Informal governance and China’s influence in the Asian Infrastructure Investment Bank

Abstract

This article develops a theoretical framework on the conditions and mechanisms of informal governance in international organizations by a major power. It argues that the condition for informal governance is that the major power has favourable outside options, i.e. the alternatives that bring about considerable gains in the absence of cooperation, while other countries do not. When conditions are not in place, the major power is unable to exert informal influence. Based on the theoretical lens of the conditions and mechanisms of informal governance by major powers in international organizations, this article assesses China’s influence in the Asian Infrastructure Investment Bank (AIIB). It finds that China’s influence in the AIIB does not remain static. In the early years after the establishment of the AIIB, China was not in a position to exercise informal governance and did not demonstrate influence beyond the confines of the AIIB’s formal rules. As the situation of outside options for European countries worsening and as China’s outside options improving, China became well placed to implement informal governance. Under such circumstances, China’s preferences are well reflected in the AIIB’s decision-making.

Keywords:

• Asian Infrastructure Investment Bank (AIIB)
• China
• informal governance
• international organizations
• outside options

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Notes on contributors

Hongsong Liu

Hongsong Liu is a professor in School of International and Public Affairs at Shanghai Jiao Tong University. His research is primarily focused on international organizations, global governance as well as Chinese foreign policy. His publications have appeared or will appear in in international peer-reviewed journals such as Pacific Review, Mediterranean Politics, Asian Perspective, Policing: A Journal of Policy and Practice, International Journal of Conflict and Violence, Comparative European Politics, Pacific Focus, Revista Brasileira de Política Internacional, Korean Journal of Defense Analysis and India Quarterly. He is the author of China’s New Role in Global Governance: Shaping the Rules (Routledge, forthcoming).

Tong Wu

Tong Wu is a PhD candidate in School of International and Public Affairs at Shanghai Jiao Tong University. Her research interests include global governance and Chinese foreign policy.