Want... An opinion piece published on the official WeChat account of the overseas edition of the Communist Party mouthpiece People's Daily has outlined the motivation behind Beijing's efforts to set up the Asian Infrastructure Bank (AIIB).
Germany, France and Italy have now followed in the footsteps of the United Kingdom to apply to be founding members of the bank against the advice of the United States, pushing the number of countries taking part in the initiative to 31.
Many international news organizations have interpreted the AIIB as an attempt by Beijing to challenge the status of the US in the international community. The People's Daily commentary said China had no other option but to do so due to the unequal treatment of emerging and developing economies in existing institutions such as the IMF and World Bank.
After 2008, the G8 countries — the US, UK, France, Germany, Japan, Italy, Canada and Russia — came to the realization that their "wealthy nations club" was not enough to save them from the effects of the global financial crisis and they needed to include emerging and developing countries, including China, to sort out the crisis, which led to the convening of the G20, the piece said. This had little or no effect on the fundamental manner by which the world economy was governed, as implemented by the IMF, the World Bank and the WTO, as the US and the G8 nations were still the dominant voices, the commentary said.
Attempts to reform the IMF in 2010 by giving emerging and developing countries more clout were blocked by the US, which left a gap in representation in the global economy which China believes the AIIB can fill, the piece said.
Other multilateral development funds in Asia have been unable to keep up with development trends in the region and there has long been a need for a new organization to resolve issues with the Asian and Chinese economies, the piece said.
The Asian Development Bank has shown its political colors with the US "Asia Pivot" strategy, the piece said, adding that the bank, founded in 1966 and led by the US and Japan, is in decline and that it is inconsistent in the loans it gives to Asian countries, making it difficult for some of them to get the funds they need.
The piece also said that the AIIB differs from the World Bank and the Asian Development Bank in terms of its functions, as the latter two are aimed at reducing poverty, whereas the former is aimed at building infrastructure and supporting the social and economic development of Asian nations.
China also likely hopes to benefit financially from regional infrastructural development, including large-scale transnational highways and railway networks, the piece said. China is currently capital rich, but there is not enough demand for infrastructure projects domestically, so infrastructure investments in other Asian countries are a good way to assert its influence in neighboring countries, as well as finding a purpose for surplus funds.
According to Asian Development Bank figures, Asian countries will require around US$8 trillion in infrastructure investment up to 2020, which will provide China with good investment opportunities, according to the article. China has a great deal of experience in infrastructure construction and this will likely mean a good return on investment, the piece said.
If China shares the dividends of its economic transformation it will also improve relations between countries in the region, the piece said. Many countries in the region are undergoing similar reforms to China, but they lack funds, skills and experience, all of which China can help to provide.
The launch of the bank will also lead to the further internationalization of the renminbi, the piece said.
Poster Comment:
Looks like Uncle Sam should have used US technology to boost living standards in Asia instead of being pre0occupied with bombing Israel's enemies (just so Democrats and Republicans could get the help of local Jews in winning seats in Congress). Even UK and Europe are forsaking Uncle Sam. See cartoon at link:
The UK, Italy, France and Germany strain against Uncle Sam's bonds of "friendship" and "brotherhood" to get at a cake offered by China, with the word "benefits" on top. (Cartoon/CFP)