MORE U.S. ALLIES JOINED CHINA-LED AIIB
March 20, 2015
The United States was irritated when its major European allies the United Kingdom, France, Germany and Italy announced to join the China-led Asian Infrastructure Investment Bank (AIIB) earlier last week. Does it signal a coming Asia, or China, century that will replace the American century?
China’s Foreign Ministry Spokesperson Hong Lei welcomed UK’s decision to join the China-led U.S.$ 50 billion AIIB as a prospective member on March 12. Germany, France, and Italy followed Britain’s lead soon after on March 17. As the application deadline March 31approaches, China has received confirmation letters from South Korea, New Zealand, and Luxembourg while expecting similar letters from Australia and Switzerland. In response, the United States has urged countries to think twice before signing up to the China-led AIIB, which Washington sees as a rival to the World Bank and the Asia Development Bank. This is also a rare situation where the United States has openly criticized the UK, its closest ally, with a senior U.S. official saying, “We are wary about a trend toward constant accommodation of China, which is not the best way to engage a rising power.”
Increasing participation by U.S. allies in the China-led AIIB is reasonable. The AIIB is welcomed in Asia due to practical concerns for infrastructure demand. The Asian Development Bank estimates Asia needs to spend at least $8 trillion on infrastructure investment. There is a growing belief that the American-dominated World Bank and related institutions cannot fulfill this demand alone.
Considering China’s growing total economic volume, U.S. allies are willing to work closer to the major economic power. Their frustration to the United States accelerates their concerted shift. According to a Reuters report, European Union and Asian governments are discontent that the U.S. Congress has held up a reform on voting rights for the International Monetary Fund that would give China and other emerging powers more say in global economic governance. Such delays undermine U.S. credibility and influence as countries question U.S. commitment to international institutions.
Although the United States has lobbied other big nations like South Korea and Australia to hold back from joining the AIIB, the UK’s recent decision is an even more significant sign of U.S. failure to sway allies. These allies must consider whether or not they can afford to become sidelined in the 21st century, a century that sees a rising China. Essentially, the UK and other middle powers have decided to hedge their bets and work with China as well as the United States.
Having a wider variety of multinational institutions is good for the world. The U.S.-dominated World Bank model is not necessarily the only effective management system for global economic institutions. However, this is not a zero sum game with the AIIB taking away the relevance and utility of the current global financial systems. Looking forward, the United States may want to move beyond obstructionism and figure out a better strategy for dealing with China’s competitive economic diplomacy.
For more information on this topic, consult the following sources:
Financial Times – “AU.S.tralia shifts stance on China-led development bank“
Financial Times – “Europeans defy U.S. to join China-led development bank”
Financial Times – “U.S. attacks UK’s ‘constant accommodation’ with China”
Huffington Post – “Why Britain Joining China-Led Bank Is a Sign of American Decline”
The Brookings – “A special argument: The U.S., U.K., and the AIIB”
Ministry of Foreign Affairs of the PRC – “Foreign Ministry Spokesperson Hong Lei’s Regular Press Conference on March 13, 2015″
新华网 – “英何以背弃美‘投奔’亚投行?”
人民网 – “法德意追随英国将加入亚投行 专家：美日莫狭隘”
中國評論通訊社 – “林基煌語中評：英國加入亞投行嚇壞美國”
Compiled and edited by Stella Ran Zheng