The Power of Building Parallel Institutions: How China’s New Strategy Advances Global Governance Reform

Abstract

Abstract:China has been a proponent of global governance reform, but its reform strategy does not remain constant. In the wake of the Global Financial Crisis, its political opportunities were depleting when dominant states, especially the United States, were recovering from the crisis. As a result, the promised 2010 International Monetary Fund (IMF) reform package failed to materialize under Beijing’s old reform strategy of making overt proposals. We argue that Beijing’s goal of the IMF reform was achieved through the creation of the Asian Infrastructure Investment Bank. To advance reform, the newly-created institution needs to have sufficient governance capacity to ensure its effectiveness, produce policy outcomes close to Beijing’s preferences, and operate in an issue area competing for resources with the established institution, the IMF, but not necessarily in the same issue area as is required by the literature of contested multilateralism.