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AIIB
OpinionComment
Wang Huiyao
Wang Huiyao

The View | How China-led AIIB can expand its remit to build a greener, more inclusive post-pandemic world

  • The recovery-boosting infrastructure spending sprees favoured by developed nations are out of reach for less-well-off countries that need them most
  • The AIIB has the scope and track record to expand to a global level and help those nations left behind

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High-rise buildings loom over residential houses in central Jakarta in February, 2017. Underinvestment in infrastructure is a chronic problem that predates the pandemic. Photo: AFP
Wang Huiyao
The case for post-pandemic infrastructure spending is compelling. Low interest rates mean states can borrow cheaply to fund projects that spur short-term recovery and long-term economic transformation. No wonder some developed economies have unveiled massive infrastructure plans to revive their economies and “build back better”.
Sadly, this path is closed off to most poorer countries as they lack the fiscal space to build much of anything now. The United Nations is warning of a looming debt crisis for developing countries. Since the onset of the Covid-19 pandemic, many have hit borrowing limits and 36 have experienced sovereign downgrades.

Underinvestment in infrastructure is a chronic problem that predates the pandemic. The world faces an infrastructure financing shortfall of US$18 trillion out to 2040. 

As the global economy struggles to recover, it is time to consider forming a new institution to address this gap. The world needs a dedicated global infrastructure bank that can mobilise capital to spur recovery and build for long-term goals related to climate, resilience and inclusivity. 

Built from scratch, such a bank would need many years to be fully operational. However, there is one candidate well placed to expand and take on this mission: the Asian Infrastructure Investment Bank (AIIB).

In the past six years, the AIIB has established itself as an effective multilateral development bank (MDB). Having attracted several advanced economies as members and adopted the high standards of other MDBs, it has gained recognition from organisations such as the UN and AAA ratings from ratings agencies.

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