Page 64 - 2017 White Paper
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7 White Paper on the Business Environment in China

can’t rule out the new government in [the] US endorsing arm of OBOR. The AIIB will begin with authorized capital
the AIIB or indicating interest to join.” (Wu 2016). of $50 billion, eventually to be raised to $100 billion.
The projected investment for OBOR will be $1.4 trillion,
The OBOR initiative has faced a more challenging about 12 times larger than the Marshall Plan, which was
path during the past year. TIME magazine reports that about $120 billion in today’s value. In addition to the
President Xi Jinping embarked on an extensive OBOR economic benefits, the AIIB and OBOR will significantly
charm offensive, travelling over Central Asia and Eastern facilitate the movement of goods, services, and people
Europe and noted Xinhua quoting the president as across national borders (Zhu 2015).
saying: “The progress and results of the Belt and Road
Initiative have been greater than expected.” Major Over the past two decades, China has contributed
challenges, TIME points out, include the “unbalanced” substantially to infrastructure or “hardware” of many
economic and political development of countries along developing nations, but it remains short of “software” or
the New Silk Road, festering regional conflicts and soft power. As Zhiqun Zhu, a professor of political science
territorial disputes and a perceived lack of awareness and international relations in Bucknell University, states
overseas about the potential economic benefits that in The Diplomat, Beijing hopes that its new initiatives
OBOR could bring to countries along the route (Campbell with a non-coercive, non-military approach will help
and Yang 2016). enhance its international image as a responsible global
power. The AIIB and OBOR have become an integral part
Asian Infrastructure Investment Bank: of China’s new diplomacy, reflecting its growing interests
Background and clout. They are also important steps to realizing
President Xi Jinping’s “Chinese dream” (Zhu 2015).
The China-initiated Asian Infrastructure Investment
Bank (AIIB), signed by 51 Prospective Founding Jin Liqun, president-designate of the Asian
Members (PFMs) as of September 2015, is expected to Infrastructure Investment Bank, that the new bank
be operational by the end of this year. China has been wouldn’t select projects to favor Chinese companies
generally cooperative with and supportive of the Bretton and wouldn’t act as “China’s bank”. When asked whether
Woods institutions. At the same time, it is frustrated the bank might have an institutional bias toward
that existing multilateral institutions limit its global Chinese companies, Mr. Jin replied: “China is the major
ambitions. The slow pace of reforms at the Western- shareholder. But this does not mean that this is China’s
dominated IMF and World Bank prevents China and bank. The bank is not owned, managed or operated
other emerging economies from playing a greater role by China. The bank practices universal procurement
in international political economy. The AIIB aims help to and universal recruitment.” and wouldn’t favor Chinese
rectify the situation, while boosting China’s status as a companies over those from, say, the U.S., he added (Watts
global power (Zhu 2015). 2015).

China will be the largest shareholder, with 26.06 Mr. Jin said the AIIB will invest in core infrastructure
percent of the votes, giving it an effective veto over projects such as railroads and power, but retain
major decisions, followed by India with 7.5 percent and the option to broaden its portfolio into associated
Russia with 5.92 percent; however, it is expected that investments such as environmental investments. “AIIB
all founding members will have the right to create the will be a good global citizen,” he said, adding that
governance and operational rules of the bank. The bank the bank will operate with a focus on “transparency,
came together in less than two years amid strong global openness, independence and accountability” (Watts
interest. It was seen as a propaganda victory for China 2015).
when U.S. allies such as the U.K. and Germany joined (The
Asia Foundation 2015). Some analysts suggest that the AIIB and OBOR
are direct responses to the Obama administration’s
China has also proposed the “Silk Road Economic rebalance to Asia; others consider them as examples
Belt” and “21st Century Maritime Silk Road”, or “One of a more confident China attempting to reshape the
Belt, One Road” (OBOR), an even broader and more global order. These may be important factors, but
ambitious initiative. The AIIB will serve as the financing there is a much more significant domestic impetus. For
example, many of the infrastructure projects proposed

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