All The Countries That Have Committed To Join China’s New Bank

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The Asian Infrastructure Investment Bank seems to be a winner. The United States has stiffly objected to the bank, and pressured allies to stay away from it, believing it would undermine existing services used for large scale financing projects. So what exactly is the AIIB?

What is the bank?

The bank was proposed by Beijing in November 2013,  with the intention of providing much needed financing to Asia. It is considered a competitor to the US dominated World Bank, the European dominated IMF and the Japanese dominated ADB (Asian Development Bank). Currently China controls just 5.71% of the World Bank. But this time, it will be different for China. AIIB is being created in a way that will give the Chinese government more control. They will take the lead in financing decisions, impose conditions for loans, and to an extent pick and choose who will receive those loans. Basically, it will work in a similar fashion to how traditional Western Powers use the World Bank and IMF to impose their will on loan receiving nations. Banks of this nature are ways for rich countries to loan poorer countries money for infrastructure projects, conditions are set on loans, and in general it is thought of as a strong binding contract and loans will always be repaid.

How Much Money will be made available? 

Initial investment into the bank will be between $50 and $100 billion US dollars. Non Asian countries will have their investment capped, to ensure that China retains its control over the bank. While this might seem like a lot of money, the ADB, a competitor to the proposed bank, released a statement in 2013 stating that Asia will need up to 8 Trillion US dollars of investment for the region to continue economic development. While most of that will come from private sources, and directly through government investment, it shows there is a huge demand for financing across Asia. The high demand for loans will make other wealthy countries want to get involved in lending money to governments with a huge potential for growth.

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Who Has Joined?

China and India will lead the way in terms of Asian powers, along with a host of Asian countries, from Mongolia to Pakistan. The deep pockets of the Arabian Peninsula have also committed and received approval to join the bank. Expect Saudi Arabia and Qatar to be big backers; both countries have a history of investing their massive oil wealth overseas in high earning markets. The map and data table below show that this will not be a small scale bank. Most of the world has either signed up for it, or is currently seeking approval. (Green countries are currently members, Blue are seeking approval, Red have either turned down the opportunity or have been disapproved by the head of the bank in Beijing)


The vast majority of Asia has committed to and received approval to be a part of the bank; a notable exception is Japan. Although they were considered at one point, the official statement from Tokyo was that they could not feel assured that investment would be run appropriately. “As of today, Japan will not join AIIB and a clear explanation has not been received from China” and “Japan is dubious about whether (the AIIB) would be properly governed or whether it would damage other creditors” – Yoshihide Suga, Japan’s Cabinet Secretary

North Korea – It is surprising that North Korea has been prohibited from joining.The traditional ally of China requested to join, but was told they had not disclosed their financial information correctly. Thus, their application was denied. This might be a sign that ties between China and North Korea are waning. But it could also be a tactical decision. The bank would have difficulties signing up much of the European Union with North Korea on the books.

The European Union 

From an American perspective, this is where the controversy arises. The United States pressured European allies to avoid joining the bank. But after The UK, Germany, France and Italy(the traditional powers of Europe) agreed to join and gained approval, it was full steam ahead for Europe. Spain, Sweden, Austria, Denmark, Hungary and The Netherlands are all awaiting approval. Switzerland, famous for its banking culture, has already signed up. While non Asian countries will be caps places on the size of their investment, and therefore voting rights, it is a sign of the credibility of the bank. Furthermore, it represents a shift in political allegiance away from the United States. This does not mean that The UK and other allies will suddenly start up a special relationship with China. Instead, it shows they will not jeopardize their own economic interests to help keep America as the dominant world power.

The Rest of The World

Russia has submitted a request to join the bank. It is unclear how much they are willing to invest, or if they will be capped from investment. The interesting story is how long it took Russia to submit the request. Russia and China work together on many projects, and after the Western world almost entirely cut Russia out of the traditional banking system after its involvement in Ukraine, it seems like Russia would become a founding member. The Moscow Times quotes Russian insiders as saying “We have no money to participate in Chinese geopolitical projects” but in the end they will likely receive approval and become a founding member.

Australia has also submitted a request to join the bank. Much of Australia’s trade happens with Asian countries, and China is Australia’s leading export partner. The United States had tried to pressure Australia to stay out of the bank. But once the majors of the European economy had agreed to join, it would have been a tough sell for America to keep Australia out.

Brazil is the only country in Latin America that has so far submitted a request to join the bank. The massive Latin American country will be the only founding member in the Western hemisphere. Israel has also submitted its desire to join as a founding member. The “Special Relationship” between the U.S and Israel has not stopped the country from joining the bank. So far the only one of America’s close allies who has not requested to join and would be in a position to do so is Canada. Canadians have not ruled it out, but so far they have not submitted a request. March 31st was the cut off date for countries to submit membership to be considered for a founding member role.


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(Green countries are currently members, Blue are seeking approval, Red have either turned down the opportunity, stated they will not be joining, or have been disapproved by the head of the bank in Beijing)


What does this mean for America’s role as the worlds super power?

While America gains some of its power from its dominance of banking organizations, it is certainly not its main source of power. Furthermore, the World bank will likely still play the biggest role in doling out loans to countries in need. But if the AIIB can thrive in Asia, then America will lose a foothold in a region that posts huge growth per year. The ADB, considered the biggest loser from these events, was led by Japan, who owned 15.67% of the bank, and closely followed by the United States with 15.56% of the shares in the bank.  The United States may now have slightly less influence in the region, but they will continue to be the number one buyer of goods for years to come. The real threat is to the US Dollar. The new bank will likely strengthen the Chinese Yuan and place it in a stage where it can be considered a viable alternative to the dollar as a Reserve currency.



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