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1 [1] (February 27, 2018)

handle is hein.crs/govcbzr0001 and id is 1 raw text is: , . ' riE S-' $. h ,. , Asian Infrastructure Investment Bank In October 2013, at the Asia-Pacific Economic Cooperation Summit in Bali, Indonesia, China proposed creating a new multilateral development bank, the Asian Infrastructure Investment Bank (AIIB). As its name suggests, the Bank's stated purpose is to provide financing for infrastructure needs throughout Asia. As the first Chinese-led multilateral development Bank (MDB), the AIIB presents several policy issues including the Bank's governance and operational practices, the U.S. role and possible participation, and the relationship between the AIIB and the existing MDBs. Some observers have also raised concerns about the transparency and governance of China-funded development projects. They argue that the AIIB may undermine decades of effort by the United States to improve governance, environmental, and social standards; these standards have been achieved through conditions attached to World Bank, ADB, and other MDB loans. According to the Asian Development Bank (ADB), the region needs around $750 billion in annual investment in infrastructure. This sum is substantially greater than any individual country or existing multilateral development bank (MDB) can provide. Collectively, existing MDBs currently provide around $130 billion of annual infrastructure financing globally. Addressing Asia's large infrastructure gap will likely require mobilizing public and private sources of financing, as well as new sources of long-term development finance. The AIIB was initially conceived as a regional financing mechanism for Chinese President Xi Jinping's One Belt, One Road initiative to create a network of highways, railways and other critical infrastructure linking China to Central and South Asia, the Middle East and Europe (the Silk Road Economic Belt) and expanding ports throughout Asia, the Middle East, Africa and Europe (the Maritime Silk Road). At the same time that China is working to deepen its economic relationships with its neighbors it has intensified its engagement with the Bretton Woods Institutions-the World Bank, International Monetary Fund (IMF) and the regional development banks-with the aim of reforming the governance and operations of these institutions to accommodate China's increased economic influence. Chinese leaders have complained for many years that the international financial institutions have been too slow in recognizing China's increased stature in the global economy. - mmm, go mppm qq\ , q I aS 11LULANJILiN, Updated February 27, 2018 President Xi, more so than previous Chinese leaders, has pursued policies to establish new China-led trade and financial institutions, as well as to further integrate China within the existing international financial institutions. President Xi said that the AJIB would promote interconnectivity and economic integration in the region and cooperate with existing multilateral development banks, including the World Bank and the ADB. Figure I. China's Silk Road Economic Belt and Maritime Silk Road Initiatives : :::::::::::::::::::::::::::::::::::::::::: i ................. Source: Xinhuanet: c andarclay Res arh' Sourcte: Xinuaetom anMarclay Re5.USefcarc eeauh off-guard when, in early 2015, the United Kingdom, followed by several other European countries, sought membership in the Chinese-led AJIB. By the time the AJIB 's Articles of Agreement were signed in December 2015, the Bank had 57 founding members, representing every region except North America. As AJIB membership grew to include European and other advanced economies, Chinese officials distanced the AJIB, to an extent, from China's One Belt, One Road strategy by agreeing to co-finance its initial projects with the preexisting MDBs. However, it is uncertain how China will balance its stated goal of establishing an independent and high-standard MDB while pursuing its own economic and national security priorities for the region. In June 2016, during a meeting with global executives, the AJIB President Jin Liquin bluffed the lines between the AJIB and Chinese national interests, saying that while it would support One Belt, One Road projects, the AJIB was not created exclusively for this initiative. In spring 2016, it was reported that the AJIB's initial projects would fund transportation projects in three key .O 'T