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Next month, the Asian Infrastructure Investment Bank (AIIB) will hold its first general meeting, the aim being to launch operations before the end of the year. And now China has doubled down on its effort to secure a controlling role in the new bank by increasing its initial investment from a planned $50 billion to $100 billion.

The additional Chinese investment certainly will strengthen AIIB’s credit rating. But it may also have been necessary for China to maintain control of the bank, because the number of countries agreeing to participate in AIIB’s launch has turned out to be far higher than China’s leaders expected.

Indeed, even doubling its initial investment will not give China a majority stake in the world’s newest multilateral lender. Still, it appears that China’s share, at around 30%, will be the largest of the 57 participating countries, which could effectively give it a near-veto over AIIB decisions.

That underscores the main concern among development economists and observers of international relations as AIIB’s birth approaches. Will it turn out to be a bank of China, by China, and for China, or will it pursue a multilateral agenda in the manner of the World Bank and regional development banks such as the Asian Development Bank (ADB) and Africa Development Bank (AfDB)?

China’s explanation for its push to establish AIIB is that developing countries have inadequate access to capital for infrastructure. Perhaps more important, they have an insufficient voice in the World Bank, the International Monetary Fund (IMF), and ADB. But securing a voice is probably not all China wants.

Recently, China’s military has adopted a steamroller-like approach to building military facilities in the Spratly Islands; indeed, it has created islands were once there was nothing but a coral reef. It has also intensified its effort to make the renminbi an international reserve currency, pushing for its inclusion in the basket of currencies that makes up IMF’s unit of account, the special drawing right. Some Chinese even think that world standard time should no longer be measured at Greenwich, England, but in Beijing.

It is useful in this regard to compare AIIB with ADB. Founded in 1966, ADB has been led ever since by Japan and the US, owing to their combined total of 15.7% investment in the bank’s capital. Nonetheless, China is the bank’s largest borrower, accounting for more than a quarter of its loan portfolio (China and India alone account for half the total, whereas Japanese companies win only around 1% of bids for ADB financing).

Perhaps China would account for an even larger share of ADB financing if it had a larger stake. But, according to Yasushi Ando, one of Japan’s best-known private-equity figures, giving a major borrower an increased say in how a bank functions would be a clear conflict of interest. He also points out that in AIIB, where China is expected to have overwhelming voting power, “Asian countries, especially China and India, will procure funding for their own infrastructure".

For China, the existence of these two Asia-focused development banks provides the best of all possible financial worlds: low-cost investment funding from ADB, which is backed by the developed countries’ high creditworthiness, and the opportunity to use AIIB’s investment decisions to draw its neighbours closer in geopolitical terms. Ando and officials at Japan’s finance ministry are livid that China appears to be achieving its aims with little or no scrutiny.

Japan, of course, can offer a high level of technology in most investment opportunities, but the price is often prohibitive. So there is a high probability that Chinese companies will have a real advantage in bids for AIIB projects. That is why many observers view AIIB as a way to sustain Chinese construction companies with nowhere else to turn as China’s economy slows.

Japan’s government has not decided whether to participate in AIIB. Prime Minister Shinzo Abe has put off becoming a founding member, saying that “there is no rush" because governance details—such as investment conditions, voting, and veto rights—have not yet been confirmed. In a public-opinion poll conducted by the newspaper Yomiuri Shimbun, 73% of respondents agreed that the government’s decision was “appropriate".

At this month’s seventh Pacific Islands Leaders Meeting, Abe pledged a contribution of ¥100 billion ($812 million) as infrastructure support for Asian countries. Being offered financing from all directions may not be a bad proposition for impoverished developing countries in need of infrastructure. But China’s approach to creating an infrastructure bank that will knit Asia into a Sino-centric economic order could prove to be a nightmare. Development banks exist to ensure reliability of finance, transparency in decision-making, and long-term environmental considerations. AIIB has not yet committed itself to fulfilling any of these criteria. ©2015/PROJECT SYNDICATE

Yuriko Koike, Japan’s former defence minister and national security adviser, was chairwoman of Japan’s Liberal Democratic Party’s general council and currently is a member of the National Diet.

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