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Business News/ Opinion / Chinese leverage
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Chinese leverage

With AIIB, China is doing the same thing it accuses the US of doing: using financial power to dominate what are said to be international funding agencies

Photo: ReutersPremium
Photo: Reuters

China has been at the forefront of complaints that emerging markets do not have adequate say in the way global financial institutions such as the International Monetary Fund (IMF) and the World Bank are run. There is truth in such complaints. There is an urgent need for governance reforms in these institutions, which the US has been resisting. One result is that China is trying to set up some new institutions to challenge the Bretton Woods twins.

Now consider this: China will have a 26% voting share in the new Asian Infrastructure Investment Bank (AIIB) launched on Monday. This voting share will give it a dominance that is even greater than what the US has now in the traditional multilateral agencies. For the record, the US has a 16.75% voting share in the IMF.

In effect, China is doing the same thing it accuses the US of doing: using financial power to dominate what are said to be international funding agencies. It is an example of the Chinese pot calling the US kettle black.

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Published: 30 Jun 2015, 12:15 AM IST
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