Contesting the liberal script? The AIIB and the World Bank in development finance

Abstract Does the Asian Infrastructure Investment Bank (AIIB), formed through China's initiative, contest the liberal script on development finance led by existing international financial institutions? This article engages the important debate on the shape and trajectory of the liberal international order where China is increasingly playing a prominent role. The research problem focuses on how the AIIB conducts development finance and whether its activities are aligned with those of the United States-led World Bank. The analysis uses quantitative text analysis to examine project documents from the AIIB and World Bank, leveraging the rich textual dimension of their funding activities. The article advances the argument that the AIIB's funding priorities align with those of the World Bank, due to overlapping mandates, an extensive degree of co-financing in AIIB projects and China's own motivations for leading the formation of the AIIB. The analysis finds that the AIIB does not contest and is largely aligned with the liberal script of development finance in its funded projects. Project documents indicate overlap in how the AIIB and World Bank conduct lending and prioritize development objectives, including the application of equivalent environmental and social frameworks. The findings also indicate the emergence of a division of labour between the AIIB and World Bank. AIIB funding favours infrastructure projects that enhance connectivity in the transport and energy sectors, while World Bank funding emphasizes education, social policy and other areas related to human development. The AIIB may well be expanding the ‘liberal script’ of development finance—one that is tailored to the infrastructural needs of the Asian region.