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New Development Banks as Horizontal International Bypasses: Towards a Parallel Order?

  • Oliver Stuenkel (a1)
Abstract

Over the past years, the Chinese government (along with other rising powers) has engaged in unprecedented international institution-building, leading to the establishment of, among others, the Asian Infrastructure Investment Bank (AIIB) and the BRICS-led New Development Bank (NDB). Providing services similar to existing institutions such as the World Bank, these new institutions profoundly alter the landscape of global governance. The existing literature has mostly debated whether such activism shows that China and others are embracing or confronting today's Western-led order. This discussion fails to capture a more complex reality, and the concept of international institutional bypasses (IIB) may help us gain a better understanding of China's complex institutional entrepreneurship. As will be explained, decisions by China and other countries to simultaneously support reform processes in existing institutions and also create new ones suggests that they seek alternative ways to overcome perceived dysfunctions in the dominant institutions by creating IIBs. Considering the initiatives in these terms allows for a more nuanced picture that transcends the simplistic dichotomy of integration versus rupture.

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Copyright
This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted re-use, distribution, and reproduction in any medium, provided the original work is properly cited.
References
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1 G. John Ikenberry, Liberal Leviathan 343 (2011).

2 G. John Ikenberry, The Illusion of Geopolitics: The Enduring Power of the Liberal Order, 93 Foreign Aff. 80 (May/June 2014).

3 John J. Mearsheimer, China's Unpeaceful Rise, 105 Current Hist. 160 (April 2006).

4 Nikolas K. Gvosdev, World Without the West Watch, Nat'l Int. (Nov. 21, 2007).

5 The World Calls Time on Western Rules, Fin. Times (Aug. 1, 2014).

6 This shows that, at least for now, new institutions are unlikely to fundamentally challenge the logic that undergirds current international development finance. Rather, the new structures are created as a parallel hedge—serving not only China, but also actors like Brazil, India, South Africa, and Russia, which can reduce their dependency on existing structures without openly reducing their support for them. As power is shifting towards emerging powers, these structures are an attempt to institutionalize their growing weight, project their power, and enhance their soft power by assuming greater international responsibility. For the West, the major question is to what extent it wants to become a stakeholder in Chinese-led projects, or whether to undermine the new institutions.

7 The third is analyzed in Medhora's essay in this AJIL Unbound Symposium. See Rohinton P. Medhora, Monetary Unions, Regional Financial Arrangements, and Central Bank Swap Lines: Bypasses to the International Monetary Fund, 111 AJIL Unbound 241 (2017).

8 Cynthia Roberts, Are the BRICS Building a Non-Western Concert of Powers?, Nat'l Int. (July 8, 2015).

This work was completed as part of the International Collaboration for Capitalizing on Cost-Effective and Life-Saving Commodities (i4C) that is funded through the Research Council of Norway's Global Health & Vaccination Programme (GLOBVAC Project #234608).

Funding information has been added since original publication. See 10.1017/aju.2017.78

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AJIL Unbound
  • ISSN: -
  • EISSN: 2398-7723
  • URL: /core/journals/american-journal-of-international-law
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