Leadership Transition and Global Governance: Role Conception, Institutional Balancing, and the AIIB

Abstract

The establishment of the Asian Infrastructure Investment Bank (AIIB) signified China’s ‘charm offensive’ towards multilateral institutions and existing global financial governance. If the rise of China is inevitable, what will the future world look like, and what should other countries be prepared for? Borrowing insights from institutional balancing theory and role theory in foreign policy analysis, this project introduces a ‘leadership transition’ framework to explain policy dynamics in global governance, with the AIIB as a case study. It suggests that China, the United States, and other countries have employed different types of institutional balancing strategies, i.e. inclusive institutional balancing, exclusive institutional balancing, and inter-institutional balancing, to compete for influence and interest in the process of establishing the AIIB. A state’s role identity as a ‘leader’, a ‘challenger’, or a ‘follower’ will shape its policy choices in global governance regarding different institutional balancing strategies in the process of ‘leadership transition.’ Institutional balancing is a new type of balancing among states in the future transformation of global governance. China’s institutional rise in global governance, therefore, might be more peaceful than widely predicted.