In international relations and global finance, there has been a lot of discussion and interest in the Asian Infrastructure Investment Bank (AIIB). The AIIB has expressed concerns regarding China’s hegemonic objectives and potential effects on the global financial system in light of China’s entry into global economic governance. The creation of the AIIB casts doubt on the World Bank’s original purpose. The World Bank’s president, Jim Yong Kim, downplayed the AIIB’s debut as a rival to the World Bank and openly declared his intention to work closely with it. At the same time, some expressed worries that China had established the AIIB to challenge American hegemony. It is argued that the World Bank’s influence would decline significantly with the establishment of the AIIB.
China’s Status-Seeking and Global Economic Governance
Since entering the WTO, China has continuously taken a diverse approach to global economic governance, and this trend will probably continue. China is adopting a multifaceted approach to global management, endorsing international organizations and accords consistent with its values and aspirations, such as the Paris Climate Agreement and the World Bank. But when it comes to matters where Beijing deviates from the norms of the existing system, such as human rights, it aims to subvert those principles and establish substitute organizations and frameworks. China’s engagement in global governance enhances its political influence internationally, facilitates the projection of its soft power, and fosters the growth of its own economy. If China’s economy keeps expanding over time, it will eventually exert more pressure to define the parameters of global governance. China’s great power aspirations are encapsulated in the AIIB, which brings into striking relief Beijing’s resolve to seek a more excellent status in global economic governance.
China’s diversified strategy includes developing financing systems and bilateral and multilateral trade. This is reflected in its approach to global economic governance. China can influence the international financial scene and reduce industry overcapacity by using this tactic. China’s engagement in global governance enhances its political influence internationally, facilitates the projection of its soft power, and fosters the growth of its own economy. China is expected to exert more influence over global governance as its economy expands, strengthening newly established China-dominated institutions and gaining more clout within established institutions like the United Nations and World Bank. Beijing’s strategy may marginalize established institutions in sectors like development finance. Thus, China’s assertive role in global economic governance could prove contentious.
China’s primary aim over the last ten years has been to change the balance of military force and weaken the influence of liberal nations over the organizations and structures that make up the international order. China’s goal of achieving a better standing in global economic governance is demonstrated by this approach, which it took with the creation of the AIIB. China’s determination to make its mark on the international financial system and the global economic order is embodied in the AIIB.
Comprehending China’s complex approach to global economic governance necessitates considering several fundamental components that inform its policy. These components include, among other things, China’s ambition to influence the direction of the world economy, its initiatives to reduce industrial overcapacity, and its preference for physical infrastructure over social infrastructure. China’s growth experience, which includes preserving the supremacy of state-owned companies (SOEs) in vital industries and embracing a hybrid market-based economic model, impacts the country’s approach to global economic governance.
Geopolitical Implications of the AIIB
The establishment of the AIIB by China’s rise to prominence challenges the disproportionate influence of the US and other advanced economies in the international system. It is a call for multipolarity in the leadership of global economic governance. Given that China now has a more prominent position in global financial management and more authority to make rules and establish norms, the AIIB poses a normative challenge to the US-led liberal international order and is expected to increase China’s influence in the developing world.
The creation of the AIIB has sparked a lot of attention since some economists regard it as a serious rival to the World Bank and the International Monetary Fund. Grand strategy analysis is necessary to fully understand the scope and nature of the AIIB since it is essentially a vehicle that China created to further its influence on the international geopolitical chessboard. China’s objective of using money as a weapon to further its goals on the international scene is reflected in the AIIB’s operations and influence in multilateralism, which go against conventional wisdom.
By focusing on better serving its members—especially those in developing markets and least developed nations—the bank can maintain its lean and efficient operations thanks to the governance innovations of the AIIB. The AIIB has received praise for its efforts in developing markets, especially for its green finance and investments in robust infrastructure to climate change, which help close the enormous funding gap in these fields. Despite geopolitical unrest, the AIIB is confident in its robust governance framework and wants to establish more cutting-edge funding options to increase its influence and applicability in global development.
Transformation of Energy Diplomacy and Economic Sustainability
The development of China’s energy diplomacy and its pursuit of economic sustainability through the AIIB and the Belt and Road Initiative (BRI) are important topics. These initiatives support China’s energy diplomacy by ensuring a consistent energy supply from outside sources, ensuring economic sustainability.
The changes in the BRI and AIIB have resulted in significant changes to China’s energy diplomacy. The necessity to protect energy supply and improve energy security in the face of quickening economic growth and rising energy consumption drives these changes. China’s emerging energy diplomacy is shaped and complemented by the AIIB and the BRI, which are vital initiatives that underscore the nation’s strategic emphasis on guaranteeing a steady and sustainable energy supply.
China’s energy diplomacy has significantly benefited from the AIIB and the BRI, making building energy infrastructure and creating supply routes that span multiple areas easier. Through these activities, China has improved economic sustainability, bolstered energy security, and encouraged the inclusion of energy resources in its foreign policy. Thanks to its innovative governance practices, the AIIB can now better serve its members, especially those in emerging markets and least develop countries, by tackling the enormous financing gap in sectors like green finance and climate-resilient infrastructure.
China’s attempts to secure energy supplies and infrastructure for long-term economic development are aided by the AIIB and the BRI, which substantially impact the nation’s ability to maintain financial stability. These programs are crucial in guaranteeing a steady and consistent supply of energy, which is necessary to promote economic growth and sustainability, and they support China’s energy diplomacy.