On January 16, 2016, China officially opened the Asia Infrastructure Investment Bank (AIIB) for business, representing what might be a seismic shift in economic power from the United States to China. The AIIB creates a challenge to the U.S.-dominated World Bank and International Monetary Fund (IMF), two venerable international financial institutions created at the end of World War II. The World Bank lends money to developing countries to promote economic development, but these loans come with conditions called the Washington Consensus--a set of policies designed to promote the use of private markets, protect the environment, protect human and workers' rights, and foster non-corruption in government, among other values.
Unlike the United States, China believes in a doctrine of non-interference with the internal affairs of other countries. China's stance led the United States to argue that the AIIB would not tie its loans to responsible social policies. Not only did the United States refuse to join the AIB, but the United States also attempted to dissuade its closest allies from joining. Despite U.S. entreaties, however, all of the United States' closest allies (except Japan) joined the AIIB, causing a political embarrassment for the United States.
While the United States has been the underwriter of the world's financial system for at least the past seven decades, the rise of the AIIB could be the first indication that China will succeed in its quest to displace the United States as the final arbiter of the rules of international trade and finance in the twenty-first century.
Daniel C.K. Chow,
Why China Established the Asia Infrastructure Investment Bank,
49 Vanderbilt Law Review
Available at: https://scholarship.law.vanderbilt.edu/vjtl/vol49/iss5/2