AIIB is about unlocking wealth via a new Asia-Europe link

AMID the deluge of often hostile media coverage of the Asian Infrastructure Investment Bank (AIIB) in recent weeks, focusing on the alleged problems of governance and shareholding at the new institution, few commentators have had much to say about what the bank will actually do.

It seems to have been widely assumed that the AIIB will copy and compete with the Asian Development Bank (ADB) and the World Bank and that it will simply poach some of the most "bankable" infrastructure projects prepared by such institutions, using its deep pockets to finance them. The website of the AIIB's interim secretariat does rather give this impression, saying that it will "focus on development of infrastructure and other productive sectors in Asia: energy, power, transportation and telecommunications, rural infrastructure, agriculture development, water, sanitation, environmental protection, urban development and logistics".

But there is reason to believe that the AIIB's vision and mission will transcend such prosaic descriptions. To understand what the institution is really all about, it is necessary to revisit remarks made late last year by Chinese President Xi Jinping when he visited Indonesia and first announced the launch of the AIIB and of the Silk Road Fund. The Silk Road Fund, a US$40 billion venture founded by China to secure private-sector participation in infrastructure, is about linking Asia with Europe via Central Asia, and many of the AIIB's public-sector projects are likely to be devoted to this end too.