Australian (ASX) Stock Market Forum

China plans to create new Asian Infrastructure Investment Bank

Dec 24, 2010
WHEN people try to pinpoint the start of a ‘new world order’ they could look to March 2015.

This week, Australia announced it would sign on to China’s plans to create a new Asian Infrastructure Investment Bank to rival global institutions like the World Bank and International Monetary Fund.

But far from being some boring economic plan, the bank ”” which aims to address the $8 trillion infrastructure gap and provide $100 billion for new roads, bridges and ports in Asian economies ”” could usher in a new phase of regional influence for China without US involvement.

UNSW’s Institute of Global Finance director Fariborz Moshirian said China’s massive foreign exchange reserves and desire for more power have driven Beijing’s plan.

“China is trying to use economic muscle and also in a sense it’s a reaction to the Bretton Woods institutions like the IMF and World Bank. They are seen as US and European children and China wants to make their own mark.”
“It’s sort of a byproduct of the rise of the financial strength of China ... We’re going to see more of this kind of influence because China can afford now to take part of this kind of activity.”


I wouldn't have thought it'd be that easy to just create another IMF? Is this why China has been hoarding gold all this time?
Nov 3, 2013

Markets benefits from increased competition? Unless there is some sort of fallout between two superpowers...


Home runs feel good, but base hits pay bills!
Jul 11, 2006
China had no way to influence the ADB, with its Japanese leadership, so they created one that they could influence.

This could be good for regional growth. Bit of a worry with China leading it though...:eek:



Multi-Strategy, Quant and Fundamental
Mar 30, 2014
When the Bretton Woods Institutions were set up, China had a seat on the bus, but it wasn't the driver's.

This is a very clear sign that China's emergence is gaining force and that it is prepared to navigate around the Washington Consensus monoliths and strategic offshoots which have increasingly stymied efforts for China to be recognized in a manner proportional to its economic and social influence.

The US, in making the AIIB a political flashpoint, has shown it ineptitude yet again. Even Japan is signing up. The AIIB is one of several initiatives designed to replicate/replace the BWIs and their offshoots in a regional sense.

This move is thus symbolically important and has demonstrated that the power of China has arrived at the point where strong US allies will openly move against expressed US desires not to cooperate with this initiative. Consider that import.

In monetary terms, the increased capital flow into long term projects that are otherwise hard to finance but which have very large potential impact in terms of economic efficiency gains, not to mention economic multipliers, will have a large impact in the region. The capital deployed will be matched to some degree by private money, creating a much more lubricated access to global capital. Productivity gains will get another push forward.

Whilst the region stands to get richer as a result, so will consumers elsewhere of competing products or those whose value chains will be restructured along more favourable terms. In the longer term, the aggregate result is supposedly win-win. In the near term, the West stands to lose a bit as Asia becomes more productive in relative terms and adjustments take place.

Consider what this means as China opens its capital account.

Consider what increased productivity means at the point of exchange for the party with the greatest bargaining power.

Consider what it means to create super-strong hubs of commerce and what that means for geopolitics.


China is crossing the river by feeling the stones. It's also splashing about a few big boulders for those blocking the way. However, in doing so, it has pulled off a substantive coup by demonstrating unambiguously that the commercial value of a relationship with China (with downstream strategic impacts) to the world exceeds the value of maintaining solidarity with the US. This is a fairly important tipping point.

The rest of the world now wants a seat in China's bus. All in the space of one generation. Not bad. Not bad at all.
Jul 3, 2009
As it is going to buy everything, it may as well create its own bank, makes sense.
Jun 2, 2011
China needs to be engaged not isolated like the West did with Russia at the end of the Cold War. The AIIB is a great idea, why should Western institutions enjoy hegemony over global institutions. The 20th century is over and whether we like it or not China will have a powerful seat at the table from now on, so we can either try to ignore them, to our own detriment, or engage with them through these sort of institutions.

The US are just trying to hang on to power in the western Pacific.