Geopolitical shift at a time of Covid-19 and the Asian Infrastructure Investment Bank: A case study of Chinese innovation in multilateralism

Abstract

How China will contribute to global governance has become a critical question in international relations, amplified by the linkages between the Covid-19 pandemic, escalating geopolitical contest and multilateralism in crisis. China has been doubling down on its authoritarian model of domestic governance while becoming more internationally assertive, including in existing and new multilateral institutions. Meanwhile, the United States appeared in recent years to be undermining the institutions, norms and rules of the liberal international order that it, itself, built. The subsequent decline in international cooperation poses grave risks to public health, economic and other forms of security. Can China cooperate with other actors to contribute public goods and stabilisation of global governance in such a deteriorating international environment? While there is a wide range of institutions in which to examine China's growing role in international governance, from United Nations bodies such as the World Health Organisation and World Trade Organisation to regional initiatives such as the Regional Comprehensive Economic Partnership, this paper examines the Asian Infrastructure Investment Bank (AIIB), an example of Chinese innovation in multilateralism. Established amidst geopolitical contest, the new institution seeks to address the Asian deficit of financing for sustainable development. The bank challenges a number of prevailing norms, including replacing the disproportionate power of the US and the advanced economies in the multilateral system with a more proportionate role for China and other developing countries; a new focus on infrastructure-led development which is built on Chinese confidence in the East Asian development model; and a shift away from the Bretton Woods practices of using financing conditions to drive liberal democratic and neo-liberal economic reforms. At the same time as representing a challenge to the traditional order, the bank exhibits – at least to date – best practices in implementation and addresses previously unmet concerns of the developing world. While it is not possible to extrapolate from only one initiative to draw comprehensive conclusions about China's likely future role in global governance, the AIIB case nonetheless suggests that, at least in some fields, China will challenge liberal norms to reform rather than revolutionise the international order.