ANNUAL REPORT

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mately, Beijing’s proffering of an alternative framework appears
thus far to have been largely rhetorical and defined by its opposition
to the United States’ approach.
Economic Frameworks
China has also worked to create and promote new economic institutions
in the Asia Pacific, notably the Asian Infrastructure Investment
Bank (AIIB) and the Regional Comprehensive Economic Partnership
(RCEP). Largely led by China, the AIIB is a multilateral
development bank founded in 2015 with 57 member countries.* It
is seen by many as a way for China to exert greater influence in
development finance, prompted, in part, by the delay at the International
Monetary Fund (IMF) of reforms that would have increased
China’s IMF voting power. 126 The bank is based in Beijing,
and China enjoys veto power over major decisions such as the selection
of a president or the increase of the bank’s capital stock. 127
The AIIB was founded to provide funding for infrastructure
projects in Asia on the basis that existing multilateral development
banks were not providing sufficient infrastructure financing to the
region. 128 Based on the bank’s mission, it appears well placed to
work hand-in-glove with China’s ‘‘One Belt, One Road’’ (OBOR)
program, an initiative to build a network of ports and transportation
infrastructure linking China with Europe through Central
Asia, South Asia, and the Middle East (for more on China’s OBOR
initiative, see Chapter 3, Section 1, ‘‘China and South Asia’’). To
date, the AIIB has partnered with the Asia Development Bank and
the European Bank for Reconstruction and Development to fund a
pair of highway projects in Central and South Asia, and has funded
projects for electrification in Bangladesh and upgrading urban infrastructure
in Indonesian slums.† The bank is also considering
funding road construction in Kazakhstan, a hydropower expansion
project in Pakistan, and electrical grid improvements in India. 129
Both Chinese and U.S. scholars have suggested the AIIB could
serve as a mechanism for China to use its excess industrial capacity.
130
On the trade front, China is a key backer of RCEP, a so-called
‘‘mega-FTA’’ that would include a large share of the world’s population
and economic activity within its membership: RCEP countries
would account for more than three billion people and 40 percent
of global trade. 131 Historically, China has pursued FTAs that
are regarded as ‘‘low quality’’—that is, agreements that focus principally
on tariff reduction but omit provisions that might be difficult
for China to enact, such as firm labor protections or open foreign
investment. 132 While still under negotiation, RCEP is anticipated
to be a ‘‘low-quality’’ FTA in comparison to TPP, containing
no conditions that would significantly overhaul China’s market access
policies. 133 China’s push for what is expected to be a regional
FTA sympathetic to China’s existing economic structure forms the
* 57 countries have signed AIIB articles of agreement, but nine have still not ratified them.
Asian Infrastructure Investment Bank, ‘‘Signing and Ratification Status of the AOA of the
AIIB.’’ http://www.aiib.org/html/aboutus/introduction/Membership/?show=0.
† The two highway projects are a road in Tajikistan and a highway in Pakistan linking
Shorkot and Khanewal. Jane Perlez, ‘‘China-Led Development Bank Starts with $509 Million
in Loans for 4 Projects,’’ New York Times, June 25, 2016.
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