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Ruhr University Bochum
Prof
...
Roman Novak
Global and European Multilateralism in Crisis? (080361-SS 2023)
6 CPs Hausarbeit

China’s role in the International Financial System
...


Giorgia Feltrin
108 022 23921 9
Ruhr University Bochum
Faculty of Romance Studies
Exchange Programme

Table of Contents
1
...
5
2
...
5
3
...
7
3
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New Development Bank (NDB)……………………………………………………………7
3
...
Asian Infrastructure Investment Bank (AIIB)……………………………………………
...
3
...
13
4
...
Theoretical Framework: Modified Neorealism…………………………………………………15
6
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Hypotheses……………………………………………………………………………………
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1 Regional Financial Power Position of China………………………………………………
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2 Hypotheses Analysis on the Asian Infrastructure Investment Bank………………………
...
2
...
21

6
...
2

Conclusions on the AIIB: an Influence-Seeking Operation?
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3 Hypotheses Analysis on the New Development Bank……………………………………
...
3
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26

6
...
2

Conclusions on the NDB: an Influence-Seeking Operation?
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Conclusions……………………………………………………………………………………
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References………………………………………………………………………………………32

2

List of Figures
Figure 1: Areas of Financed Projects………………………………………………………………
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15
Figure 4: Announced greenfield FDI projects by region/economy, 2013-2014/2015-2016……
...
23
Figure 7: Absolute amount of shareholder’s equity (2018)…………………………………………23
Figure 8: Indian proposal, Chinese proposal, and BRICS proposal of NDB………………………
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Introduction to the Topic
The World Bank Group (WBG), with its many regional institutions, nowadays includes more than 20
Multilateral Development Banks (MDBs), however, a feeling of lack of representation of developing
countries, and the heavy loans conditionalities that the Bretton Woods Institutions have been
imposing, especially after the 1997 Asian Financial Crisis, resulted in the foundation of two new
developing countries-based banking institutions
...

During the past decades, China in particular has been rising as a major economic and financial power
at the international level, and the country – not surprisingly – is among the most relevant actors within
these new financial institutions
...

The present paper will analyze the country’s role in the International Financial System, in particular
the effect on the previously stabilized balance under the post-war Bretton Wood Institutions, and
furthermore on the numerous MDBs already present on the market, before and after the foundation
of the NDB and the AIIB
...

1
...
The failure of these
expectations, that led to the searching for new suitable institutions, involve a broad range of aspects
...
The
IMF included representative delegates from forty-five nations, whose target consisted in the
reorganization of international economic cooperation, in the moment the Second World War would
end
...
The WB, on the other side,
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at his foundation accounted for thirty-eight sovereign nations
...
In the following
years, both institutions utilized this lending mechanism seeking to use ‘development financing’ as a
tool to encourage policy change in the borrowing countries
...
The WB
has also been accused of having excessive influence on borrower nations, a negative influence, in
particular towards their development prospective as well as in regard to environmental consequences
of the financed projects
...
Some worth-mentioning episodes include the
Asian Financial Crisis in 1997, the Mexican crisis in 1994-1995 and the Argentinian Crisis, that lasted
from 1994 to 2001, after which the country was declared in bankrupt
...
In the Argentina case, for example, the
privatization of the social security system and many others state-led businesses, resulted in a
considerable diminishing of the State’s income and increased its indebtment, which brought
bankruptcy
...
The IMF, for instance, is highly unbalanced in its representation of member
States, as some developed countries’ representative delegates in the Executive Board are directly
elected to represent a single nation, meanwhile emerging countries are grouped in – sometimes broad
– constituencies
...
As for the WB, its Board of Executive Directors also operates through
constituencies, but the voting shares are assigned partially according to the subscribed capital and
partially in fixed measures, to balance the clear advantage of developed nations
...
Furthermore, the Fund has been accused of favoritism
at the advantage of the US, which costed its own (not anymore) recognized political legitimacy;
resulting from the situation is the hoarding of massive exchange reserves, in order to avoid relying
again on the organization after the failure of the Asian Financial Crisis
...


6

Finally, both institutions have also been accused of technical inconveniences, namely an enormous
bureaucracy perceived to be wasteful and inefficient
...

The founders of the New Development Bank and of the Asian Infrastructure Investment Bank claimed
that the new institutions would right these wrongs
...
The Principle of Non-interference, deeply embedded in Asian cultures and
especially in the Chinese one, played a fundamental role in the strong appealing of these banks
...


2
...
1 Asian Infrastructure Investment Bank
The Asian Infrastructure Investment Bank (AIIB) was founded in 2015, with its headquarters in
Beijing
...
The bank officially began operating in 2016, with its fifty-seven
founding members, thirty-seven regional member States and twenty non-regionals
...
The remaining fifteen nations are
enlisted as Prospective members, both regionals and non-regionals
...

The AIIB was originally established with two main regional aims:
-

Financing of private and public infrastructure and development projects in Asia, sustained by
a starting investment of US$ 100 billion coming from the 57 founding members
...


7

The bank soon started its Infrastructure for Tomorrow (i4t) initiative committed to sustainability,
which – according to the main AIIB website – addresses three main spheres of action of their clients’
investments: 1) environmental, addressing the ecological impact on water, air quality, biodiversity,
pollution and climate change; 2) financial and economical, with returns on investment aimed at
raising economic growth and increasing productivity; and 3) social, enabling inclusive access to
infrastructure services
...

Since not long after starting its work, the Asian Infrastructure Investment Bank has received AAA
ratings “with a stable outlook from the top credit rating agencies: Standard & Poor’s, Moody’s and
Fitch” (AIIB, 2017)
...
The bank’s prestige was soon
recognized at the global level and the AIIB, in 2018, was assigned the role of Permanent Observer
status in the deliberations of the UN General Assembly and of the Economic and Social Council
...
Therefore, with the Strategy on
Financing Operations in Non-Regional Members, in 2018, the bank’s Board of Governors issued the
contribution of Non-regional members to the cause and the way the bank will operate in regard to
those non-Asian countries
...
The mentioned criteria and
requirements are stated in the AIIB Articles of Agreement, the multilateral treaty under which the
organization was established
...

1 The Court, whose function is to decide in accordance with international law such disputes as are submitted
to it, shall apply:
a
...

The AIIB, as updated at the 25th
...
The
Investment Operations (IO) are subdivided according to geographical areas, into Region 1 – involving
Southeast Asia, South Asia and the Pacific Islands –, and Region 2 – Afghanistan, Pakistan, Central
Asia, East Asia, West Asia, Europe, Africa, North America and Latin America
...
Energy, transport
and multi-sectoral projects are the most financed projects, in line with the sustainable principles of
the AIIB
...
international custom, as evidence of a general practice accepted as law;
c
...
subject to the provisions of Article 59, judicial decisions and the teachings of the most highly qualified
publicists of the various nations, as subsidiary means for the determination of rules of law
...
This provision shall not prejudice the power of the Court to decide a case ex aequo et bono, if the parties
agree thereto
...
61% of the total
...
6%, and Russia, with the 6
...
The European country with the highest share rates is Germany,
with an amount of 4
...
In the AIIB, member countries’ voting powers are highly dependent on
shares and the result of the sum of three types of votes: 1) basic votes, representing 12% of the total;
2) Founding Member votes, six-hundred votes for each founding member; and 3) share votes, about
85% of the total votes
...
2 New Development Bank
The BRICS organization, contrary to other integration blocs (the European Union, the North
American Free Trade Agreement,…), is of informal character, because of the absence of a founding
act
...
The initial area of interest for cooperation was
economy, however safety, agricultural production, energy, information and communication, food
safety, technology and health care are now included in the initiatives
...
At its foundation, the bank included 41%
of the world’s population (more than three billion people), around 22% of the world’s GDP (US$ 17
trillion) and more than 40% of the world’s foreign exchange reserves (US$ 2800 billion)
...
According to Stojković, cooperation within BRICS is generally
based on two pillars: 1) on coordination and multilateral cooperation with a particular focus on
economic and political management, and 2) on the cooperation between member States
(comprehensive intra cooperation)
...
Currently, the NDB’s operations are undergoing a General Strategy of the duration of
five years (2022-2026) – ‘Scaling Up Development Finance for a Sustainable Future’ –, mainly
focused on the areas of: Clean Energy and Energy Efficiency, for a low-emission development;

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Transport Infrastructure, to foster economic growth and unlock job opportunities; Water and
Sanitation; Environmental Protection, to decouple economic growth from environmental degradation;
Social Infrastructure; and Digital Infrastructure, to enhance connectivity and foster innovation
...

The guiding principles of the institution, as stated in the official website, include:
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Inclusive and Sustainable Development, sharing development benefits and opportunities
among socially vulnerable groups, while adopting international good practices and responding
to environmental and social risks;

-

Country Systems, for the public and private sectors, to foster the management of
environmental and social risks and impacts;

-

Environmental and Social Interests, avoiding any minimal adverse impact on the environment
and people, possibly resulting from the financing of development projects;

-

Climate Change, promoting mitigation and adaptation measures to address climate change,
while supporting existing and new green economic growth initiatives at the regional, national,
sub-national and private sector levels;

-

Conservation of Natural Resources, supporting sustainable land use management and urban
development;

-

Gender Equality, considered deeply tied to successful and sustainable economic development;

-

Precautionary Approach, to justify discretionary projects decisions that could result in
possible environmental and social harm;

-

Co-operative Functioning and Knowledge Dissemination, with the institution’s development
partners and other multilateral and regional financial institutions
...
According to this, each member can exercise 100,000 votes and
detains 18
...
The Foundation Agreement explicitly states that each
member is granted one vote, which is the main difference with the World Bank
...
V
...


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“The membership shall be open to members of the United Nations, in accordance with the provisions
of the Articles of Agreement of the New Development Bank
...
”
– Agreement on the New Development Bank, Art
...
Donor countries are also limited in the contribution, being limited to
possess an overall 20% of the total shares
...
0 million and 9,420 shares, and United Arab
Emirates, with a subscribed capital of US$ 556
...
0 million and 11,960 shares, became
an official member of the bank
...
Alongside the Board of
Governors, highest decision-making authority, the NDB is administered by the Board of Directors,
responsible for the general operations of the bank, the bank’s President and the Vice Presidents
...
8 billion of approved
financing and a total of ninety-six approved projects
...
The
statistics also include the supposedly CO2 emissions to be avoided – 13
...


12

Figure 2: Project Portfolio by Country
(Source: NDB Website, 2022)
2
...
Both banks emerged from the same ‘developing economies’ context
and out of disappointment with the Bretton Woods Institutions, with the PRC hosting their
headquarters and acting as an important financial backer, yet the AIIB present considerable material
financial advantages – because of the nature of its enlarged membership – and the NDB is more
innovative in character – the member States are, for instance, including many green projects in the
agenda
...

Considerable is also the different size of the banks, the NDB starting with a US$ 50 billion initial
capital subscription and the AIIB with the double of it, reflecting once again the nature of the
membership
...

The presence of developed countries – key donors, rather than borrowers – within the AIIB members,
on the contrary, is of great contribution to the original purpose of the bank
...
In case MDBs cannot rely on a large capital, borrowing from private capital
markets is also an option, as usually the presence of multiple sovereign governments within the bank
works as a warranty, enabling cheaper and safer borrowings; as a result, MDBs usually lend on less
strict terms
...

Further aspects in which the Asian Infrastructure Investment Bank and the New Development Bank
differ are, first of all, their governance framework, the Principle of Equality laying at the basis of the
13

NDB opposed to the voting system of the AIIB, which allows China to possess a significantly bigger
share of capital than other member countries and de facto Veto power
...
The NDB, on the other hand and despite the resolutions on the official documents, has been
heavily criticized for the absence of said safeguards and the less transparent attitude
...

Finally, another relevant distinction is related to the interactions and cooperation initiatives with other
MDBs, that developed through different paths
...
The same can be said true for the New Development Bank, which has also signed a
conspicuous number of agreements with national development banks as well as commercial banks,
compensating its limited experience and capacity by working closely with national development
authorities in the borrower countries, in making its initial loans (Wang, 2017)
...
Coherent with the model of
‘borrower-led’ bank, this kind of loans reduce the risks of default and allows the borrower
governments more influence in the projects’ choices
...

According to Wang (2019), the Asian Infrastructure Investment Bank and the New Development
Bank have so many substantial differences to affirm that they obviously do not represent a coherent
model of multilateral development finance and have more in common with the traditional banks than
with each other
...


14

Figure 3: Landscape of MDBs
(Source: Development and Change, Vol
...
Research question
The research question on which this paper is based aims at explaining the consequences of China’s
rise in the International Financial Order and its effects on MDBs
...
Assessing the
amount of said influence will then quantify the influence the country can as well exert in the
international sphere, first of all in the regional and then international financial market, as well as
generally in the Liberal International Order
...
Theoretical framework: Modified Neorealism
The theoretical framework utilized to answer the research question is Modified Neorealism and the
associated foreign policy theories
...
Developed in
2001, the theory starts with ‘power position’ as the independent variable crucial to States’ foreign
15

policies’ directions: according to the theory, a State’s behavior is determined by factors such as
geography, natural resources, industrial and military capacity, population size, and following indexes
...
The country may choose to pursue an Autonomy-Seeking
Policy, in order to maintain or reinforce its own independence from other States, or may adopt an
Influence-Seeking Policy, to shape the interaction processes with other nations, influencing the
resulting outcomes to their own interests and gaining prestige at the regional or international level
...
”
This paper will focus on the assumption that the analyzed actor of the international system, China, in
these years has chosen to pursue an Influence-Seeking Policy, by taking on a relevant role in the New
Development Bank and in the Asian Infrastructure Investment Bank
...


5
...
Analyzing
official data from the international financial market is fundamental to evaluate the foreign policies of
countries, especially of the most outstanding members of the two new MDBs
...
The power position of China is analyzed at the regional level through a
power analysis, while the internal structure and main features of both banks are evaluated to establish
whether the power position of China is favored and enhanced within the institutions
...

On a broader range, however, to take into consideration the economic and financial rise of China, it
is necessary to analyze both the time before and after the founding of the two banks, to see how
China’s foreign policy changed and the amount of contribution the two banks had in rising the
country’s influence at the international level
...


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6
...
Based on this general statement, two
different following hypotheses can be drawn, analyzed and verified
...
This hypothesis is based on an independent variable – the regional financial power
distribution –, resulting from the analysis of a combination of individual factors varying considerably
from nation to nation
...

As for the second hypothesis, it states that “if existing regional development banks do not allow China
to exert influence, the country will create its own multilateral development banks”
...

The factors considered to verify both hypotheses are the elements that influence China’s general
behavior and attitude at the regional level, specifically its involvement in or even the creation of new
regional MDBs, as well as its use of said institutions as political vehicles to gain and exert influence
in the region
...
1 Regional Financial Power Position of China
“A responsible spokesman for developing countries” (Jacobson & Oksenberg, 1990)
As stated in the first hypothesis, if China’s power position is strong, the country will supposedly
pursue influence seeking policies and, if said position is strong at the regional level, they will be
pursued through regional multilateral development banking organizations
...
Regarding regional
financial power distribution, year 2014 represents a milestone for the PRC, which at the time reached

17

the position of second biggest regional power thanks to its GDP, overshadowing for the first time the
traditional regional power of Japan and the strong influence of the US, according to economic and
financial indexes
...

The country, at the same time, increased its power position with consistent Foreign Direct
Investments (FDI) directed towards the Asian region
...
724 millions of 2013 up to the US$ 14
...
The increase grew
even more in 2015, when it reached US$ 40
...
249
millions in foreign direct investments for that year
...
1% in 2021, a
considerable digit if compared to the 2
...
Most growth was achieved during the first half
of the year, while in the second half the nation had to deal with power shortages, supply chain
bottlenecks, regulatory tightening in several sectors, and COVID-19 outbreaks (NDB, Annual Report
2021)
...
9% higher than previous
ones and estimated statistics from the International Monetary Fund predicted the country’s GDP to
grow on a yearly average of 4
...
In the same year, the country
advanced its request to join the Comprehensive and Progressive Agreement for Trans-Pacific
Partnership, fostering its relationships with regional partners
...
Currently, the region is considered
increasingly divided by the bipolar competition of two superpowers
...
5
points out of 100, second only to the United States, which scored 80
...
2 points
...
1 points (3%) compared to the previous two years
...
5
points (2%); the referred study bases its theories on the assumption that “a power transition is
triggered when a rising power’s overall strength approaches 80 per cent of that of the established
power” (Patton et al
...

In the Asia Power Index, China is ranked the highest in economic relationships – “the capacity to
exercise influence and leverage through economic interdependencies” –, thanks to its strong trade
and investment ties with regional neighbors; and in diplomatic influence – “the extent and standing
of a State’s foreign relations” –, regaining its title in 2022 because of “extensive diplomatic
engagement with Asia Power Index countries” (Lowy Institute, 2023) as well as following the
American foreign policies of the Biden administration in the Asian region
...
3 points)
...
Actually, 2023 is, for the country, the year with the largest competitive advantage in
economic relationships – 88
...
0 points;
o future resources, “projected distribution of future economic, military and demographic
resources”: +67
...
8 points;
o military capability, “conventional military strength”: +54
...
3 points;
o and cultural influence: +34
...

Considering the other countries too, according to the study China exerts more influence in the region
than it is expected, if the country’s availability of resources is taken into consideration
...
The authors firmly believe that China will not surpass the US in the ranking before the
end of the decade, and – in the case that would come true – the predominance would not equal the
unrivalled power and influence that the United States exercised in Asia until not long ago
...


Figure 5: Comprehensive Power Rank (2023)
(Source: Lowy Institute
...
2 Hypotheses Analysis on the Asian Infrastructure Investment Bank
6
...
1
...
If not,
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then the country would likely – according to the second hypothesis – resort to the creation of its own
multilateral development banks
...
At its foundation, the bank accounted for thirty-one member countries, which at the
current time amount to sixty-eight, including even a considerable number of European countries, the
United States, Canada and Australia, in addition to most Asian nations
...
57% of the total share
...
42%
of the shares; India holds 6
...
77%
...
In his work, the author mentions Australia’s block of fossil fuel
disinvestment as a clear example of this phenomenon
...

China’s intentions for its foreign policy can easily be seen in its role in the Asian Infrastructure
Investment Bank, originally founded “to foster sustainable economic development, create wealth and
improve infrastructure connectivity in Asia“, similar to the original purpose of the ADB “to foster
economic growth and co-operation in the region of Asia and the Far East“ (Peitz, 2022)
...
The underlying
purpose was the creation of a borrower-led MDB, rather than a lender-led bank, to meet developing
countries’ needs as borrowers more than existing institutions have been able to accomplish
...
As
visible, in 2018 the voting shares of borrowing countries in the AIIB – 75% – were more than doubled
compared to the ADB, which barely reached 30%
...
57% of the total shares,
meanwhile China’s voting power in the AIIB extend to 26
...

22

Figure 6: Voting shares of borrowing and non-borrowing member states (2018)
(Source: MDB annual reports and financial statements, 2018)

Figure 7: Absolute amount of shareholder’s equity (2018)
(Source: MDB annual reports and financial statements, 2018)
The creation of the AIIB is generally thought by many researchers to be shaped and driven by
“strategic considerations” (Andornino, 2019)
...
Article 28, comma 2, of
the Articles of Agreement is committed to the requirement of ‘Supermajority for decisions’:
(ii) A Super Majority vote of the Board of Governors shall require an affirmative vote of twothirds of the total number of Governors, representing not less than three-fourths of the total
voting power of the members
...
The country, surprisingly, offered to
forgo this advantage if the US and Japan joined, or promised to do so in the near future (Chin, 2016);
event that naturally did not happen and will not likely ever happen, as the two superpowers would
never consider joining an institution where China possesses the highest shares and voting powers, the
same reasons under the Chinese decision of creating a new multilateral development bank
...

Even with all the positive purposes, as evidenced by the Chinese predominance withing the bank, the
Asian Infrastructure Investment Bank still displays some continuities with the methods and practices
of the World Bank and the Asian Development Bank
...
A progress has
been made, however, in the limits imposed to the shares allowed to non-regional members, which –
as already stated – has to stay below 25%, to preserve the influence of Asian member States and the
bank’s “regional” status
...
Transparency is another similar issue
with the compared institutions; up to these days, the president of the WB, the director of the IMF and
the governor of the ADB have always been respectively American, European, and Japanese
...

nationality of the candidate)” (Chin, 2016) and it seems that the AIIB has taken the same path, as the
Chinese proposal of the first president being from China – the largest shareholder – was accepted
...


24

Finally, the range of China’s influence through the bank can be seen in multiple initiatives and
behaviours, first of all for the rejection of Taiwan’s membership request; unfortunately, evidences of
political involvement are always hard to assess: in the case of Sino-Indian tensions, for example,
investments were not affect at all (Creutz, 2023)
...
2
...
Subsequently, since the ADB is clearly an economic statecraft vehicle of the Japan and the
United States, China was brought to initiate its own MDB to master and exercise more influence –
verifying the second hypothesis
...

China, however, is a difficult country to consider for a standard power-political and systemic analysis,
because of many of its characteristics, that generally fall outside of the usual Euro-centric Western
models and standards utilized in political analysis
...
First of
all, the PRC has been defined as an increasingly ‘responsible leader’, the standards and transparence
of the AIIB are higher than bilateral investments and increasing Paris Club involvement has been
registered in the past twenty years
...
Established
in the 1956, this informal institution is tasked with finding a coordinated and sustainable way for
debtor countries to overcome their paying insolvencies
...
According to Rieffel, possible reasons of China’s nonmembership in the Paris Club include its previous status as a developing country and its close
relationships to the other nations of the same category, as well as “the close working relationship the
Paris Club has with the IMF and the World Bank, which are dominated by the United States and other
high-income countries with democratic political systems”
...
Regardless of the reasons China has to not wanting to be a
member of the Paris Club, the efforts spent with its debtor nations display once again the increasing
involvement of China in regional relationships and partnerships
...
In this case, low reputation costs are
applied with tough lending conditions and China does not take the role of direct creditor, avoiding
the direct responsibility of said (eventual) failures
...
In addition to this, disagreements on working methods and especially low
investment in connectivity, for instance, are to be added to the hidden factors not included in the
official analyses
...

6
...
3
...

The fastest difference to grasp is the limited size and membership, if compared with the AIIB
...
For many years after its foundation, the bank still counted only the five BRICS
countries as member States
...
Chinese counterproposal was to base the quota
allocation on the countries’ GDP size, instead of the mentioned-above principle of equality, which
would have given all five founding members the same quotations and therefore the same voting power,
meaning no one could exert more influence than the other members
...
BRICS proposal, however, shared the
PRC’s idea of the headquarter being established in Shanghai, and – more importantly – on extending
the scope of lending to all the developing countries, while India’s original proposal included only
BRICS countries in this aspect
...
The
result was a borrowing-country-led-MDB, whose founding members share the quotations equally and
are both borrowers and contributors
...
On the financing aspect, the bank actively uses the
local currency financing and capital markets
...

As for the role of China, its competition with India for leadership emphasized equality as the
prominent feature of institutional design
...


Figure 8: Indian proposal, Chinese proposal, and BRICS proposal of NDB
(Source: New Development Assistance: Emerging Economies and the New Landscape of
Development Assistance, 2020)
In the long term, the New Development Bank can provide more institutional choices for the reform
of the global economic governance in favor of developing countries; the bank is also more innovative
than the AIIB, for reasons including its green projects and local currency financing
...
Moreover, donor countries – as a group – cannot exceed 20 per cent of
the shares and no single new member can exceed 7 per cent of the shares (NDB, 2014)
...

Among the member countries, only the PRC has medium to high investment grades in its sovereign
rating, all the other members have ratings below or bordering investments grade
...
It is not surprising that this far the NDB has relied heavily on the
Chinese capital market
...
This is something that China alone can use to strengthen the standing of the RMB on
the international monetary market and one key individual benefit that the country can obtain from its
membership in the New Development Bank
...
3% at the end of 2021
...
Actually, the largest share of the Bank’s approvals
in 2021 – 37
...
8% – and
US$ – 31
...
Finance Minister Enoch Godongwana, appointed South-African Governor, mentioned
how the use of local currency among the NDB members is a priority of the bank, the aim being derisking the impact of foreign exchange fluctuations
...

According to Vice-President and Chief Financial Officer Leslie Maasdorp (2023), the bank’s target
is increasing local currency lending from the current 22% to 30% by 2026
...
3
...
The borrowing-country-oriented model, as the one that the NDB opted for, reflects
28

developing countries’ thinking in regard to the current international development
...
A central concern expressed by
various observers is whether these China-backed MDBs would pose a threat to the multilateral
development banks established after WWII under US leadership, highlighting how the possibility of
these banks being vehicles for the PRC to gain prestige and influence is a concrete concern
...
The Global South in particular will
benefit from institutions that invest on undeveloped markets and in the primary sector, meanwhile
China’s credibility would significantly increase to stand against Western predominance
...

According to the variables analyzed, it is possible to establish the extent of influence that China can
exert thanks to and through the considered MDB
...
Even if doubtful at first, the country actively took on its role in the New
Development Bank, alongside the other four members, and with distinctive proposals contributed to
the structural shaping of the banking institution
...
The country is still one of the founding
members of the institution, which in recent years has been accepting the entrance of outside members
with lower capital shares and voting power, and it is – up to these days – still the member country
with the highest investment rating, therefore benefiting more from this inside situation, both in the
finance and monetary markets
...
The findings
displayed how China gained its status of superpower in the last decade, precisely in 2014, when the
country suddenly started increasing its Foreign Direct Investments towards the South and South-East
of Asia in a more considerable and consistent way
...
The variables analyzed evidenced how China sophisticated
its position as an important player on the global stage, by playing a major part in founding these
institutions
...

The fact that China is prominent in both the NDB and the AIIB suggests that this country is not
promoting a coherent new model of Multilateral Development Financing, but rather is straddling
various traditions in this realm of global financial governance – notably, the resemblances of the AIIB
with the World Bank model and of the NDB with common borrower-led MDBs
...
The effort of
China to increase its voting power and influence inside the institution and lately to take it distance
from the model was, on the other side, paralleled by actions devoted to cultivating external
arrangements to deal with financial crises, such as the Contingency Reserve Arrangement (CRA)
created with the other BRICS countries, which are however working closely with the IMF
...
China has assumed its role in these really
different institutions in order to combine its identities as a developing country and as an established
power: often the country has more in common with advanced economies than emerging ones, starting
from its financial interests that are closer to creditor nations than to debtor ones from the Global South,
yet the country still associate itself as a developing country and an advocate of said category
...
This also translated in the country’s efforts in demanding a
reform of the Bretton Woods Institutions and their credit rating system, to more favorable conditions
towards the borrower countries
...


30

Considering the substantial differences between the Asian Infrastructure Investment Bank and the
New Development Bank, it is clearly possible to affirm that the AIIB allows China way more
influence than the NDB could ever, give the nature of the bank
...
The size and internationalist approach of the AIIB also grant bigger room for maneuver
to China, to exert its influence towards investments and policies of the bank
...
Furthermore, the relying of the
bank on Chinese credit agencies and Chinese investments is working in favor of the country as well
...


Herewith I declare that I prepared this seminar paper independently on my own and without the use
of any aids except those specified, that I used only the specified sources and that any direct or
indirect quotes taken over from other authors are indicated as such
...

Venice, 01/06/2023

SIGNATURE

31

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33



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