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CHINA’s growing global clout can be unsettling for the incumbents who must make room for it. At the same time, China’s recent financial tumult has been unnerving for the investors exposed to it. This combination of vastness and vulnerability has left some people afraid of China and others afraid for it. Both groups have found reason to worry about the Asia Infrastructure Investment Bank (AIIB), which has just held its initial annual meeting in Beijing and approved its first $509m-worth of projects.

The AIIB reflects China’s new eagerness to institutionalise its official lending abroad, which has been generous but contentious. Another example is the sprawling “one-belt, one-road” initiative, which aims to revivify trade routes across and around the Eurasian landmass. Harking back nostalgically to the Silk Road, it envisages a web of bilateral agreements between China and the beneficiaries of its largesse. The AIIB is more moder n and multilateral in character. It is billed as China’s “21st-century” answer to lenders like the World Bank (always led by Americans) and the Asian Development Bank (dominated by Japan).

To its critics, the AIIB is early evidence of China’s determination to work around existing institutions rather than through them. Where some see aggression, others see hubris. The AIIB was conceived when China’s foreign-exchange reserves seemed headed inexorably towards $4 trillion. Since then, China’s yuan has fallen and capital has fled. Having lost over $500 billion of hard-currency reserves in 11 months, can China really afford to lend dollars to Tajikistan?

Neither fear stands up to scrutiny. China’s financial commitment to the AIIB is equivalent to less than one percent of its remaining reserves. Almost 70% of the institution’s $100 billion of capital is drawn from its other 56 participants. It will also raise money by issuing bonds of its own. Far from being a fair-weather folly, the AIIB appears welltimed. Global capital has retreated from emerging markets, leaving a gap the AIIB will help fill. By the same token, the retreating dollars are sheltering in