In 2013, China launched an initiative to establish a new multilateral development institution, the Asian Infrastructure Investment Bank. The AIIB, Beijing argued, could help fill a multitrillion-dollar gap in financing for railways, roads, power plants, and other infrastructure in the world’s fastest-growing region. But the United States treated China’s proposal as a challenge to the existing regional and global development institutions that it had helped establish in the decades after World War II. Washington not only refused to join the bank itself but also launched a quiet diplomatic campaign to dissuade its allies from doing so either.
Washington contended that the new institution could undermine the existing system by offering investment without imposing the anticorruption and environmental standards used by existing groups. And some in Washington also implied that Beijing had a deeper purpose: to construct an alternative set of China-oriented international institutions free from both U.S. dominance and the liberal values espoused by the United States and other industrialized democracies. Many believed that Washington’s stated uneasiness about standards actually masked a geopolitical concern that the bank was the first step in an effort by Beijing to construct a Sinocentric world order.
The U.S. attempt to halt or marginalize the AIIB failed miserably. The bank was launched in 2015, and by the middle of the next year, a host of close U.S. allies, including Australia, Canada, France, Germany, Israel, South Korea, and the United Kingdom (although with the notable exception of Japan), had defied Washington and signed up.
How could Washington have misread the intentions of so many of its allies and ended up isolating itself rather than Beijing? Could it have handled China’s initiative differently? And what does Washington’s failure say about the United States’ chances of further integrating Beijing into the existing order?
The answers have little to do with the details of the new bank or Asian infrastructure spending. Instead, they require a balanced understanding of the role China has begun to