In a little over a month, the Asian Infrastructure Investment Bank will be five years old. Back then, the nascent China-organized multinational lender was described as a challenger to the Asian Development Bank and even the World Bank.
But after half a decade in operation, the reality doesn’t quite match the hype.
The AIIB reported $30.78 billion in assets at the end of September. Even combined with the $19.32 billion of the New Development Bank, another Chinese-led multilateral bank, that is still less than a fifth of the Asia Development Bank’s $250.8 billion.
Both are overshadowed by World Bank Group’s constituent parts: The International Bank for Reconstruction and Development, the International Development Association and the International Finance Corp. together hold more than $600 billion in assets.
Despite a surge in lending this year—the AIIB is well-capitalized and was able to manage a considerable increase—it made up less than 5% of the new lending disbursed by international financial institutions, and even less of the approved figure, according to data compiled by the Center for Strategic and International Studies.
As in many areas of Asian commercial and economic diplomacy, Japan speaks quietly and carries a big checkbook: It is the ADB’s joint-largest shareholder. In comparison, China’s large-scale financial interventions sometimes amount to less than the thunderous headlines years earlier suggested.
The AIIB was assembled at a time when China’s international relations with many countries were much warmer. The U.K. and Australia joined the AIIB against the protestations of the U.S. after visits by President
to both countries.
Such support today is difficult to imagine. China’s relations have soured with many developed countries. The second-largest capital subscriber, India, has been embroiled in a series of commercial and territorial disputes with Beijing this year.
The best argument for the AIIB is that it is a more narrowly focused multilateral lender, which doesn’t differ all that much from the existing institutions. But in that case it also can’t be a major source of Chinese government influence or a vehicle to encourage the use of the yuan, as some breathless explanations suggested five years ago.
Whatever the AIIB’s future holds, becoming the muscular financial sponsor of Chinese influence abroad that some imagined is unlikely.
Write to Mike Bird at Mike.Bird@wsj.com