on Climate Change and the World Health Organization shortly after taking office on January 20, 2025.
Was the World Bank and the International Monetary Fund follow? Surely, supporters of the twin organizations – that have formed the backbone of world economic order for 80 years – are concerned. A Trump-ordered evaluation of Washington’s support for all international organizations has sparked fears that the US will endow more money or withdraw it immediately.
But any receding of U. S. authority in international financial institutions may, I believe, run counter to the president’s apparent political goals, creating a suction for China to move into and get on a bigger international role.
In particular, weakening the World Bank and any other multilateral development banks, or MDB, that has a large US presence may present an opportunity for a little-known, fairly new Chinese-led global business: the Asian Infrastructure Investment Bank– which, since its inception, has supported the pretty diplomacy the U. S. is attacking.
AIIB’s contradictory function
Nine years ago, China established the Asian Infrastructure Investment Bank ( AIIB ) as a means of investing in infrastructure and other related sectors in Asia while promoting “regional cooperation and partnership in addressing development challenges by working in close collaboration with other multilateral and bilateral development institutions.”
Since then, it has provided an example of an international organization that is willing to cooperate closely with other significant international organizations and adhere to global growth banking standards and standards.
This may conflict with the portrayal of Beijing’s global efforts that are frequently portrayed by China eagles, of whom there are many in the Trump presidency, who frequently envision a China that is determined to undermine the progressive, Western-led world order.
However, as some researchers and other Chinese experts have suggested, Beijing’s policies in international monetary management are frequently nuanced, with actions that both support and denigrate the liberal world order.
As I explain in my new guide, it is apparent that the AIIB is a paradox today: an institution created by an authoritarian government but connected to the rules and standards of the progressive global order.
The AIIB has a strong connection to the rules-based system, as demonstrated by its numerous joint relationships with other significant multilateral development banks, including the World Bank and the Asian Development Bank under the leadership of Japan.
In this context, the AIIB might offer a Taiwanese opposition in a country where US leadership is waning.
The AIIB’s collaborative pattern
Multilateral development banks have been providing the crucial role of lending billions of dollars annually to promote economic and social development for years.
They can be important sources of funding for poverty reduction, inclusive economic growth and lasting development, with a newer focus on climate change. These global lenders have also been remarkably resilient in the current climate of discord and crisis, with member countries earnestly looking into ways to improve their standing.
At the same time, MDBs frequently receive criticism from civil society organizations because they point out areas of poor performance and are concerned about potential negative effects of the main MDBs ‘ greater focus on working more closely with the private market. Big” MDBs were built around a set of geopolitical and economic strength relationships that are disintegrating before our eyes,” according to MDB professional Chris Humphrey.
There was a lot of concern among key countries about China’s motives when Chinese President Xi Jinping proposed in 2013 the establishment of the AIIB to aid in the development of infrastructure in Asia.
The Obama administration responded by urging different nations to abstain from joining. Its priority was that China may use lending to expand its influence in the area without upholding strict environmental and social standards.
However, all the other main nonborrowing countries, with the exception of Japan, joined the new lender. Now, the AIIB is the second-largest international development banks in terms of member states, behind simply the World Bank. It now has 110 member governments, which translates to over 80 % of the world population. With US$ 100 billion in cash, it is one of the medium-sized international loans.
From the get-go, the AIIB was designed to be collaborative. Jin Liqun, the first president of the bank, has a long history of multilateralism, having spent many years working for the Chinese banking department, the World Bank, the Global Environmental Facility, and vice president of the Asian Development Bank.
Previous executive managers and staff from the IMF and other development bankers were among the international group of experts who assisted in the creation of the AIIB, as well as two American with much careers at the World Bank who played key roles in the creation of the company’s articles of agreement and its environmental and social model.
How the AIIB influenced people to learn from them
In a variety of ways, the bank fits into the international development environment. The Asian Development Bank’s mandate, which promotes “regional cooperation and collaboration in addressing growth challenges,” is directly related to the Asian Development Bank’s base.
The AIIB has environmental and social norms in line with other important multilateral development banks, as well as its conventions and policies.
The AIIB collaborates closely with its classmates, besides stealing fundamental ideas. The World Bank originally ran the AIIB’s government functions. In its early years, the AIIB co-financed a significant portion of its assignments with other bilateral development institutions.
In a recent sign of cooperation, in 2023, a deal between the AIIB and World Bank’s International Bank for Reconstruction and Development ( IBRD ) saw the AIIB issue up to$ 1 billion in guarantees against IBRD sovereign-backed loans. This increased the IBRD’s capacity to provide more money, while diversifying the AIIB’s payment collection.
As of February 6, 2025, the AIIB had 306 approved initiatives totaling$ 59 billion. Its two biggest lending sources are transport and power. Recent projects that have received approval include funding for Uzbekistan and Kazakhstan’s wind power plants and an Indian solar power plant. India, which has a slippery partnership with China, is one of the company’s largest consumers, together with Turkey and Indonesia.
collaborating and competing with China
From its conception until recently, the bilateral AIIB has frequently distinguished itself from China’s diplomatic efforts. China’s Belt and Road Initiative, a framework for network borrowing by Chinese corporations that has been criticized for lacking transparency and accountability, is one of them.
However, some Belt and Road-linked initiatives have faced problems about problem, costs and the transparency of the loan contracts.
The AIIB has made more mention of the benefits of working with Belt and Road lenders in recent years, and the lender now houses the Secretariat of a service called the Multilateral Cooperation Center for Development Finance, which provides grants and assistance to developing nations seeking to finance equipment in nations where Belt and Road lending takes place. This may blur the distinction between loaning under Belt and Road and AIIB, but it doesn’t appear to lower the company’s standards.
No fresh concerns about the impact of the Chinese government at the AIIB. In June 2023, Canada froze its ties to the bank in a pending investigation into a French employee’s dramatic resignation after claiming that the bank was ruled by Communist Party users.
No additional member countries expressed their concern, and Canada has not yet released a report on the situation. An internal review by an AIIB executive director contained no findings to support the claims.
It would be wise for the new US administration to consider the variations in China’s strategies in global economic leadership as its formulation of its policies toward China may require more complex responses. Recognition of areas of assistance, competition, and conflict calls for more complex responses. The US will cooperate with China in many areas while competing with China.
Interestingly, any actions by the Trump administration to reshape multilateral organizations could put the AIIB in a better position to collaborate than the world’s leading multilateral development banks and the US, regardless of whether or not it is an anomaly. role.
At American University, Tamar Gutner is an associate professor.
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