China to Rearrange World Financial System – German Media

With the establishment of the Asian Infrastructure Investment Bank (AIIB), China has started to reorganize the world’s financial system. Asian countries are no longer solely dependent on the IMF and the World Bank and able to have a major influence on world’s financial markets, DWN reported.

The establishment of the bank is one of the biggest geopolitical successes of China in recent years, the newspaper wrote. It would help the country to counterbalance the IMF and the World Bank, which are dominated by the US.

Due to its rapidly growing economy, China considers itself not sufficiently represented in the world financial system and constantly vows for its reform. The United States in turn sees major risks arising from the creation of the financial institution as it fears losing control over financial markets and has therefore tried to prevent the foundation of the AIIB.

An interesting fact is that the establishment of the bank almost failed due to the doubts of the Chinese political elite who were skeptical about China’s ability to lead a multilateral bank and pointed to the lack of experience of Beijing.  Some politicians also had doubts concerning the financing and the feasibility of the project.

The internal government debates started in spring 2013 and lasted about six months. Only after the inauguration of the new President Xi Jinping did the plan received a new impetus. Xi Jinping viewed the AIIB as an ideal institution to finance China's new infrastructure and export strategy as well as to strengthen the Eurasian states along the former Silk Road.

Nobody could imagine the AIIB would be so successful, or that so many people would be interested in it, a Chinese source told Reuters.

The idea of the bank’s establishment has been met with a great interest worldwide. The Gulf States as well as major European countries announced their support for the project — to Beijing's surprise and contrary to the demands of the United States, DWN wrote.