Dissociation via Alternative Institutions: The Establishment of the Asian Infrastructure Investment Bank and US-China Conflict

Abstract

How does the nature of a dissociation conflict affect its management by parties on opposite sides and, consequently, the interstate relations between the parties? In this paper, I seek to address this question through a case study of the establishment of the Asian Infrastructure Investment Bank (AIIB), understood as dissociation by creating alternative institutions, and its impact on the relations between China - the initiator and leading country of the new bank - and the US - the main stakeholder of the established global financial architecture. Based on my analysis of the interaction between the two countries during the AIIB's founding process (2013-2016), I argue that US-China relations saw moderately increased tensions due to the fact that the North American country had been overall more concerned with the ideational challenges posed by the AIIB than the material ones. I further postulate that the structural rivalry between the two countries has contributed significantly to the US perception of the AIIB representing an ideational challenge, thereby fostering the former's opposition of China's initiative. However, this dissociation conflict did not directly contribute to the deterioration of US-China relations under the Trump administration.