China's President Xi Jinping arrives at the Itamaraty Palace for the 6th BRICS summit in Brasilia. Reuters

When the leaders of Brazil, Russia, India China, and South Africa announced the formation of a jointly run development bank earlier this week, the news sent a clear message: The developing world has arrived. Just 13 years after Jim O’Neill, then an executive at Goldman Sachs, coined the “BRIC” acronym to describe the world’s largest emerging markets, the countries (plus South Africa, the S in BRICS) successfully formed an institution that aims to rival the World Bank and International Monetary Fund.

But while the New Development Bank will have contributions from all five member countries, the dominant player in the organization lies in plain sight: China.

China is the world’s second-largest economy and has a larger GDP than the other four BRICS combined. It is, for example, 17 times larger than South Africa, the smallest member, which joined at China’s behest in 2010. And, in the years since O’Neill lumped China with the others, this gap has widened even more: China accounted for 40 percent of all global growth in the five years following the collapse of Lehman Brothers in 2008. China looms so large that it is the largest trading partner of the other four members, but none of the four even rank in China’s top five.

The New Development Bank, to be headquartered in Shanghai, only reinforces this dominance. Although each BRICS country will contribute $10 billion to the bank’s capital stock, China will provide 40 percent of a $100 billion Contingency Reserve Arrangement -- more than twice the amount of any other country.

Nevertheless, for a country with $3.3 trillion in foreign currency reserves, $40 billion is pocket change. China has paid more than that to the IMF, an institution the NDB is modeled after. China earmarked a cool $200 billion in the China Investment Corporation in 2007, and it has its own development bank already.

So why is China bothering with a BRICS Development Bank?

The political machinations at the World Bank and IMF provide one explanation. For years, economists have criticized the two institutions for imposing onerous conditions on loans to developing countries, which often must agree to painful “structural readjustment” programs to receive cash infusions. The World Bank and IMF, by tradition, are respectively led by an American and a European, and the world’s wealthiest states have consistently refused to increase the developing world’s voting share within each institution. According to Anna Snyder, an analyst at the New York-based economic consultancy Rhodium Group, the NDB is a natural consequence of these frustrations.

“The formation of the bank is clearly a response to the fact that the IMF and World Bank wouldn’t move on the voting share issue with emerging markets,” she said.

The NDB also provides a vehicle for China to insulate itself from criticism of its own investment strategy in the developing world. As Beijing has sought a larger role on the global stage, Chinese companies have increased their investment footprint throughout Africa, often working with regimes -- like Sudan -- whose human rights records bring global reproach and sanctions. While Chinese firms have built factories and transportation networks in several countries on the continent, Africans have accused them of neglecting environmental standards and failing to improve the living conditions of the population. The joint nature of the NDB will allow Beijing to make investments under a multilateral umbrella, all while providing developing countries with less stringent conditions than those offered by the IMF and World Bank.

According to Joseph Stiglitz, a Nobel Prize-winning economist and a strong supporter of the bank, this helps explain its utility to China: “The problem with bilateral aid is that, fairly or not, it’s always seen as an instrument of foreign policy,” he said.

Beijing has bristled at accusations that it will dominate the NDB. Speaking to reporters in Brasilia at the conclusion of the BRICS summit earlier this week, President Xi Jinping insisted that China will not take a leading role.

"The Chinese people love peace. In the blood of the Chinese people there are no genes for invading others or dominating the world. China does not acknowledge the old logic of 'when a country is strong it must dominate'," Xi said.

China’s dominance -- or lack of it -- aside, Stiglitz said that infrastructure needs worldwide are so great that the NDB’s emergence is welcome news. Referring to the bank’s relationship with the World Bank and IMF, he said, “I don’t think anyone views this as competitive rather than complementary."