AIIB

Taking its growing status and influence to a new level, China is promoting a new financial institution called the Asian Infrastructure Investment Bank (AIIB) to fund infrastructure projects throughout Asia in direct competition with the Western-dominated World Bank and the International Monetary Fund. The AIIB will be based in Beijing.

To date, 57 countries, including four of the five UN Security Council members and half of the European Union members, France, Germany, and Italy among them, have committed to joining the AIIB. The United States, however, has not. The U.S., in fact, has been actively campaigning against the new institution and attempting to coerce its allies not to play ball.

Their efforts have been consistently unsuccessful. Great Britain, Canada, Australia, South Korea, and New Zealand have all signed on. Only Japan has heeded the U.S. plea for non-involvement but even it is expected to ultimately join.

It is yet another sign of the U.S.’s loss of global leadership and declining influence. But the loss is more than symbolic. I dare say it is hastening the decline.

After all, what possible argument can be made against the funding of much needed infrastructure projects in Asia’s developing countries? If the World Bank is a worthwhile institution, how can the AIIB not be?

The only difference will be that the AIIB will operate more democratically and the U.S. will not have the veto power it enjoys at the World Bank. By declining to play, the U.S. has shown not only ignorance of the new world order but has clearly exposed its often-denied concern over the rise of China.

It is, in fairness, a reflection of political reality in Washington. It is doubtful that a vote to join an institution sponsored by China and of which both Russia and Iran are founding members would stand any chance of getting through Congress.

But nothing gets through Congress. As a political system the U.S. has become entirely dysfunctional, precluding action on any issue of such global significance.

But it is perspective, I believe, that is America’s greatest failing on the matter.

The American Century came about not so much by its victory in two World Wars as by its actions in the wake of World War II. We didn’t punish our former enemies. We helped them to rebuild. And that brought us both new allies and a thriving global economy in which those allies helped pave the way to America’s economic supremacy.

China is merely following the same script and will, I suspect, enjoy the same success. By helping its neighbors develop it will deepen its ties with neighbors that might otherwise be inclined to heighten the tension over disputed atolls or promote separatist objectives within China.

For America it is more than unfortunate. Why would a country of its stature and international experience take on a battle it could not win? Or did it think it could? That, perhaps, is the scariest scenario of all. Can the power-brokers within the Beltway be so uninformed as to think the U.S. could actually thwart China’s efforts to do what the West has already done? Wars have been started over far less significant errors in judgment. (Wink, wink)

I believe part of the problem is that too many politicians view global power as a zero-sum game. If China gets stronger, the logic goes, the U.S. must get weaker.

But history does not support this logic. China and the United States can both get stronger. There is more than enough of a leadership vacuum in the world today for both to play a significant role in shaping the future world order. Together they would be a global political force that could not easily be denied or overlooked. In competition, however, they only provoke rogue leaders to play one against the other.

To present a united front, however, both countries must redefine their relationship to eliminate distrust and build consensus wherever it can be built.

The AIIB, it strikes me, would be a good starting point. What is the downside?  The only downside I can see flows from a unilateral decision to stay on the sidelines. That can only result in isolation and virtually precludes any opportunity to influence the evolution of the institution.

As a university student I had an economics professor who sat on the board of directors of the local power utility. He once told our class that he was often taken to task by his fellow professors for supporting such a crassly commercial enterprise that many believed negatively impacted the environment of an otherwise pristine and sparsely populated state.

He said, “I do it because to refuse to participate is a one-time protest that would soon be forgotten. At least now I have a seat at the table and can attempt to influence the company in a way my fellow professors would be proud of.”

I suspect, however, that none of our country’s current foreign policy decision-makers sat in on that lecture

Too bad.

China no longer wants to be the factory to the world.  And foreign companies are obliging.  But does China have the will to fill in the gap between an unprecedented accumulation of wealth in real estate and a manufacturing sector that can compete at the top of the value chain?
China no longer wants to be the factory to the world.

Copyright © 2015 Glassmaker in China

Notice:  The views expressed in this post are strictly those of the writer acting in a personal capacity.  They are not in any way endorsed or sanctioned by his employer or any other individual with which he may be personally or professionally affiliated.