THE AIIB AND CHINA’S SOFT REGIONALISM “decisions involving structure, membership, capital increases, and other significant issues require a super majority of not less than three-fourths of the total voting power of the members,” and 3) the dual board system is retained, with the board of directors functioning on a non-permanent resident basis (Chin 13-15). Although the institutional changes seem minor, Beijing has actually made substantial concessions to promote a more multilateral framework in its organization. Relating firstly to the veto, although China retains its veto power, it was not without credible effort to involve enough countries so as to do away with the power. In the runup to the signing of the Articles, Beijing reportedly offered spots to both the US and Japan, holding trilateral talks with Japan and South Korea to convince the island nation to join (Chin 13; Ren 437). Although it was unthinkable that the US could join because of Congressional opposition, Beijing had offered “to forgo the veto power and reduce its voting rights to less than one-quarter” if Japan joined, and when Japan refused because of its ties with the US, “the other members supported” Beijing’s veto power “given China’s initial $29.78 billion contribution to the bank’s $100 billion capital base” (Chin 13). Additionally, although the AIIB retains the aforementioned Executive Committee in the form of the upper board of governors, it has changed into a multilateral institution, with the Articles guaranteeing that “each member shall be represented on the Board of Governors and shall appoint one Governor and one Alternate Governor” (Articles 13). Finally, the removal of China’s power over the board of governors makes the nonpermanent member status of the board of directors less threatening to multilateralism, and China has reasonably justified the non-permanent member status by pointing to debates over similar reforms in the IMF and by arguing that the non-permanent status is key to the bank’s mission to be “lean, clean and green” (Chin 15; AIIB). The success of the reform process in creating a more multilateral AIIB structure reifies China’s overarching desire to use the bank to lay claim to soft regionalism. South Korea, for example, initially refused to join the bank, with Finance Minister Choi Kyong Hwan arguing that China’s proposals “seem not to live up to the levels of rationality and fairness practiced in most IFIs” (Lee 106). China’s acquiescence to reform conditions demanded by member states suggests that “the evolution of AIIB may provide a model of how China’s behavior can be shaped by the collective efforts of the international community and how China’s ambitions can be accommodated without overturning the existing international order” (Ren 439). Institutional structures that 1) assure nine of the twelve members of the board of directors are from regional members, 2) limit the shares of non-regional members to one-third, and 3) reserve at least seventyfive percent of votes for Asians additionally underscore China’s commitment to the “regional feel” and notion of “common destiny among Asian countries” (Euroweek 24; Chin 14; Kuik 1). China has also reiterated its commitment to merit-, not nationalitybased, recruitment of the AIIB president, unlike the World Bank, IMF, and ADB, with perpetual American, European, and Japanese heads respectively (Ren 439). When
DUKE EAST ASIA NEXUS / !%