(Yomiuri: January 17, 2016 – p. 2)
Japan is taking the launch of the Asian Infrastructure Investment Bank calmly, as many in the government predict that it will take time for the China-led aid body to become fully functional.
Tensions erupted in the government when the U.K., Germany, France and several other countries announced their participation in the AIIB in March. The move sparked fears that the Japanese economy would decline. But the management of the AIIB is still in the hands of the Chinese government, and whether it can maintain fairness remains questionable. While taking a cautious stance toward participation, Japan is poised to closely watch its development.
International competition is intensifying in Asia to win contracts for infrastructure projects that add up to about 800 billion dollars a year. In September, Japan lost to China in a bidding war for a high-speed railway project in Indonesia. The Japanese business community is becoming increasingly worried that the AIIB’s increased influence may give Chinese businesses the upper hand and hinder Japan’s exports of technological expertise in infrastructure building.
The government is currently working to invest about 110 billion dollars over the next five years in quality infrastructure projects in Asia. To better compete against the AIIB, it will reduce the time required to process yen loans for key projects to about one and a half years from about three years, and carry out other reforms.
The Asian Development Bank, which is managed under the leadership of Japan and the U.S., is planning to extend loans together with the AIIB. ADB President Takehiko Nakao said at an international symposium hosted by the Yomiuri Shimbun in November: “The ADB has agreed with the AIIB on joint financing and we hope to extend the first loans as early as next spring.” If the two aid organizations finance many projects together, Japan will probably be able to maintain its influence. (Slightly abridged)