Chinese President Xi Jinping has confirmed his government’s position that the US is welcome to join the Asian Infrastructure Investment Bank (AIIB).
In an interview with the Wall Street Journal, published on the eve of Xi’s state visit to America, he wrote, in emailed answers: “In addition to Asian countries, countries outside Asia such as Germany, France and the UK have also joined the AIIB. China welcomes the US to join the AIIB. This has been our position from the very outset.”
The development of the AIIB has led many to conclude that it is a response to China’s relative isolation from the Bretton Woods architecture which has dominated global development and trade for the past half century. Along with the One Belt One Road programme, it is viewed as part of China’s efforts to create a development lending platform in its own image.
The US’ failure to join some of its key western allies as a founder member was criticised by analysts at home and abroad. Niels Marquardt, the CEO of the US Chamber of Commerce in Australia, described it to GTR as a “case of how not to advance the national interest in diplomatic terms” adding that it “didn’t work, so we ended up looking silly”.
However Xi denied claims that China’s new US$100bn development bank was designed to replace or rival the existing US-backed institutions such as the World Bank and IMF, saying that “such reform is not about dismantling the existing system and creating a new one to replace it. Rather, it aims to improve the global governance system in an innovative way”.
He cited the Asian Development Bank (ADB) statistics, which show that from 2010 to 2020, the annual shortfall in funding for Asian infrastructural development is around US$800bn.
Xi wrote: “The AIIB serves as a new option to meet this shortfall, and it is therefore welcomed by both Asian countries and the wider international community. But as the funding shortage is huge, it is clear that the AIIB alone cannot possibly meet such demand. As an open and inclusive multilateral development agency, the AIIB will complement other multilateral development banks.”
“There is a potential economic part. There is money to be made if you can increase the infrastructure, in both delivering and using said infrastructure,” Deborah Elms, Asia Trade Centre
While the glaring infrastructural gap is undeniable and the need for additional funding is acknowledged by virtually everyone involved in trade in Asia, others are more realistic about the potential political aims of the AIIB.
“I think with the AIIB, there is a potential economic part. There is money to be made if you can increase the infrastructure, in both delivering and using said infrastructure. But there is a political part of this, saying: we want to show that we can play a role since we’ve been so cut out of leadership positions in things like the ADB, World Bank, IMF, we will just make our own thank you very much,” Deborah Elms, chair of the Asia Trade Centre, tells GTR.
Overall, Xi’s words had a conciliatory tone: “China and the United States account for one third of the world economy, one fourth of the global population, and one fifth of global trade. If two big countries like ours do not co-operate with each other, just imagine what will happen to the world.”
The co-operative stance was outlined further this week, when AIIB President elect Liqun Jin met ADB President Takehiko Nakao in Beijing, with the pair renewing their “commitment to working together for the development of Asia, and agreed to start the process to identify ADB’s future projects that AIIB may be able to co-finance,” according to a statement.
Meanwhile, speaking at a conference in Singapore on Saturday, Jin claimed that the AIIB has been approached by 20 additional countries, which hope to become future members. He denied that the AIIB would be a “China bank”, favouring Chinese companies, instead saying that it would act in the regional interest.
The bank already has 57 member states and is expected to start lending to projects in 2016.