(Yomiuri: March 31, 2015 – p. 7)
Efforts to expand Asian Infrastructure Investment Bank (AIIB)
By Seiichiro Takeuchi, Kazuhiko Maita in Beijing
On March 30, one day before the deadline for applying to be a “founding member” of the AIIB, a China-led initiative, Egypt also announced its intention to participate. The AIIB membership has been growing. In spite of the skepticism of Japan and the U.S., the Xi Jinping regime intends to continue expanding the AIIB, backed by enormous China money.
China and other newly emerging and developing countries have been demanding reforms at the International Monetary Fund (IMF) to increase their capital ratio. On the surface, China is citing slow IMF reform as a reason for founding the AIIB. The U.S., on its part, has remained cautious about the new bank.
In contrast to the U.S.’s reservations, the advanced European countries — the UK, Germany, France, and Italy – have announced their participation, thus initiating an unstoppable trend.
Jin Liqun, 65, former Asian Development Bank (ADB) vice president who is tipped to become the first AIIB president, is widely believed to have been very effective in sowing disunity among the G7 nations. He was able to lead the European countries, which used to be critical of China for its human rights record and other issues, by the nose with his charm.
The Xi regime has been expanding the AIIB’s membership by setting March 31 as the deadline for applying as founding member. However, it will also continue to accept “regular members” after this date.
In a speech in Beijing on March 22, Jin emphasized “communication” with Japan and the U.S. three times. An economist in Beijing reckons that this was his message to Japan and the U.S.
Expanding AIIB membership came as blow to the U.S.
By Kunihiko Yasue in Washington
The U.S. has maintained that it will not join the AIIB. Yet, its allies, which it had asked to take a wait-and-see attitude, have now announced their participation. Japan and the U.S. are finding themselves increasingly isolated. Although the U.S. is asking China to cooperate with the existing international financial institutions, there is no doubt that it is in a diplomatic fix.
The U.S. has concerns about the AIIB’s governance and loan screening criteria. It is also wary that China, the no. 1 donor, may use development aid to expand its influence. It is asking China to cooperate with the World Bank and other institutions in the belief that this will help prevent China’s arbitrary management and the souring of loans.
However, with the AIIB membership growing, it is very unlikely that China will accept the U.S.’s demands. With the negotiations for the U.S.-led Trans-Pacific Partnership (TPP) now at an impasse, the participation of half of the 12 TPP members in the AIIB may also turn out to be a serious blow on the U.S.
ASEAN, European countries prioritize economic interests
By Kazuhiko Maita in Beijing; Tadashi Isozumi in London
It appears that the ASEAN states, the growth center of the world, have been dissatisfied with the failure of the existing international financial institutions, such as the IMF and the ADB, to meet their needs.
At first, only a number of Asian countries with close relations with China in ASEAN had expressed their intention to join the AIIB. However, an international financial institution whose members are all developing countries will have a low credit rating for its bonds. The ASEAN states all shared the sense that “the participation of advanced nations holds the key.” An ASEAN diplomatic source revealed that they “used all channels of communication to persuade the European Union nations to join without being asked by China.”
The UK, Germany, France, and Italy decided to join because their economies have not recovered fully from the aftermath of the major financial crisis of 2010. This decision was made in consideration of the economic gains from strengthening relations with China, the no. 1 market for their exports. (Abridged)