Chinese President Xi Jinping, fourth from right, meets with the guests at the Asian Infrastructure Investment Bank launch on Oct. 24, 2014, in Beijing. (Takaki Yajima/Reuters)

This week, Germany, France, Italy and Britain all decided to join the recently created China-led Asian Infrastructure Investment Bank (AIIB) despite the express opposition of the United States. The United States worries that the new bank will apply looser standards with regards to the environment, transparency, and governance. Perhaps more to the point, the United States is concerned that the new institution will undermine the World Bank; an institution in which the United States and its allies retain a dominant say.

The AIIB together with the new BRICS bank are heralded as evidence of China’s growing geopolitical clout. Fareed Zakaria rang the alarm bells last fall:

[..] if China uses its growing clout to keep asking countries to choose between the existing arrangements or new ones, it might create conditions for a new kind of Cold War in Asia. It will certainly help to undermine and destroy the current international order, which has been a platform on which peace and prosperity have flourished in Asia for seven decades.

There is little doubt that the creation of these new institutions reflects China’s growing economic might as well as China’s desire to use this economic power for political purposes.  There is plenty of evidence that Western governments and Japan have used the multilateral development banks that they control in exchange for favors in the international arena (such as votes in the United Nations) or to influence the domestic politics of poorer countries. Banks in which China exerts more influence will surely behave in similar ways. This will have some consequences. But it is too soon to think that these initiatives will have such drastic effects that they will “undermine and destroy the current world order.”

To start with, so far the total amount of lending by these banks is $0. There is a long list of international institutions that were created with much fanfare only to be relegated to the footnotes of world history (if that). UPenn political scientist Julia Gray estimates that of formally existing international economic organizations 10 percent are essentially dead and 38 percent are “comatose.” I suspect that the AIIB will not fall into either category in the near future (I am less confident about the BRICS bank). But the jury is still out on just how important a player it will be. AIIB lending may replace some World Bank lending but it will also replace some Chinese bilateral aid and some Asian Development Bank lending. It is not really clear at all why modest shifts in the distribution of where aid comes from will have seismic geopolitical consequences.

Second, and more importantly, China has had a much harder time reforming or replacing global institutions in policy areas other than development lending. Stanford political scientist Philip Lipscy argues in a recent article in the American Journal of Political Science that the extent to which the world’s institutions adjust to changes in the global distribution of power depends strongly on whether member states have attractive outside options.

If you are unhappy with the World Bank, and you have resources, it is rather straightforward to just start giving aid bilaterally or to create a multilateral bank with like-minded countries. All you need is money (countries that are willing to accept the money are easy to find). That’s why we already have two dozen multilateral development banks.

If you are unhappy with the International Monetary Fund (IMF) it is much harder to create an alternative. In the past few decades, the IMF has mostly been concerned with the maintenance of global financial stability. Lipscy argues that there are considerable benefits associated with having a universal organization in this area. Given financial interdependence global surveillance and universal coverage are far superior to a patchwork of regional arrangements. You also often need very large sums of money quickly in times of crisis. Other than money, a lender of last resort needs to be credible and needs to provide political cover for painful measures, tasks much easier accomplished by a universal organization than a regional one.

This is why most regional alternatives to the IMF, such as the proposed Asian Monetary Fund, have failed. Or, why in times of financial crises countries, such as South Korea and Indonesia, turned to the United States and the global institutions for help rather than the the Chiang Mai swap agreement. Lipscy shows that as a result of the paucity of alternative options IMF voting rules have adjusted much less rapidly to changes in the global distribution of power than have World Bank voting rules.

Similarly, China is not trying to undermine the key global security institutions and continues to rely very heavily on the key trade institution: the World Trade Organization (WTO). It is true that many states, including China, are very active in signing bilateral and regional trade agreements that sometimes challenge aspects of the WTO regime. Yet, this patchwork of agreements does not form a substitute for the global market access that the WTO provides.

Development lending is a particularly difficult area for the United States to stop China from changing the globe’s institutional infrastructure. If China has the money, it can create institutional arrangements to lend it to others. Most states accept that this is going to happen anyway. They thus decide that they may as well join to benefit or to influence proceedings from the sidelines. But that doesn’t mean that this is the first step toward destroying the international order all together. China lacks the incentives and/or the ability to fundamentally undermine the world’s most important institutions.