How China-led AIIB and US-backed ADB can cooperate in the infrastructure ‘Great Game’, starting in Central Asia

The Asian Development Bank’s activities in Central Asia may look like a challenge to the AIIB and belt and road projects. But Beijing could welcome help in bridging the vast infrastructure gap in the region, which can only enhance its links with Europe

Reading Time:3 minutes

AIIB president Jin Liqun holds a press conference in Luxembourg on July 12. Photo: EPA-EFE

Published: 5:00pm, 24 Nov 2019Updated: 8:53pm, 24 Nov 2019

What might be called the “battle” of the Belt and Road Initiative has shifted ground and split into two fronts: one, still involving the trade initiative to link economies into a China-centred trading network, and the other, involving the China-led Asian Infrastructure Investment Bank (AIIB). The other main protagonist is the Asian Development Bank (ADB). Who is really on top in the struggle is not always clear.

The ADB has been very active lately in China's “backyard” of Central Asia, in the process stealing some of the AIIB’s thunder. On the other hand, the Beijing-based AIIB has been working so closely and willingly with the Manila-based ADB that cooperation could be seen as a Beijing strategy.

At first glance, the China-led infrastructure bank appears to be playing second fiddle to the ADB, having relatively little policy input in the projects that it helps to finance. As one senior Japanese financial official put it to me, the AIIB has become “just a fund which can give additional money”.

This, added the official (who for many years headed Japan’s leading infrastructure financing institution, and one of the biggest in the world) “is not the original thinking behind the creation of the new institution”. But this image of a somewhat humbled AIIB will not be displayed in Jakarta later this week.

At the FT-AIIB Summit there on November 26, bank president Jin Liqun and others are expected to lay out the need to develop capital markets across Asia so the AIIB is better able to finance the region’s massive needs for basic infrastructure.

Oddly, some of the claims coming from Japan that the AIIB's capital base of US$100 billion is relatively puny against Asia’s need to spend up to US$1.7 trillion annually on infrastructure projects from now to 2030 ignore the fact that the ADB has capital of “only” US$143 billion. Even the World Bank has just US$250 billion.

Select Voice

Choose your listening speed

Get through articles 2x faster

1.25x

250 WPM

Slow

Average

Fast

00:0000:00

1.25x