China: The Asian Infrastructure Investment Bank Opens: Early Indications For The Construction Industry

Last Updated: 4 February 2016
Article by Glen Warwick and Eugene Tan

On 16 January 2016, the Asian Infrastructure Investment Bank (AIIB) was declared open for business at its inaugural meeting in Beijing. The China-led AIIB aims to support infrastructure construction in the Asian region by providing finance and professional advice to governments and the private sector. With the promise to facilitate sustainable economic growth, improve infrastructure networks, and create wealth in Asia, we have analysed what the introduction of the AIIB may mean for the construction industry and the region.

What is the AIIB?

The AIIB is a multilateral development bank (MDB) based in Beijing.

MDBs are international organisations created by multilateral treaties. In essence they are international financial institutions that facilitate national development. Each MDB is a separate entity, has its own focus and its own rules and procedures.

The AIIB will focus on the development of infrastructure and other productive sectors in Asia, including energy and power, transportation and telecommunications, rural infrastructure and agriculture development, water supply and sanitation, environmental protection, urban development and logistics. It is not the only MDB with such an aim. For example, in 2011, the Asian Development Bank created the ASEAN Infrastructure Fund, which to-date has made USD 485.3 billion in equity contributions.

In 2014, in recognition of the significant overlap that exists between infrastructure-focused MDBs, the G20-backed Global Infrastructure Hub was established. The Global Infrastructure Hub seeks to coordinate and consolidate the efforts of MDBs dedicated to infrastructure investment, and that will now include the AIIB. Clyde & Co's Global Projects & Construction practice has been following the development of the Global Infrastructure Hub closely.

The case for the AIIB

The AIIB was proposed by the government of China in 2013 due to the infrastructure funding gap in the Asia. In 2010, the Asian Development Bank Institute estimated that the Asian region required USD 8 trillion to be invested in infrastructure over 10 years for the region to continue economic development. To that end the bank's Articles of Agreement disclose that it has two primary purposes:

  1. fostering sustainable economic development, creating wealth and improving infrastructure connectivity in Asia by investing in infrastructure and other productive sectors; and
  2. promoting regional cooperation and partnerships in addressing development challenges by working in close collaboration with other multilateral and bilateral development institutions.

From a global perspective, the OECD has estimated that the global infrastructure gap is set to reach USD 70 trillion by 2030. The AIIB aims to reduce Asia's share of this gap by creating a nexus between the strong capital markets in the region and the significant requirement for infrastructure development.

The structure of the AIIB

Of the 57 founding members of the AIIB, China is the top contributor, with a 29.78% stake in the AIIB's share capital. It invested a further USD 50 million at the opening ceremony of the bank.  Australia contributed USD 720 million for a 3.69% stake, making it the sixth largest contributor, behind India, Russia, Germany and South Korea. Pending its own parliamentary endorsement, Singapore will become a member of the AIIB by contributing USD 250 million, or 0.25%, of AIIB's authorised capital of USD 100 billion.

Notably, the United States and Japan – the first and third largest economies in the world – have declined to join the bank, citing concerns over potential operational practices and policies, and the competition it could provide to existing MDBs. However, China insists the AIIB will address regional development challenges by working collaboratively with other MDBs and that it will promote regional cooperation, despite concerns that it will compete with, rather than complement the work of the World Bank and the Asian Development Bank.

The function of the AIIB

The AIIB intends to facilitate sustainable economic growth, improve infrastructure networks across Asia and create wealth by promoting and encouraging public and private investment in infrastructure and other productive sectors such as energy and power, transportation and logistics.

It will focus primarily on financing specific projects or investment programs, equity investments and guarantees. It is mandated to make, co-finance or participate in direct loans, as well as:

  • invest in the equity capital of an enterprise;
  • guarantee loans for economic development;
  • deploy donor funds in accordance with the agreements determining their use; and
  • provide other types of financing as may be determined by the Board.

In addition to the capital provided by its members, the AIIB will benefit the regional debt capital market by raising funds primarily through the issuance of bonds in financial markets and through inter-bank market transactions.

As well as financial assistance, the AIIB may also provide technical advice and assistance.

What does the AIIB mean for the construction industry and the region?

Only time will tell whether the AIIB will live up to its vision of taking Asia's infrastructure into the 21st century, whilst all the while promoting regional cooperation and partnerships. On one view, the bank is merely seeking to replicate the way in which other MDBs currently operate in the region, albeit with a strong Chinese influence. On the other hand, given the strong influence of China on the AIIB, it is likely to prove to be the most effective vehicle to mobilise Chinese investment in the developing states of Asia

Going forward

The bank's Board of Governors and Directors held their first meeting on 16 - 18 January 2016 and approved key policies, such as the 2016 business plan and budget. Mr Jin Liqun, a Chinese banker and politician, was also elected as President of the bank for a five year term. The first projects are expected to be submitted for approval in the second quarter of 2016 and the AIIB is aiming to lend USD 10-15 billion a year for the first five or six years of operation.

Recent reports suggest that senior management positions within the AIIB will be occupied by nationals from a variety of countries. The five vice-president positions are expected to be filled by nationals from Germany, Britain, India, South Korea and Indonesia, with the German vice-president anticipated to hold the position of chief operating officer.

The AIIB's progress will continue to be of interest to all regional players in the construction industry. Clyde & Co's Global Projects and Construction team has extensive experience advising on infrastructure and other projects in Asia and will provide updates as they arise. Please contact us if you require any further information in relation to this article.

The Asian Infrastructure Investment Bank Opens: Early Indications For The Construction Industry

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Eugene Tan
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.