President Xi Jinping joins with envoys of governments that signed onto the Chinese-led Asian Infrastructure Investment Bank at the Great Hall of the People in Beijing on June 29. [Photo/China Daily]

For years, the G7 nations have pledged substantial governance reforms in international multilateral institutions, such as the International Monetary Fund, the World Bank and the Asian Development Bank. But the promises have been left unfulfilled, not least because these organizations are dominated by American, European and Japanese interests, as reflected by their voting quotas, investment allocations and the nationalities of their leaders.

In this context, the China-proposed Asian Infrastructure Investment Bank represents the needs of emerging economies which have been failed by the international multilateral institutions that were created and remain frozen in the mid-1940s.

In the fall of 2013, Chinese leaders proposed the establishment of the AIIB. In June 2014, they proposed doubling the registered capital of the bank from US$50 billion to US$100 billion, with nearly 30 percent of that coming from Beijing and the rest from the other founding members. Overall, some 75 percent of the AIIB's capital and voting rights are likely to be Asian.

The establishment of the AIIB on June 29 means an urgent response to a massive infrastructure need. Neither the World Bank nor the ADB has the funds to drive infrastructure progress in Asia.

According to the ADB, Asia's economic development needs about US$8 trillion from 2010 to 2020 to ensure the success of the "Asian century." That would allow an additional 3 billion Asians to enjoy living standards that are closer to those in Europe today. In turn, Asia would account for more than half of the global output by 2050.

In the absence of dependable sources of massive infrastructure investments, the "Asian century" will remain a pipedream, however. Hence the need for the AIIB.