China’s Finance Minister Lan Foan urged the Asian Infrastructure Investment Bank (AIIB) to ramp up funding for cross-border connectivity projects in developing nations, spotlighting a $900 billion annual infrastructure gap as global aid dwindles. Speaking at the AIIB’s annual meeting in Beijing on June 25, 2025, Lan emphasized support for emerging markets like Southeast Asia, now China’s top export hub. With the US slashing development spending, China, holding 26% of AIIB votes, sees an opportunity to lead. Yet, with 130 countries facing debt crises, can the AIIB’s $60 billion loan portfolio bridge the gap, or will high debt and geopolitical tensions limit its reach?

The Call for AIIB Expansion

Lan Foan pressed the AIIB, a 110-member bank led by China, to increase loans for projects like railways and ports, citing a 9–17% drop in global aid in 2025. The AIIB, with $8.4 billion in 2024 financing, has disbursed $60 billion since 2016, including $5.1 billion for 14 Indonesian projects. Lan’s push aligns with China’s Belt and Road Initiative, aiming to connect Asia, Africa, and Europe. He also called for private sector involvement to mobilize $100 billion yearly, as public funds falter. Southeast Asia, overtaking the EU as China’s $2 trillion export market in 2024, is a priority, though its consumption power lags behind Western markets.

Why Global Aid Is Drying Up?

Global development aid is shrinking, with the OECD projecting a 13–25% cut to least developed countries and 16–28% to sub-Saharan Africa in 2025. The US, once the top donor at $66 billion in 2023, cut 80% of USAID programs in March 2025, saving $10 billion but costing 100000 lives, per UN estimates. Europe’s aid, including from Germany and France, dropped 9% in 2024. Meanwhile, 3.3 billion people live in countries spending more on debt than health or education. China’s push leverages the AIIB’s AAA rating to fill this $4 trillion SDG funding gap, though its $100 billion capital is half the World Bank’s.

Read more: Singapore’s Draft Guidance Boosts Voluntary Carbon Credits

China’s Strategic Play

China’s 26.5% AIIB voting share gives it sway, unlike its 6% in the IMF. With trade wars costing its $19 trillion economy $200 billion annually, China pivots to Southeast Asia, where Vietnam and Indonesia grow at 6–8%. Premier Li Qiang, at the AIIB’s 10th meeting, tied the bank to the Belt and Road Initiative, which has built $1 trillion in infrastructure since 2013 but saddled countries like Sri Lanka with $7 billion in debt. Critics see this as China’s bid to counter US influence, especially after Trump’s withdrawal from global institutions, risking a 20% trade volume drop for AIIB members.

Challenges to Scaling Funding

The AIIB faces hurdles in boosting loans. Developing nations, with 60% of global debt, struggle to borrow more, as 108 countries face economic shocks. The bank’s $8.4 billion annual lending is a fraction of the $900 billion Asian infrastructure gap. Private firms, wary of $50 billion in risky projects, contribute only 10% of AIIB funds. Environmental concerns linger, as 30% of Belt and Road projects drive emissions, clashing with the AIIB’s green financing goals. Without US support, and with EU hesitancy, the bank may struggle to raise $200 billion by 2030, covering just 5% of the SDG gap.

What’s Next for AIIB’s Role?

Under incoming president Zou Jiayi, starting January 2026, the AIIB aims to expand to $100 billion in annual lending by 2030, targeting 50% green projects. A $2.89 billion deal with Brazil’s BNDES and a $200 million Turkish climate loan signal broader reach. China’s push could unlock $500 billion in Southeast Asian growth, but 70% of AIIB projects must align with local needs to avoid debt traps. Against 35.6 billion tonnes of global CO2e emissions, the AIIB’s green loans could cut 0.2% of emissions by 2030.

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