The deadline for joining The Asian Infrastructure Investment Bank (AIIB) as founding member has passed. China successfuly attracts also many Westerns countries.
1. With the big western countries ready to join the Asian Infrastructure Investment Bank (AIIB) led by China despite the US displeasure, how do you read their decision?
2. What can China win (politically, strategically) with the successful AIIB and what can America lose?
Kerry Brown, Executive Director, China Studies Centre, University of Sydney
1. I think the US will just have to live with it. With so many allies going to join the AIIB, it has scored a diplomatic own goal. It should have been prepared for this kind of move much earlier on, shown more flexibility, granted China more voting rights on entities like the IMF or at the very least been a stakeholder with the new bank, rather than carping on the wayside. This time it is not China that has eroded the US’s interests, but the US.
2. China if it manages its key role in the AIIB can show it can take a global lead in some areas. This is a regional initiative though, for the Asian region, and in one sector, infrastructure, so we shouldn’t get too excited. It is a great opportunity for us to see how China can manage this more prominent role without too much damage being done. It lets us see deeper into China’s global vision. Otherwise, without something like this, we would always be second guessing.
Prashanth Parameswaran, Associate Editor at The Diplomat, PhD Candidate. Fletcher School of Law and Diplomacy, Tufts University
1. These countries clearly believe that the AIIB is a serious enough proposition for them to at least be part of it, and that they can try to address lingering concerns that Washington and others have expressed about it from within.
2. It is too early to draw conclusions about the AIIB and what it means for China and the United States. The AIIB is still in its infancy and faces significant challenges ahead before it can be registered as a success of any kind for China. And American influence in the Asia-Pacific is still quite strong across the board such that focusing on the AIIB alone is quite misleading.
It would be misguided to chalk the AIIB up as a win for China or a loss for America. The one lesson from the AIIB debate is that countries are reluctant to be seen as pawns in a geopolitical chess game between the United States and China. They will pursue their own interests accordingly, and efforts by either Washington or Beijing to obstruct them from doing so risk failing.
Hongying Wang, Associate Professor of Political Science, University of Waterloo
1. A number of Western countries have decided to join AIIB as founding members despite explicit US warning not to do so. This has been a big surprise for the US and a major diplomatic victory for China. Few predicted the turn of events following UK’s “break up” with the US on this issue — that so many other US allies in Europe and elsewhere followed UK’s example in such a short time. This apparent “domino effect” shows the strong economic attraction of China, and the limited ability of the US to constrain China’s growing influence. Countries applying to joint AIIB do so for various reasons, not only hoping to share the business opportunities AIIB projects will bring, but also to increase financial and commercial relations with China more broadly.
2. The immediate gain for China and the immediate loss for the US is diplomatic, political and symbolic. The international power shift from the US to China seems more clear than ever before. But in the long run we should not see China and the US as locked in a zero-sum game (China’s gain and America’s loss). As China tries to make the AIIB more appealing to a wider range of countries (including many of America’s allies), Chinese officials have already bent over backwards to accept policies and rules that will make it difficult for China to run the bank after the Chinese model and serve China’s narrow interests. Although China is the largest shareholder, the Chinese government has recently stated that unlike traditional multilateral financial organizations, AIIB will make decisions by consultation rather than by weighted voting. China has also promised that the new bank will follow international environmental standards and not tolerate corruption. These principles run counter to some of the traditional practices of Chinese companies and banks, but in the long run, they are going be benefit China as well as the other parties involved. A more open AIIB upholding higher standards in governance will be a victory for all sides.
Lawrence C. Reardon, Associate Professor of Political Science, University of New Hampshire
1. I completely understand the US and Japanese desire to keep the established Bretton Woods institutions viable. I suppose US displeasure concerns Beijing’s money diplomacy: Beijing has used its 4 trillion in forex to promote its long-term goals in the world. The AIIB would essentially be used to finance infrastructure in Asia that would most probably favored employing Chinese companies and Chinese labor. Various countries have linked domestic growth goals with external aid deals. And to date, the US was probably concerned that such a large program would seriously tilt the Asian countries toward Beijing. Obviously, European and Asian counterparts are less concerned, and want to participate in any new financial scheme. They seem to be more assured of Beijing’s stated willingness to play a lesser role in the loan schemes. I suppose the proof will come when/if the AIIB begins operations, as well as Beijing’s decision to accepted Taiwan as a AIIB member.
2. Having a very strong memory of the public concerns of Japan and Germany taking over the world in the 1980s, I don’t think that this is a zero-sum game in which the ascendant China benefits from a declining US. Chinese investments abroad have been very mixed, and not always profitable. And the amount of debt that China’s local governments has assumed is tremendous. So for my part, I think the idea of an AIIB benefits all. If this means that it ties Asian economies to China, realize that such ties are not necessarily translating to Chinese assuming control over the Asian continent. They are just become a greater regional player.