The announcement by another major U.S. ally that it would join the China-led Asian Infrastructure Investment Bank (AIIB), and the disgruntled response from Washington, amounted to free advertising for the forthcoming bank.
Founding members of the AIIB plan to discuss the institutional arrangement of the bank in the following months, with official operations slated to begin by the end of the year. So far, in addition to Asian countries, several major European economies including France, Britain, Germany and Italy have also expressed interest in the Asian bank, signaling that the AIIB will be a dynamic international financial institution extending well beyond Asia's borders.
The decision of these European allies of the United States has been perceived as a blow to Washington, which then proposed cooperation between the AIIB and Western institutions. As a matter of fact, there is no need for Washington to rebuff the AIIB--rather, it should welcome the new bank, and take up China's invitation to join the institution so that it can make its own contribution to the region's development and the well-being of its people. This would be the proper conduct becoming of a leading world power.
China is seeking to establish the AIIB for two main reasons. First, after proposing the Silk Road Economic Belt and the 21st Century Maritime Silk Road initiatives to enhance connectivity in the Asia-Pacific region, the country needs an international financial institution to provide funding for infrastructure construction. Second, China hopes to have a bigger say in the international financial arena both to help internationalize its currency as well as to advance the opening up of its financial market. Despite China's position as a member of many international financial consortiums, the system is still largely controlled by major Western powers--an arrangement that leaves China with a weakened voice. The World Bank once stated its intention to conduct reforms so that developing countries would have a larger role, but the U.S. veto has shelved the idea. Under these circumstances, the establishment of the AIIB can rightly be regarded as the only option to diversify the governance of global financing. The country now has over $4 trillion in its pool of foreign exchange reserves, giving itself a tremendous advantage in launching an institution of this magnitude.
The AIIB may be China-led, but it is not China-centered. It is not aimed at competing with the U.S.-led World Bank or the Asian Development Bank, nor is it intended to overthrow the existing international financial order. Rather, it is a useful supplement to the multi-lateral financial institutions which are dedicated to economic development and poverty reduction--hardly a reason to worry for the United States.
The United States has attempted to preemptively cast doubt on the bank's transparency and regulatory oversight as a way to justify its refusal to join the bank and to attempt to sway its allies from doing so. The rules and regulations are still under discussion among the potential member states, so any criticism thereof is premature.
However, the truth may be far more complicated:
The U.S. opposition to the AIIB is primarily due to its faulty mindset. Whether or not to join the China-led bank is a highly controversial topic among many U.S. officials. If the world's Big Brother takes the narrow-minded path of snubbing the new bank, given the current situation, it will isolate itself from an emerging force of international financial power. Even if it were to say "yes" and exert a level of influence in its operations, it may still resent its status as a minor player.
For political reasons or otherwise, some U.S. officials and media have claimed that China's rise poses a threat to the United States, spreading fears over supposedly "inevitable" rising conflicts of interest between the two. With that mindset, they misleadingly regard the establishment of the AIIB as China's move to upset the U.S.-led international financial order, and as a threat to U.S. global strategic interests. In contrast to such ungrounded accusations, many of the country's financial experts who understand the benefits of such an arrangement have responded in an objective and reasonable manner, expressing their willingness to cooperate with the AIIB.
The attitude of those few U.S. officials and members of the media can been described as "narrow-minded Americanism," an attitude that does not fit with the bigger picture of globalization that requires inclusiveness and cooperation. Such a pessimistic approach could result in missed opportunities for both the United States and Asia.
Copyedited by Joseph Halvorson
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