United States potential withdrawal from the World Bank opens door for China-led Asian Infrastructure Investment Bank (AIIB) to take lead, potentially offering new blueprint for global collaboration

The Asian Infrastructure Investment Bank (AIIB), a significant player in the multilateral development banking landscape, has a substantial US presence, making it an opportunity for China to potentially increase its influence if the US reduces its involvement.

Recent developments have caused concerns about the future of US funding for international organizations, with a review of Washington's support ordered. This review has sparked speculation about potential funding reductions or withdrawal, which could create a vacuum for China to take on a more prominent global role.

The AIIB, the second-largest multilateral development bank behind only the World Bank, has been deeply tied to the rules-based order. It has worked in close conjunction with its peers, including the World Bank, which initially ran the AIIB's treasury operations. The bank has also co-financed a high percentage of its projects with other multilateral development banks, particularly in its early years.

In 2023, a deal between the AIIB and the World Bank's International Bank for Reconstruction and Development (IBRD) was struck, with the AIIB issuing up to US$1 billion in guarantees against IBRD sovereign-backed loans. This collaboration serves as an example of the AIIB's willingness to cooperate with other major multilateral organizations and follow international rules and norms of development banking.

The AIIB has been active in funding various projects, such as loans to support wind power plants in Uzbekistan and Kazakhstan, and a solar plant in India. Energy and transportation are the two largest sectors of lending for the AIIB.

Moreover, the AIIB has made mention of synergy with Belt and Road lenders. It now hosts the secretariat of a facility, the Multilateral Cooperation Center for Development Finance, which offers grants and support to developing countries seeking to finance infrastructure in countries where Belt and Road lending takes place.

Jin Liqun, the first president of the AIIB, is a longtime multilateralist with a distinguished career at China's finance ministry and past positions on the boards of the World Bank and the Global Environmental Facility, as well as a vice presidency of the Asian Development Bank.

India, which has a complex relationship with China, is one of the bank's largest borrowers, along with Turkey and Indonesia. However, concerns about the level of Chinese government influence at the AIIB were raised in June 2023, when Canada froze its ties with the bank pending a review of allegations by a Canadian staff member who accused the bank of being dominated by members of China's Communist Party.

Potential future targets for US withdrawal from multilateralism could include the United Nations and its specialized agencies like the World Health Organization (WHO), the Green Climate Fund, and other UN-related climate and development initiatives, as the US has previously cut funding or suspended contributions to these bodies. Additionally, NATO could be indirectly affected due to its reliance on US leadership and support, raising concerns about European defense capabilities.

As of Feb. 6, 2025, the AIIB has 306 approved projects totaling US$59 billion. Despite the concerns raised, no other member nations have expressed similar concerns, and Canada has not yet published any review. An internal review conducted by a group of AIIB executive directors found no evidence to support the allegations.

In conclusion, the AIIB has proven itself as an international body willing to cooperate with other major multilateral organizations and follow international rules and norms of development banking. Its continued growth and expansion could signal a shift in the global financial landscape, particularly if the US reduces its involvement in multilateral development banks.