The finance ministers or authorized representatives of 50 founding members of the Asian Infrastructure Investment Bank signed the AIIB Agreement on June 29; representatives of other founding members can do so before the end of 2015.
This development adds momentum to China's efforts to build a multipolar financial network comprising the AIIB, the New Development Bank of BRICS states and the proposed Development Bank of Shanghai Cooperation Organization, and promote economic integration and common development through the "Belt and Road Initiative".
China realizes the important role of finance in global cooperation and development, and international relations, for which it will shoulder greater responsibilities and carry out more experiments with its foreign policy through financial diplomacy.
The multipolar financial agencies proposed by China will abide by the basic operating principles of the banking industry, and actively participate in global governance and reform. The three development banks have the same mission: promoting regional and global economic and social development. They will finance infrastructure and sustainable development projects in developing and emerging economies to help them overcome obstacles and realize inclusive and balanced development.
However, their priorities and target regions are different. They will complement each other, though. The BRICS New Development Bank is open to all UN members, and can be described as a multipolar development agency similar to the Word Bank. It has higher targets than the other two banks and will become a strategic platform for China to take part in global governance.
On the other hand, the AIIB will focus on Asia and the Development Bank of SCO on Central Asia and Russia.
Different methods will be used for the three banks' operations. The basic principle of cooperation among BRICS states is equality. Though China's economic power outweighs that of the other BRICS states, it shares equal rights and decision-making powers with the others. China and Russia form the core of the Development Bank of SCO, and China has to coordinatewell with Russia to achieve results and avoid misunderstanding.
China will play a leading role in negotiations, preparations and the organizational work of the AIIB, which is in line with the needs of the "Belt and Road Initiative" that aims at using China's huge foreign exchange reserves and strong manufacturing sector to promote regional integrity and common development. The top five stockholders in the AIIB are China ($29.78 billion), India ($8.37 billion), Russia ($6.54 billion), Germany ($4.48 billion) and the Republic of Korea ($3.78 billion). China's leading role in the AIIB is ensured because it holds not only the largest stocks but also the highest percentage (26.06 percent) of the votes.
China's prominent role in establishing the three development banks indicates it will play a very constructive role in global economic governance. Since President Xi Jinping assumed office in late 2012 China has been proactively using its financial diplomacy and multipolar financial development strategies. China is committed to promoting economic and social development in emerging and developing countries by funding or helping fund their infrastructure and sustainable development projects, which are the most pressing challenges they face on the road to development.
China's financial diplomacy is aimed at overcoming the shortcomings and plugging the loopholes of the existing global financial institutions and deepening the reform of the international financial system. Working together with China, the emerging economies can use a broader channel to take part in global governance, which will be conducive to reforming global economic governance.
China will also undertake more responsibilities in global and regional governance. The compatibility of China's strengths and other developing countries' needs have led to win-win cooperation for the benefit of the whole world.
