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AIIB Warning: A China-influenced global financing architecture is set to emerge.
AIIB Warning: A China-influenced global financing architecture is set to emerge.
22/4/15
The Asian Infrastructure Investment Bank (AIIB) is an international financial institution
proposed by the government of China. The purpose of the multilateral development bank is to
provide finance to infrastructure projects in the Asia region. AIIB
is regarded by some as a rival for the IMF, the World Bank
and the Asian Development Bank (ADB), which are
regarded as dominated by developed countries like the United States.
The United
Nations has addressed the launch of AIIB as "scaling up
financing for sustainable development" for the concern of Global Economic
Governance.
For a long time, the Chinese government
has been frustrated with what it regards as the slow pace of reforms and
governance, and wants greater input in global established institutions like the
IMF, World Bank and Asian Development Bank which it claims are dominated by
American, European and Japanese interests.
In April 2014, Chinese Premier Li Keqiang
delivered a keynote speech at the opening of the Boao Forum for Asia and said that China was ready to intensify consultations with
relevant parties in and outside Asia on the
preparations for the Asian Infrastructure Investment Bank. The Articles of
Agreement (AOA) would be finalized and open for signature by Prospective
Founding Members (PFMs) from June 2015. The AOA is expected to enter into force
and AIIB to be fully established by the end of 2015.
Chinese Premier Li Keqiang
affirms AIIB cooperative stance. Up to now, there are 37 PFMs in the region, 20
PFMs outside the region. As of April 15, 2015, almost all Asian countries and
most major countries outside Asia had joined the AIIB, except the US, Japan
(which dominated the ADB) and Canada.
The deadline for
prospective founding members to submit their applications to China’s new
Asian Infrastructure Investment Bank (AIIB) came on March 31, leading a flurry
of final applications from countries all over the world. When the dust settled,
China
moved on to selecting who would actually made the cut. Yesterday, the AIIB
released its final, approved list of founding members (excluding
Taiwan). With 57 countries signed up, the AIIB includes well over a
quarter of the world’s nations. Even more interestingly, 16 of the world’s 20
largest economies are on board (with the U.S.,
Japan, Mexico, and Canada as the holdouts).
The AIIB is a
creation whose aim is to challenge the hegemony of institutions dominated by
the United States, Western
Europe and Japan.
Unlike the BRICS Bank, whose main shareholders may face coordination problems
due to the equal distribution of voting shares, the AIIB faces no such
difficulty since China
will provide the largest share of resources.
China’s Asian Infrastructure Investment Bank (AIIB) has met
with nothing but opposition from the United States. Officially, the
objection cited by the United
States is a lack of clarity about AIIB’s
governance, as well as concerns about whether the AIIB will adhere to strict
environmental and labor standards
in its operations. It is clear, however, that U.S.
opposition also derives from fears that the AIIB — spearheaded by China and part of China’s
“New Silk Road”
strategy — will diminish U.S.
leadership in the region.
Despite its
efforts, the United States
has been unable to keep its allies from joining the AIIB. Earlier this year, Saudi Arabia
applied for membership. The AIIB also has great representation in Europe. Nearly all of Western Europe (save Belgium and Ireland) officially signed up for
the new bank. It’s a different story in Eastern Europe,
where countries generally don’t have the excess capital to invest in an
extra-regional bank (and thus Eastern European countries are not involved with
the Asian Development Bank either). Meanwhile, the interest in AIIB from
Western Europe marks a stark contrast between that region and North
America. The U.S.,
Canada, and Mexico all declined to sign on, with Washington being
particularly critical of the new project (including pressuring its friends and
allies not to join). The United
Kingdom announced that it would join as a
founding member — a move that received a rare, public rebuke
from the White House. Following it, a trio of European powers — France, Germany
and Italy
— have also applied for membership.
However, the glut of Western European
countries involved in AIIB doesn’t mean Europe
will be able to play a major role in the bank’s governance. The AIIB’s chief,
Jin Liqun, previously said that non-Asian countries will be limited
to holding a total of 25 percent of AIIB shares. That means China can claim all of the prestige of having Western Europe join its new pet project without actually
have to share control.
It also means that Asian countries with
governance concerns (including Australia
and South Korea)
will have to be more vocal about these issues to ensure AIIB actually lives up
to international standards. China has announced that negotiations over the AIIB charter
will take place in April and May, with the signing of the charter scheduled for
the end of June.
Strategically, the
United States cannot keep on
shoring up an obsolete economic order in Asia.
China is not withdrawing
from the Washington
institutions, it is supplementing them. Unlike certain other aspects of China’s policy, this development is properly
seen in the context of the “peaceful rise” which China’s leaders have proclaimed.
This is a case for accommodation, not confrontation.
China is leveraging off legitimate concerns. Developing
countries are frustrated with the unfair governance standards and ineffective
aid policies of the IMF and World Bank as well as their interference in local
policy making. The pressure on South Korea
and Indonesia
to open specific domestic industries to foreign investments in return for
financial assistance during the Asian Financial Crisis in 1997 has not been
forgotten.
There's also China's strategic interest looking
for multilateral legitimacy and funding. Global participation in China-led
projects, it hopes, will dilute China's
reputation in parts of Africa and Asia (e.g. Myanmar), of being abrasive on
development and for demanding market access and natural resources in return.
But the real,
unstated tension stems from a deeper shift: China
will use the new bank to expand its influence at the expense of America and Japan,
Asia’s established powers. China’s decision to fund a new
multilateral bank rather than give more to existing ones reflects its
exasperation with the glacial pace of global economic governance reform.
The AIIB is a small step by itself, of little
importance during the next few years. From a long-term perspective it’s another
step on the road to replacement of the US as global hegemony by a
multi-polar system. The bank has become a key factor in deciding whether Beijing
or Washington
will hold the upper hand in deciding economic and trade issues in Asia
in the coming decades./.
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All comments [ 16 ]
A China-led lender aiming to provide loans to fund infrastructure projects in developing Asian countries.
Also aiming to control other countries through it.
I doubt China's true intention, they want to influence other nations, and AIIB will become a tool for them.
Britain’s decision to join angered the US, with President Barack Obama slamming the UK’s “constant accommodation” of China.
Creating a competitor to the World Bank — the AIIB — required signing on many major nations.
So pity for America, so alone, left by their allies.
The Obama administration is concerned the new bank will compete with Western-led institutions like the World Bank and the International Monetary Fund
The AIIB, as it's called, will be a chance for China to extend its influence by financing big infrastructure and development projects throughout Asia.
Don't believe China, they say and do inconsistently.
US government officials understood the importance of stopping China’s first steps, and strongly pressured our allies to not participate.
I agree with Hung Quan! China also say and do quite difference!!
almost countries have realized that AIIB is just china's tool to expand it's influence in the area and over the world.
so why have many nations still joined AIIB?
all due to economic interests, some countries are ready to exchange political dependence for immediate benefits
so far both the US and Japan haven't yet joined AIIB because they have worried about China 's increasing influence that could threaten to position of a superpower of the US.
AIIB and "silk road" are all aimed at China 's political intention, so countries must be viligant.
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