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A Chinese Bretton Woods

Damion Jeong

Powerful states create international organizations to consolidate their strength. The International Monetary Fund (IMF) led by the United States, or the Commonwealth of Independent States led by Russia are such examples. In its attempts to challenge the existing world order, China offered a number of alternatives to US-led institutions, and the Asia Investment Infrastructure Bank (AIIB) headquartered in Beijing is one of those.

From the outset of the AIIB’s establishment, Beijing expressed its willingness to make a Chinese counterpart to the US-based Bretton Woods systems and the institutions thereof, including the IMF, World Bank, and the Asia Development Bank (ADB).[1] The current president of the AIIB, Jin Liqun, notes that “history has never set any precedent that an empire [like the Bretton Woods system] is capable of governing the world forever.”[2] As part of such ambitious plans, not only will the AIIB be a positive addition to the world economy, but it will also be “lean, clean, and green,” comparable to the Bretton Woods system.[3]

The Bretton Woods Conference and the AIIB Opening Ceremony

Although the AIIB and the Bretton Woods institutions are not mutually exclusive, the AIIB is a main component of China’s ambitions. It highlights the country’s desire to become a global – not regional – economic player and to raise its soft power, as well as the type of world order it wants. This is visible in the institutional design and investment policies and regulations of the AIIB.

The AIIB’s Institutional Design

Regarding how the AIIB is set up, there are two key dimensions: membership and delegation. Firstly, the diversity of the AIIB’s membership reveals the extent of China’s aspirations of establishing itself as a great power in the current world order. Secondly, delegation, as in the voting powers of each member states, signifies the image China wants to project to other states.


In his 2016 speech at the AIIB inauguration ceremony, President Xi Jinping stated that the AIIB strives for “open regionalism.”[4] Whereas investment projects primarily focus on Asia, membership will not be limited to Asian states. In other words, China is leveraging Asia’s potentials to attract non-Asian states to economically cooperate under its leadership.

The profitability of infrastructure investment in Asia attracted the high number and variety of member states to the AIIB. Developing states in Asia currently need $1.7 billion investments in total every year to sustain their rapid and lucrative growth by 2030.[5] Having realized this, 57 countries joined initially.[6] They expressed enthusiasm by pooling $100 billion worth of capital. which was double the estimated amount. An interesting aspect of this is the composition of member states. Despite its regional name, the AIIB has a significant proportion of non-Asian states, such as Germany, Switzerland, Australia, or South Africa.

Considering its regional focus, the inclusiveness and diversity of membership in the AIIB seems quite peculiar. This irony is understandable through the level of power China wants to achieve. Through the AIIB’s wide membership, Beijing’s understanding of non-Asian states will increase, and non-Asian states’ level of engagement with China will deepen. By inviting both Asian and non-Asian states to collectively invest in Asia’s economy, China hopes to solidify its standing in Asia and further extend its influence beyond the boundaries of Asia. China does not want to be a mere ‘Asian power’, but it is rather actively seeking to assume a global role comparable to that of the US.


Voting rules in the AIIB reveals the image of itself China wants to show to the world. Similar to other development banks like the World Bank, voting procedures in the AIIB also has aspects of shareholder voting. Put simply, states have voting powers proportional to their capital contribution to the AIIB. China has approximately 30% of the capital share, which equates to around 26% of the total voting power, giving the country de facto veto power.[7] The large amount of Chinese capital invested in the Bank and Beijing’s high voting power clearly signifies Chinese leadership in the institution.

In spite of the criticism China receives due to its disproportionate degree of power in the AIIB, Chinese dominance in the institution remains rather subtle. In comparison with Bretton Woods institutions, shareholder voting represents 90% of voting in AIIB, while it is 94% in the World Bank and 80% in the ADB, both dominated by the US and Japan.[8] The AIIB is no outlier in this sense. In addition, Jin Liqun also claimed that China will not exercise its de facto veto power in the AIIB to secure the AIIB’s credibility, stressing that Beijing in the AIIB will not be the same as Washington in the World Bank.[9] Overall, Chinese influence does not dominate the AIIB. The AIIB, as President Xi mentioned, “belongs to all member states.”[10]

China’s stance on voting rules in the AIIB illustrates the image the country wants to construct in the eyes of other countries. By creating a stark contrast with the dominance of the US in Bretton Woods institutions, China attempts to label itself as an egalitarian, benevolent actor in the international arena. In the AIIB, it thus projects an image of a ‘generous leader’ or of a ‘first among equals.’ While whether China is actually such a leader remains an area of contention, such construction of positive images translate to Beijing’s endeavor to reinforce its soft power, the power to induce other countries to share similar views with oneself.[11] Through a subtle, benevolent leadership, Beijing desires to make itself an attractive partner to other states.

The AIIB’s Investments

The AIIB is certainly an important vehicle for China’s rise and aspirations. But how will the institution be utilized? Looking deeper into the recent investments and projects conducted by the AIIB will convey hints of the world order China is envisioning. A comparison of the AIIB’s investments with that of its Bretton Woods counterparts, mainly the World Bank and the ADB, will be useful.

Thanks to their endorsement by major developed states and long history of engagement, Bretton Woods institutions have managed to establish themselves as a high-quality, credible source of investment. In a matter of a few years, the AIIB has achieved a similar status. The German Federal Ministry of Finance describes the AIIB as having “comparable standards with the World Bank”.[12] It also received a 3A ‘stable’ rating from Moody’s, S&P, and Fitch, the three main rating agencies in the world, largely similar to the ADB.[13] Its extensive, increasing membership also indicates the high degree of trust the AIIB earned.

To receive such positive evaluations, the AIIB strived to match its investment standards with that of the world by taking into account environmental and social standards. It implemented the Environmental and Social Framework (ESF) to ensure its projects are executed in a socially responsible and sustainable manner.[14] This is a response to the rising significance of ESG criteria in investment decisions, which was adopted by numerous investment banks, governments, and rating agencies.

Albeit similar high-quality standards, an important difference exists in the nature of the investments of the AIIB compared to Bretton Woods institutions. AIIB-led projects are completed much faster than that of the ADB. The AIIB would complete a task which would take 3 years for the ADB in 6 months.[15] Beijing officials also professed that the AIIB’s approach is swifter compared to its counterparts.[16] This lies in the lack of ‘strings’ attached to China’s investments. For instance, the World Bank insisted that Nigeria resolve corruption and human rights issues before receiving investments.[17] Necessitating reforms and monitoring compliance may delay investment processes. On the other hand, the AIIB’s investment does not contain such conditions or regulations.

Such differences are also evident in investment areas. An ample proportion of projects approved in the ADB are pertained to social policy. By reforming social policies in developing countries, the ADB aims to secure liberal values and institutions. In its recent $300 million loan for reformations in local governance in the Philippines, the ADB promoted free market values, human rights, and rule of law in the country.[18] On the contrary, projects of the AIIB are more focused on infrastructure building and economic development itself by building waterways or bridges or selling investment loans. ‘Liberal’ ideas are less apparent in the AIIB’s projects.

From such disparities, it is evident that China envisages a world unlike that of the US. It offers competent, high-quality investments and projects like the World Bank or the ADB but does not add conditions to its investments. China’s investments do not enforce reformations nor aim to promote ‘liberal’ values such as free market or human rights. While the AIIB is only at an early stage, and specific goals of China is difficult to know, it is conspicuous that China is not dreaming of a ‘liberal’ world like the US. It hopes to offer a ‘Chinese alternative’ to the American model, comparable in quality but divergent in ideology.


The AIIB is a guide in understanding China’s ambitions in the 21st century. Through the AIIB, its institutional design, and its investments, crucial elements of China’s foreign policy are detectible. China is not envisioning a ‘liberal’ world which the US strived to establish, as seen from the AIIB’s investments. As the design of the AIIB suggests, China is attempting to maximize its soft power by creating a positive global image of itself and by widening its influence across the entire world. In this way, the AIIB is an important clue in anticipating changes the rise of China will bring to the world.


[1] “Beijing's Challenge to the World of Bretton Woods.” Financial Times. Financial Times, October 30, 2014. https://www.ft.com/content/db2dcaf8-6042-11e4-88d1-00144feabdc0.

[2] Perlez, Jane. “China Creates a World Bank of Its Own, and the U.S. Balks.” The New York Times. The New York Times, December 4, 2015. https://www.nytimes.com/2015/12/05/business/international/china-creates-an-asian-bank-as-the-us-stands-aloof.html.

[3] “Asian Infrastructure Investment Bank Achieves Major Milestones in Its First Three Years - Federal Ministry of Finance - Issues.” Federal Ministry of Finance. Federal Ministry of Finance, April 3, 2019. https://www.bundesfinanzministerium.de/Content/EN/Standardartikel/Topics/Financial_markets/Articles/2019-04-03-AIIB-milestones.html.

[4] Xi, Jinping. “Full Text of Chinese President Xi Jinping's Address at AIIB Inauguration Ceremony.” Chinadaily. China Daily Information Co (CDIC), January 16, 2016. http://www.chinadaily.com.cn/business/2016-01/16/content_23116718_2.htm.

[5] “Meeting Asia's Infrastructure Needs.” Asian Development Bank. Asian Development Bank, February 2017. https://www.adb.org/publications/asia-infrastructure-needs.

[6] Perlez, 2015.

[7] Huang, Cary, and Andrea Chen. “China to Have 30 per Cent Stake, Veto Power under AIIB Deal.” South China Morning Post. South China Morning Post, June 30, 2015. https://www.scmp.com/news/china/diplomacy-defence/article/1829342/china-have-30-cent-stake-veto-power-under-aiib-deal.

[8] Lichtenstein, Natalie. “Setting Up the Asian Infrastructure Investment Bank.” Oxford Law Faculty. University of Oxford, November 9, 2018. https://www.law.ox.ac.uk/current-students/graduate-discussion-groups/chinese-law-discussion-group/blog/2018/11/setting-asian.

[9] Fu, Jing. “AIIB Chief Rules out China Veto Power.” Chinadaily. China Daily Information Co (CDIC), January 27, 2016. https://www.chinadaily.com.cn/business/2016-01/27/content_23265846.htm.

[10] Xi, 2016.

[11] Nye, Joseph S. "Soft Power." Foreign Policy, no. 80 (1990): 153-71. doi:10.2307/1148580, 166.

[12] “Asian”, 2019.

[13] “Credit Ratings Reports.” AIIB. AIIB. Accessed November 29, 2019. https://www.aiib.org/en/treasury/_other_content/rating-reports/index.html.; “运营两年,亚投行交出的这份成绩单令国人自豪!.” Xinhua. Xinhua, January 16, 2018. http://www.xinhuanet.com/2018-01/16/c_1122268353.htm.

[14] “Environmental and Social Framework - Framework Agreements.” AIIB. AIIB. Accessed November 29, 2019. https://www.aiib.org/en/policies-strategies/framework-agreements/environmental-social-framework.html.

[15] “China Led AIIB Could Overtake ADB as Major Financier of Infra Projects.” The Economic Times. Economic Times, June 13, 2019. https://economictimes.indiatimes.com/news/economy/finance/china-led-aiib-could-overtake-adb-as-major-financier-of-infra-projectsexperts/articleshow/69773549.cms?from=mdr.

[16] Perlez, 2015.

[17] Naim, Moises. “Rogue Aid.” Foreign Policy. Foreign Policy, October 15, 2009. https://foreignpolicy.com/2009/10/15/rogue-aid/.

[18] “ADB to Support Philippine Local Governance Reforms with $300 Million Loan.” Asian Development Bank. Asian Development Bank, November 14, 2019. https://www.adb.org/news/adb-support-philippine-local-governance-reforms-300-million-loan.