Asian Infrastructure Investment Bank
AIIB is a China-led multilateral development bank launched in 2016 with $100 billion in authorized capital. It was created partly as an alternative to US-dominated Bretton Woods institutions and has grown to 111 members including major European economies.
AIIB operates like a hermit crab—it inhabits the protective shell of MDB legitimacy (AAA rating, preferred creditor status) without having developed its own hard exoskeleton, co-financing 80% of early projects with ADB or World Bank to borrow their due diligence.
AIIB's president can unilaterally approve any project unless an executive director files a formal objection—the reverse of every other MDB where boards must affirmatively vote yes. This 'approve by default' model enabled 7-month average approval time versus World Bank's 27 months. However, over 80% of projects in the first two years were co-financed with ADB or World Bank, meaning AIIB essentially outsourced due diligence while claiming credit for speed.
Key Facts
Power Dynamics
Board of Governors (111 members) sets policy, non-resident Board meets quarterly, president has operational authority. Decisions requiring 75% supermajority: constitutional amendments, capital increases, membership changes.
China holds 26.6% of voting rights = de facto veto over all major decisions (which require 75% supermajority). This is deliberately just below the 30% threshold that would signal outright control, but functionally identical—China can block anything, and only China can block anything.
- China alone (26.6% blocks 75% threshold)
- United States is NOT a member (deliberate Obama-era decision)
- Credit rating agencies (AAA depends on preferred creditor status)
- Codependence with ADB/World Bank: 53% of projects co-financed
- China's Belt & Road Initiative: Project geography aligns suspiciously well with BRI corridors
- Non-resident board creates information asymmetry favoring Beijing-based management
Revenue Structure
Asian Infrastructure Investment Bank Revenue Sources
- Paid-in capital 35% →
- Bond issuance 60% →
- Loan income 5% ↑
$100B authorized, members pay ~20% over time
AAA-rated, zero Basel risk weight
Still ramping up, only founded 2016
Overexposure to distressed borrowers: weighted average borrower rating degraded from Ba3 (2021) to B1 (2022) due to Sri Lanka and Pakistan exposure. Both countries defaulted or near-defaulted in 2022-23.
Starting capital: $100B vs ADB's $160B vs World Bank's $223B. AIIB is 2/3 of ADB, half of World Bank in authorized capital.
Decision Dynamics at Asian Infrastructure Investment Bank
COVID-19 Crisis Recovery Facility launched within 6 weeks of pandemic declaration. Co-financed projects approved in 3-4 months using partner's pre-prepared due diligence.
Standalone projects without co-financing partners stall 12-18 months in 'client preparation' due to AIIB's limited country presence and 600-person staff.
Staff capacity: 600 total vs World Bank's 12,000, ADB's 3,500. No country offices means all project development requires flying missions from Beijing.
Failure Modes of Asian Infrastructure Investment Bank
- June 2023: Global Communications Director Bob Pickard resigned claiming 'CCP domination' and 'toxic culture,' fled China citing personal safety concerns.
- 2022 Sri Lanka near-miss: Sri Lanka defaulted on commercial debt; AIIB's preferred creditor status held but weighted average borrower rating fell from Ba3 to B1.
- Pakistan near-default 2022-23: Major AIIB exposure as Pakistan teetered on brink.
- China veto paradox: 26.6% enables blocking without overtly dominating
- Co-financing trap: Over-reliance on ADB/World Bank undermines raison d'être
- Non-resident board accountability gap: Directors meet quarterly, unpaid, from home countries
Major borrower default coincides with China using veto to protect geopolitical interests. Credit rating downgrade as preferred creditor status questioned, Western shareholders demand reforms, China refuses, AIIB fractures into 'China development bank with international fig leaf.'
Biological Parallel
AIIB inhabits the protective shell of MDB legitimacy—AAA credit rating, preferred creditor status, multilateral governance norms—built by 80 years of World Bank/ADB reputation, without having developed its own hard exoskeleton. Like a hermit crab, it grew rapidly by co-financing 80% of early projects, effectively borrowing others' shells (due diligence, safeguards). The soft-bodied organism inside (600 staff, no country offices) is vulnerable when forced into standalone operations. China's 26.6% veto is the crab's large crusher claw—asymmetric defense that can block threats but cannot catch prey alone.
Key Agencies
Project origination and supervision
Credit and operational risk assessment
Institutional strategy and resource allocation