“...
while China's ultimate future will depend on its ability to compete
with economies in Europe, North America and the rest of Asia, today
it faces the process of managing the transition. Part of this
involves utilizing the current production capability and assets which
keep factories open and people working; another part involves
strengthening the logistical and development infrastructure of its
neighbors, so that they have a stable base to grow their economies
and societies. This has been one of the main drivers pushing the
series of international and regional infrastructure development
initiatives introduced by China's leadership. These include the BRICS
Bank, the "One Belt and One Road" initiative, the expansion
of the Shanghai Cooperation Agreement into infrastructure, numerous
signed and negotiated bilateral and multilateral trade agreements and
the Asian Infrastructure Investment Bank (AIIB).”
“Despite
recommendations from within the IMF and World Bank, the US has
steadfastly stalled any reforms which would provide a larger role for
China. The other part of this equation, which does not fit the
Chinese international development model, is the inclusion of
political and economic requirements, beyond the simple repayment of
funds. As China's policy emphasizes trade and development and
non-interventionism, China tends to clash with the political and
economic requirements that come with the loans from these
institutions. The third issue is that these institutions have become
very unwieldy, bureaucratic and politically dominated. The
combination of these three factors has pushed China to think outside
the box set up by Bretton Woods and look at developing financing
mechanisms that fit China's desire for more sustainable regional and
international development.”
“The
goal of the AIIB is to provide infrastructure investment funds that
help Asia-Pacific countries develop their internal and regional
economies. In 2010 the ADB, which is dominated by Japan and the US,
estimated that the Asia-Pacific region would need 8 trillion US
dollars in infrastructure improvements before 2020. The ADB has less
than 200 billion US dollars in total capital and is able to lend only
about 10 billion a year. To address this need China has given an open
invitation to all interested countries to become founding members of
the 50-billion-dollar AIIB. To date 33 countries have voiced an
interest.”
“The
greatest surprise to date has been the interest by European and
southern Pacific countries and the open and cloaked opposition by the
US, which has gone so far as to publicly scold Great Britain for
indicating an interest. When France and Italy indicated a desire to
be included, additional negative statements were issued by the Obama
administration. In the background, the US has been lobbying South
Korea, Japan and anyone who will listen about the dangers of such a
bank. Unfortunately, it comes at a time when the US is offering no
substantial alternative alongside the unhappiness of a number of
traditional EU allies with the US on the Ukraine and Middle East
issues.”
“The
opposition to the China-proposed AIIB comes mostly from the US and
Japan who see any alternative structures to the Bretton Woods scheme
as an erosion of their interests. Some of the countries cite the
emphasis from the US, EU, Japanese and Australia on standards of
governance, environmental and social safeguards and transparency. But
in the end, the AIIB cannot and should not be a copy of the ADB, IMF
or World Bank. These institutions have been in place for the last 70
years, but the world has moved on; it is time for institutions which
reflect the needs and realities of today. It is highly probable that
this means that loans will be based on need and ability to repay
rather than political or economic ideology.”
“The
larger issues involved in the opposition to the AIIB are the result
of distrust and cultural differences between the US and China. The
distrust is based on the US's concern about China's growing
political, economic and cultural influence, which Washington sees as
a zero sum game. The cultural differences stem from the US view of
American Exceptionalism, which assumes that only a country that
accepts capitalism, democracy and Christianity can be legitimate and
lasting. It is reflected in the US approach to Asia which emphasizes
trade and security, as opposed to China's trade and development.
Unfortunately with a 'lame duck' president and a hostile congress
there is even less chance of reaching a mutual understanding on such
an issue.”
“For
China, the challenge is whether an increasingly isolated US becomes
more intractable and less of a global player. With its massive
resources, advanced technology and military power, the US is an
essential partner in maintaining world order at a time when
separatism and extremism has become rampant. The real issue is how
China and the US can cooperate well in today's multi-polar world.”
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