The China-proposed Asia Infrastructure Investment Bank (AIIB), formally established on Dec. 25 last year, is set to begin operating following an inauguration ceremony on Saturday, showcasing the commitment of the world's second largest economy to making substantial contributions to renewed global economic governance.
In 2013, Chinese President Xi Jinping, who will address Saturday's ceremony, first proposed the global multilateral financial institution, which has now developed into a 57-member body in just two years, with further enlargement highly anticipated.
To Chen Fengying, research fellow at the China Institute of Contemporary International Relations, the opening of the AIIB marks China's "shift from a participant of the global governance system to a contributor of it," reflecting a shift in the country's ability to manage global economic issues.
David Aikman, chief representative officer in China and Greater China Member at the World Economic Forum, which holds annual meeting on the world economy in the Swiss town of Davos, said the launch of the AIIB shows China's increasing role in leading and innovating institutions to address the trillion-dollar infrastructure gap around the world.
Unlike the World Bank and the International Monetary Fund (IMF), which are predominantly controlled by developed countries, the AIIB was proposed by China -- one of the most robust emerging economies in the world -- and includes both developing and developed member states, thus making it a truly open and inclusive entity supplementing the existing global financial framework.
In response to suspicions expressed mainly by the United States and Japan that the AIIB will be more of a tool Beijing could use for its own good, Jin Liqun, the bank's president-designated, said China holds the highest voting stakes because of its GDP volume and capital contribution.
As new members join in, all founding members' shares and voting stakes will be "gradually diluted," Jin added.
"Although China still supports the existing global financial system, the new governance emerging from Asia, led by China, is a supplement and contribution," Ibrahim Yusuf, executive director of the Indonesia Council on World Affairs, told Xinhua in a recent interview, expressing his hope that the AIIB could serve as a new funding source for Indonesia as most western countries are suffering an economic slowdown.
To Chen Gang, senior research fellow with the East Asia Institute at National University of Singapore, the first and foremost problem of the current global finance order -- based on the U.S.-led Bretton Woods system established after World War II -- is the many hurdles it sets for developing countries, thus impeding the timely allocation of funds of which there is a desperate need, especially on a large-scale.
Therefore, Chen argued, the AIIB will fill in the blank and, with an overall lending capacity Chen believed will one day equal that of the U.S.-controlled World Bank and the Japan-dominated Asia Development Bank (ADB), benefit countries all over the world, especially developing nations.
The proof of Chen's remarks could be found in an earlier statement made by Jin, who said the China-initiated bank will hand out its loans as early as mid-2016, adding that the bank will keep in close contact with other multilateral and bilateral development organizations.
One prominent feature of the AIIB is that it focuses on enhancing connectivity among Asian countries by funding infrastructure development projects, and Jin said it's this "win-win in nature" approach that gained the bank popularity.
Jin's opinion was echoed by Aikman, who said, "China has a lot to bring in terms of experience with the large-scale infrastructure projects and really has an opportunity to innovate."
Acknowledging that a shortage of financing is one key constraint preventing the development of better infrastructure in developing countries, China expert James Laurenceson said the AIIB will alleviate that shortage.
Hailing China's willingness to make the AIIB open for partnership with the ADB, Laurenceson, who serves as Deputy Director of the Australia-China Relations Institute at the University of Technology Sydney, said the fact that China has established a truly multilateral lending institution in an extremely short time is "hugely impressive."
Maung Maung Thien, Myanmar's Deputy Minister of Finance, was optimistic about the prospect of the AIIB when asked to comment on the bank's opening on Saturday.
"Our expectation and view on the opening of the AIIB are good and clear, that was why we participated as a founding member. The AIIB is assumed to be a dependable bank which supports regional development," the official said, adding that the country's Minister of Finance U Win Shein will attend Saturday's ceremony.
In addition to infrastructure, the business of the AIIB, which has an authorized capital of 100 billion U.S. dollars, will also cover energy, education and health care.
Expansion of the AIIB's lending resonates with the opinion of Vasily Mikheyev, who is Deputy Director of the Institute of World Economy and International Relations at the Russian Academy of Social Sciences.
Mikheyev believes the functions of the AIIB can be adjusted in the future, expanding from financing infrastructure-building to funding actual production as the world economy enters a different stage.
