According to Scott Kennedy, the 2017 World Economic Forum was a watershed moment in global governance where China under Xi Jinping discarded the strategy to “hide brightness and nourish obscurity”, underscoring Beijing’s desire to play a greater role in global governance as the United States turned inward. The last three decades has seen China gradually evolve from an outsider to a key player within international organizations. However, these IOs are embedded in a system founded on the principles of liberal internationalism and state sovereignty and borne out of American hegemony (Ikenberry,2017). Hence, China’s orientation towards various facets of the current order dictates it behavior within IOs. While China is not the harbinger of the destruction of the current order, it’s rise will have significant impact on global governance issues and IOs.
Antithetical to cultural and historical arguments, Chinas behavior within the IOs is reformist than revisionist. Its behavior fluctuates within a spectrum ranging from cooperative to competitive to perilous. China’s actions are not directly aimed at overhauling the current liberal order but to integrate itself tightly within these bodies so as to exploit and undermine them when it fits it’s interests. Moreover, Global governance is a mutually interactive system, wherein China’s participation has advanced its socialization into the international community as a result of the adaption of global institutions to a more assertive Chinese presence (Kennedy,2017). The institutional learning process has a visible impact on China as it deciphers and seemingly adapts liberal traditions in its conduct of trade and international relations.
In order to realize its reformist agenda within a highly institutionalized system, it has sought greater representation within premier IOs such as WB and IMF and increase its bargaining power within these institutions. In this way, according to Ikenberry, China is strategically acting as an “authority-seeking stakeholder” in International organizations, in its attempt to redistribute decision making authority and claim a larger share of the gains from international cooperation. While the U.S government reduced its contribution to the United Nations (UN) and foreign aid services, China has become a leading contributor to the U.N.’s budget and is in the forefront, rallying nations in the fight against terrorism, piracy and climate change. On the other hand, China has employed its expanding influence in the UN to aggressively silence criticism of its human rights record and thwart efforts to strengthen key provisions to advance human rights, particular related to country-specific resolutions on North Korea and Syria. Hence, in a parallel move China is engaging in institutional obstruction using its new stature to weaken UN resolutions on civil society and human rights.
AIBB is another product of Chinas reformist agendas. Both Wang and Ikenberry notes that China created AIIB as an alternative platform to apply “reverse pressure” on other IOs to implement their then long overdue reforms. External innovation is strategic choice available to a rising power to gain a larger say in global governance issues. Today, AIIB is one of the key instruments of Chinese institutional statecraft. Although Multilateral Development Bank (MDB) financing for infrastructure has declined in recent decades, with the creation of AIIB, China now has the primary leadership in a major institutional player in this issue area. AIIB serves multiple purposes for China, especially in enhancing its leadership status in the international order as well as promoting its own national and transnational agendas. Primarily classified as counter-hegemonic tool, AIIBs existence have come to justify developing nation’s resentment of lending approaches of the existing MDBs.
With the creation of AIIB, China’s rise will have a significant impact on International development issues. For example, if AIIB is successful in offering more enticing benefits to member state, it will directly challenge the Bretton Woods institutions. It can act as a competitive node of interstate cooperation to WB and IMF (Ikenberry, 2017), threatening their performance and legitimacy. But most importantly, China can use AIIB to overhaul the current rules, practices, and norms of multilateral development. AIIB can disrupt the established order of multilateral development banking by offering loans with fewer conditionalities and reduced standards of transparency and accountability. Additionally, with the creation of AIIB, China has displayed it ability to “exit” the current system and withdraw its participation in existing institutions (Ikenberry, 2017).
Moreover, AIIB allows Chinas to strategically build new bilateral and multilateral relationships, boosting its regional and global influence. For instance, China is using AIIB to forge a stronger relationship with Pakistan. It has loaned out 300 million for hydroelectric projects in Pakistan, feeding the security dilemmas of the sub-continent (AIIB) . Critics also charge that China’s interest in creating AIIB is economically self-serving and designed to propel its neo-imperialist projects, promote the internationalization of the renminbi, enhance its access to raw materials and relieve excess capacity at home. It also provides China with the opportunity to invade new markets, oversee substantial operations in the world’s most dynamic economic region and expand its sphere of influence. Most of AIIB’s approved projects are along the geographic area of the One Belt, One Road initiative (Weiss,2017). It can develop a regional infrastructure that has China at its center, incentivizing regional economies to augment trade and investment relations with China rather than with other economies, such as Japan, India and South Korea. However, this is not surprising since great powers have often exploited IOs and multilateralism as a platform to realize national and international objectives, with narrow consequences.
Nonetheless, early evidences suggest that AIIB is far less threatening than its critics have alleged. In design and operation, AIIB shares overwhelming similarity with the WB and the Asian Development Bank (Wang, 2016). Retaining his sanguinity, Ikenberry notes that the net impact of AIIB is more likely to strengthen the present norms and rules- There is no “Beijing consensus”. Additionally, there are various factors that impede AIBB from hijacking the development financing sector. AIIB is structured to rely on international capital markets to fund multilateral development loans, constraining its choice of financing projects that serves political purposes.