Brief: 31 Aug 2016 — Canadian Prime Minister Justin Tredeau announced Canada’s application to join the Asian Infrastructure Investment Bank after meeting with Chinese Premier Li Keqiang. Despite Obama’s insistence not to join, it is clear that US allies have no desire to abstain from applying to Chinese-led alternative lending institutions.
Implications: The AIIB is already successful with 57 countries, bridging ideology, political tensions, and geography. China-watchers — Just like the Marshal Plan became the economic platform that enabled the US to transition into an active global role, the AIIB enables China to set the stage for global strategic frameworks from humanitarian missions to military endeavors.
Analysis: The AIIB is the financial arm to support Chairman Xi Jinping’s One Belt One Road initiative. The AIIB’s role is to fund infrastructure projects to develop global trade networks from China’s underserved western provinces into the Middle East, Africa, and Europe.
The AIIB challenges the US-led lending mechanism, the World Bank, by offering alternative lending without conditions. This is especially appealing to corrupt or authoritarian governments that do not meet the standards of the World Bank.
Xi Jinping’s aggressive policies are a signal that China will take a more active role in the world. China has traditionally avoided shouldering international responsibilities, taken the wait-and-see approach, and claims to uphold a policy of noninterference. However, China is clearly testing the boundaries of what type of role it wants to take on by expanding strategic humanitarian aid and development missions into Africa, contesting the South China Sea, and developing the AIIB across the globe.
Finally, there will inevitably be future clashes between China and other countries who have stakes in both the AIIB and the South China Sea, like Vietnam, Taiwan, the Philippines, Malyasia, and Brunei. This is because the AIIB funds the One Belt One Road initiative and China’s land reclamation campaigns and military build-up in the South China Sea are designed to protect those sea-based trading routes. China however, has now established even more leverage to dissuade the aforementioned countries from staking claims in the South China Sea.