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Development Policy Monitor

New Kids on the Block: AIIB und NDB

New Multilateral Development Banks: A Cornerstone of Chinese Superpower Politics?

With the "Monitor Development Policy" series, the Konrad Adenauer Foundation aims to shed light on the role of non-traditional donors in development cooperation. This time we take a look at two multilateral development banks: the BRICS countries' NDB, headquartered in Shanghai, and the AIIB, headquartered in Beijing. With their establishment, China is challenging the dominance of the USA in development finance and is making clear its global leadership claims.

Two new multilateral development banks were launched in the mid-2010s with massive participation on the part of China, the BRICS countries' New Development Bank (NDB) and the Asian Infrastructure Investment Bank (AIIB). With the help of both banks, China is openly challenging the dominance of the USA. By founding new multilateral development banks (MDBs) with global support, China is thrusting itself into a role that seemed to be reserved for the US at least since the end of the Cold War, thereby underpinning its claims to a global leadership role.

 

The analysis makes it clear how, in the span of a few short years, Beijing has succeeded in establishing a recognised global institution with the AIIB, whose credit standing is equivalent to that of the World Bank in the view of the rating agencies. Moreover, by successfully co-founding or initiating two MDBs, China is expanding its relative influence in the field of multilateral finance – much to the displeasure of the US, which has not joined the AIIB so far.

 

China's engagement in multilateral development finance is also inevitably part and parcel of global competition between different systems. In addition to expanding its latitude for action, China's involvement in the newly established MDBs may also enhance its soft power, its allure and attractiveness in the Indo-Pacific region and beyond.

 

Read our Monitor Development Policy on the role of the AIIB and NDB in global development cooperation here as a PDF. 

Development Policy Monitor
Flickr / CC BY-NC-ND 2.0 / Albert González Farran (UNAMID)
December 14, 2021
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About this series

The publications of the Development Policy Monitor are part of our Monitor publication series. The Monitor series deals with one main topic at a time from the perspective of KAS experts and places it in the political and social context on the basis of a few key points.