The Asian Infrastructure Investment Bank and the Asian Development Bank are widely seen as competitors in shaping a new world order. The former, sponsored by China, has already outstripped the membership of the latter, backed by Japan and the U.S. But what matters is whether these institutions can help provide an effective framework for infrastructure planning and financing -- the key to Asia's growth.
In late March, soon after the annual session of the National People's Congress -- China's legislature -- several Chinese economists visited Japan, one after another. Their goal was to promote a better understanding of Beijing's Belt and Road Initiative. Li Xiangyang of the Chinese Academy of Social Sciences stressed that this plan to forge new land and sea trade links between Asia and Europe through infrastructure development is neither colonialist nor an effort to build another Sinocentric tributary system.
Nevertheless, many find it hard to shake the notion that this initiative -- modeled after the ancient Silk Road and pushed by Chinese President Xi Jinping -- is designed to create a broader Chinese economic sphere.
The AIIB is one of the main tools for supporting the project, and as such, it has been controversial since the very idea of the bank was floated. Some argued that countries should not aid Beijing's efforts to challenge the existing international order, and that the AIIB would dilute the presence of the ADB. Others were more willing to play along, arguing that countries should join the institution to monitor and guide its operations from within, or that governments should participate for the benefit of their own countries' businesses.
The divide was evident even among the Group of Seven advanced economies: Canada and the four European members joined the AIIB, while the U.S. and Japan opted to stay out, at least for the time being.
Against this background, the AIIB is typically discussed in the context of international politics. But the real challenge is, in fact, economic: How can Asia meet its huge infrastructure investment needs?
BEYOND THEIR MEANS The region's infrastructure demand is projected at $26 trillion over the 15 years from 2016, according to an ADB study. That is far more than the ADB and AIIB are capable of covering -- even if they do their utmost to complement each other.
The principle task, then, is to attract more investment from the private sector.
Building the infrastructure Asia needs to fulfill its destiny as a 21st century growth center is, clearly, an international challenge. What kinds of infrastructure would best serve the region as a whole, rather than a specific country or territory? Answering such questions requires a transparent framework that is acceptable to all parties concerned.
In May, the Chinese leadership will host a summit on the Belt and Road Initiative in Beijing, bringing together representatives from relevant countries. But as long as China treats this initiative as a national project, it will be difficult to ensure true international cooperation.
One possible solution would be to launch an international summit on Asian infrastructure investment. This could include G-7 countries, Asian governments and international organizations -- as opposed to one country taking a leadership role in spreading infrastructure across a vast area.
Infrastructure is the essential ingredient for the region's economic ascent. If it becomes a source of political conflict, the people of Asia will be the ones who suffer the most.
This special report on the Asian Development Bank comprises articles that appeared as part of a Nikkei-FT joint special report.