Posts Tagged ‘Asian Infrastructure Investment Bank’

Chinese vs. American trade agreements

June 18, 2015

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U.S. rivalry with China should be mainly economic, not military.   The threat to us Americans is that we shall continue to allow the hollowing out of our manufacturing industry while China grows ever more powerful.

China offers the world the chance to invest in its Asian Infrastructure Investment Bank, which may or may not amount to anything, but potentially could help all its partners achieve their economic goals.

The US government is trying to pressure the world into joining the Trans Pacific Partnership, the Transatlantic Trade and Investment Partnership and the Trade in Services Agreement, which would require them to give up national sovereignty so that multinational corporations could operate with greater freedom.

President Obama has said that it is important that “we” rather than China get to write the rules for the international economy.  I don’t feel included in that “we”.   I think the “we” who will write the rules are the big international banks and other corporations, not us Americans.

There’s an old saying that you can catch more flies with honey than with vinegar.  Right now the Chinese government is offering honey while the U.S. government is trying to force its allies to swallow vinegar.

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The world invests in China’s new bank

April 16, 2015

aiib-graphic

Fifty-seven governments, including all the major powers except the USA, Canada and Japan, have signed up to participate in China’s new Asian Infrastructure Investment Bank.

The AIIB may or may not be an important force in building infrastructure in Asia.  But the eagerness of the world’s governments to participate shows a willingness to follow the leadership of China even against the advice of the USA.

The red countries on the map are governments that participate in the Asian Development Bank, which is supported by Japan and headquartered in Manila, who also participate in the Asian Infrastructure Investment banks.  The blue countries on the map are other countries who have joined the AIIB.

The yellow countries are Asian Development Bank participants who held back from joining the AIIB.

I know, from reading of history, that China is following a pattern of drawing other countries in to itself rather than engage in overseas conquest.

During the Age of Discovery, for example, Europeans had a trade deficit with China and also India.  All the exploits of Vasco da Gama and Christopher Columbus were intended to find a route by which the European nations could trade directly for the porcelain, silk and spices of Asia rather than through Muslim middlemen.  All the gold and silver that Cortez and Pizarro found in the New World and brought back to Spain eventually went to China and India.

China went into temporary eclipse during the 19th and early 20th century, but the current Chinese government has restored China to its historic position—the nation that the rest of the world comes to, and tries to connect with.

I do not claim to know whether how much Asian infrastructure will in fact be built through the AIIB, nor what the future holds for China.  As stockbrokers say, past performance is no guarantee of future results.  But for now, the Chinese policy of offering things to people is more successful than the U.S. policy of forcing things on people.

LINKS

57 nations approved as founding members of China-led AIIB by Gary Huang for the South China Morning Post.

The infrastructure gap: Development finance helps China win friends and influence American allies by The Economist.

The power of the new Chinese investment bank by Richard Javed Heydarian for Al Jazeera.

 

China’s new bank is a great attractor

April 13, 2015

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The world is rushing to join the new Asian Infrastructure Investment Bank, which is China’s alternative to the U.S.-influenced World Bank.

The Shanghai-based bank would raise $50 billion to invest in Asian infrastructure projects, such as dams, airports and electric power plants.

Only founding members are entitled to a vote.  Reuters reported that voting will be weighted so that Asian members have 75 percent.  China will announce the names of the founding members on Wednesday (April 15).   The Economist explained:

The AIIB is but one of a number of new institutions launched by China, apparently in frustration at the failure of the existing international order to accommodate its astonishing rise.

Efforts to reform the International Monetary Fund are stalled in the American Congress.  America retains its traditional grip on the management of the World Bank.  The Manila-based Asian Development Bank (ADB) is always directed by a Japanese official.  [snip]

China, flush with the world’s biggest foreign-exchange reserves and anxious to convert them into “soft power”, is building an alternative architecture. 

It has proposed not just the AIIB, but a New Development Bank with its “BRICS” partners—Brazil, Russia, India and South Africa—and a Silk Road development fund to boost “connectivity” with its Central Asian neighbors.

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