The AIIB as an ordinary development bank? China and the design of international institutions

Abstract The institutional design of the Asian Infrastructure Investment Bank (AIIB), established by China, follows best practices for multilateral development banks, thereby challenging the widely held assumption that domestic regime types affect institutional outcomes. Through qualitative content analysis and process tracing, this article argues that China’s design choices for the AIIB nevertheless reflect domestic political needs. To enhance the bank’s reputation, China made concessions during negotiations in order to secure membership from various European countries. Yet China preserved flexibility by leaving room for reforms of the AIIB in the longer term. These institutional design outcomes stem from China’s strategic goal of gaining status, which is rooted in its domestic political needs of demonstrating regime legitimacy and achievement. The case of the AIIB suggests that long-term strategic advantages can override short-term institutional concessions, and that authoritarian states may adopt liberal institutional designs in response to demands from democracies when doing so serves broader strategic objectives.