Ten years ago, Washington worried that China would use the Asian Infrastructure Investment Bank (AIIB) as a means of imposing its political will on Asia’s infrastructure. But after a decade in operation, it may be time to reconsider that view.
The AIIB now holds triple-A ratings from the leading international rating agencies. India, which has abstained from Beijing’s Belt and Road Initiative, has genuinely benefited for the bank’s lending. Although the AIIB is not free of geopolitical considerations, it is increasingly hard to view it as a purely Chinese financial weapon.
Having served in Pakistan’s Federal Service for roughly 37 years and held additional charge as managing director of the China-Pakistan Economic Corridor (CPEC) Secretariat from 2020 to 2023, I have observed both the bilateral and multilateral sides of infrastructure financing.
And in my estimation, the US, Japan and their outlier allies should engage with the AIIB and hold it to account for the claims it makes.
Chinese origins, multilateral present
There is no doubt that China pushed for the creation of this bank and is its largest shareholder. But the AIIB is undeniably a multilateral lending institution, so its $100 billion in capital is not all Chinese money. Nor does Beijing solely decide where that lending does and doesn’t go.
To be sure, China has strong influence over the AIIB. It holds 26.4% of the voting power, giving it a blocking minority on decisions that require 75% of the vote. Although the bank’s international character imposes some restraint, China does wield significant power.
That said, it is a treaty-based bank, with lending policies and oversight provided by other shareholders, among them Australia, France, Germany, Italy and South Korea. Cooperation with the World Bank and the Asian Development Bank (ADB) means AIIB-funded projects have established appraisal and procurement processes.
All of this has helped ensure AIIB lending discipline. The bank carries a very high credit rating of AAA/AAA from Moody’s, S&P and Fitch, which all deem it “stable.”
The AIIB has approved US$10.59 billion in financing for 57 projects and has mobilized roughly $4.48 billion in private capital. Around 71% of the regular financing approved is for climate-related projects. This all shows the bank’s scale, focus and financial firepower.
India, identified as the AIIB’s largest country exposure in terms of cumulative project approvals as of February 2025, shows how the bank has transcended geopolitical and geoeconomic competition.
India, it should be noted, is also the AIIB’s second-largest shareholder. While not joining Beijing’s Belt and Road Initiative (BRI), New Delhi is willing to engage with a China-created but decidedly multilateral lender.
This is not to say China has no strategic interest in AIIB’s lending decisions. But it’s portfolio shows that countries with major differences can still work together on a major global funding source.
CPEC lessons
This is all familiar in Pakistan. The CPEC, a multi-billion-dollar BRI venture, has undeniably improved the country’s energy and transport infrastructure.
Yet the lengthy effort to get the Main Line-1 railway moving shows the gap between announcing a BRI lending project and finally agreeing on affordable financing, realistic milestones and credible delivery.
The bilateral project, with China as lender and Pakistan as borrower, has stalled over appraisal, risk-sharing and other issues. Islamabad feels it needs enough oversight of costs, procurement and delivery to ensure the railway project is affordable.
Meanwhile, Tarbela’s Fifth Extension (T5), a hydropower expansion at the Tarbela Dam on the Indus in Khyber Pakhtunkhwa, run by WAPDA, shows both the promise and the limits of multilateral funding.
The AIIB has committed $300 million alongside World Bank financing for the 1,530-megawatt project, whose first unit is due in April 2027, though on-time delivery is still in question.
ML-1, until now solely a BRI project, may yet benefit from the same multilateral approach. Pakistan Finance Minister Muhammad Aurangzeb’s October 14 meeting in Bangkok with AIIB President Zou Jiayi reportedly touched on the ML-1’s Karachi-Rohri section.
Co-financing with the ADB, with other sections funded in parallel, is possible. Their meeting did not result in a loan approval, but it could be the first step toward making a stalled ambition into a more realistic, staged project.
Meanwhile, the AIIB has announced new commitments of $83.5 million to its Project Preparation Special Fund, bringing total contributions and commitments to about $213 million. By September, $110 million had been approved for 45 projects across 13 members.
That is less exciting than another corridor unveiled at a summit, but potentially more useful, since preparation tests whether engineering assumptions, environmental risks, procurement and delivery capacity are realistic.
Accountable investment
Still, the AIIB’s most vulnerable area is ensuring it is held to account.
An assessment around the time of the 2026 annual meeting showed that none of the 45 submissions received by the AIIB’s Project-affected People’s Mechanism were eligible. The assessment also noted issues with individuals and communities affected by co-financed projects.
The board passed a new policy for the mechanism on December 18, 2025. This means that affected people should be able to have their voices heard and be offered credible solutions. Co-financing should not confuse who is responsible for harm to households.
The AIIB cannot fix Pakistan’s fiscal issues, paltry revenue collection and poor public administration. This is Islamabad’s responsibility. While a multilateral loan can improve the financing structure, it cannot be expected to run the country.
The US and Japan are, by choice, not members of the AIIB. But they should both reconsider whether staying outside is in their best interest. Engaging with the AIIB will provide an important avenue to shape standards and ensure oversight.
China is still trying to gain global influence, and the AIIB is not perfect by any means. However, the AIIB has many undeniable strengths, and its track record should be assessed on its merits, not on geopolitical competition.
The US and Japan, as well as their AIIB-outlier allies, should approach this practically. Governments can encourage collaboration between development banks, ensure procurement oversight and push for accessible solutions.
That is not tantamount to agreeing to everything that happens in Beijing. US, Japan and their outlier allies’ participation could help to ensure that all multilateral lenders operate to the same standards.
That is, are global borrowers getting useful assets at an affordable price, and are communities actually benefiting? US, Japan and their allies’ participation would make criticism of AIIB lending more credible and collaboration more productive, while giving borrowers clearer expectations.
Asia needs banks that ensure they get their sums right, share risks appropriately and are accountable to those living alongside and within their financed projects.
The US, Japan and their allies have spent a decade questioning whether the AIIB is a Chinese ploy for global domination. After a decade, they should be questioning whether they should have stayed out in the first place.
Qazi Zaheer Ahmad is a former senior joint secretary to Pakistan’s government. He has worked in the federal service for around 37 years in planning, development, economic policy and foreign affairs. He served as additional charge managing director of the CPEC Secretariat from 2020 to 2023. His analyses have been featured in Asia Times, Petroleum Economist and The Diplomat.
