Why Asia and the Misguided West Desperately Need the AIIB (News,
Switzerland)
"In mainstream
media in America and Europe, judgment has been passed more or less in unison. It is
a conclusion that came about as a result of poor reasoning and a skewed
analysis of the facts. According to estimates by the Asian Development Bank, where
the largest shareholder is Japan, infrastructure requires an annual
investment of $750 billion per year until 2020. This is beyond the capacity of
the ADB, which in 2012 granted loans valued at only $7.5
billion. … Overall, this China-led regional financial institution is quite
complementary to existing U.S.-led Bretton Woods
institutions: the International Monetary Fund, World Bank or Asian Development
Bank."
China is founding a
new global development bank. The United States is not amused. Is the
predominance of Bretton Woods institutions and the
dollar as the reserve currency at risk?
China is said to be striving for geopolitical as well as
financial and economic dominance.Led by
The Wall Street Journal, the mouthpiece
of capital, and leading mainstream media in America and Europe, including
Switzerland of course, judgment has been passed more or less in unison. It is a
conclusion that came about as a result of poor reasoning and a skewed analysis
of the facts. What has clearly changed, however, are global atmospheric
conditions with respect to finance, economics and power politics.
For decades, the global center of gravity has been gradually
shifting from the Atlantic to the Pacific. Yet Western commentators,
economists, bankers, analysts and other assorted pundits who remain mired in
Euro-centric thinking could not or would not comprehend that after 500 years of
European and Western cultural supremacy, a new world is in the process of
emerging - one no longer under U.S. hegemony, but multipolar instead.Asia has caught up rapidly in recent decades.
First it was Japan, then the four tigers or dragon nations of South Korea,
Taiwan, Hong Kong and Singapore, then Thailand and Malaysia and finally, heavyweights
China, India and Indonesia.
Now that it is economically fortified, China has established
the Asian
Infrastructure Investment Bank or AIIB and is
sending a clear financial and development policy signal that a new economic
world order is emerging. This comes 70 years after the creation of the Bretton Woods
institutions at the end of WWII - the International Monetary Fund (IMF), the
World Bank (WB) and its offshoot, the Asian Development Bank (ADB).
Washington immediately responded with rejection. A spasmodic
White House sought to prevent its closest European ally, Great Britain, from
becoming a founding member of AIIB. In vain. Diplomatic pressure from America fizzled with other
Western nations as well.New Zealand,
Australia, South Korea, Brazil, India, Russia and South Africa, but also the U.S.
allies Germany, France, Italy and yes, even Switzerland, Luxemburg and Austria
- and 23 other countries - are now included as founding members.
By the target date of March 31, a total of 44 countries
applied to be founding members.Among
them is also - in Beijing's view - the "renegade" province of Taiwan.
China has responded to Taiwan's application favorably. At the very last moment
the Americans suddenly became more flexible, apparently influenced by the
participation of its closest European allies. In talks held in Beijing on March
30th with Premier Li Keqiang, U.S. Treasury Secretary
Jack Lew expressed cautious optimism. Lew stated diplomatically that the United
States welcomes and supports proposals that promote an improved international
financial structure. Washington was ready to talk.
Twitter@CurtisSChin
As always when it comes to financial and economic issues,
China proceeds with pragmatism and flexibility. The creation of the AIIB should be seen against the backdrop of a new Chinese
Silk Road strategy. Shortly after taking office two and a half years ago, head
of state and party leader Xi Jinping outlined his new
view of things, not just for China, but for South Asia, Eurasia and Europe: The
Silk Road must be reinvigorated on land and sea to benefit all people in Asia,
Europe and beyond. The improvement and expansion of infrastructure is the first
necessary step toward achieving that goal. That's no surprise. This means the improvement
and expansion of airports, container terminals, deep-water ports, telecommunications
systems, energy and above all, the intercontinental Eurasian railway system. The
investment required is enormous. Just one example: In Indonesia alone, the
government estimates that a half a trillion dollars in investment is required
to improve the ailing infrastructure. Or: According to estimates by the Asian Development
Bank, where the largest shareholder is Japan, infrastructure
requires an annual investment of $750 billion per year until 2020. This is
beyond the capacity of the ADB, which in 2012 granted
loans valued at only $7.5 billion.
Against this backdrop, the name of the new bank - "Asian
Infrastructure Investment Bank" – is perfectly understandable. A closer
look reveals that overall, this China-led regional
financial institution is quite complementary to existing U.S.-led Bretton Woods
institutions: the International Monetary Fund, World Bank or Asian Development
Bank.
Posted By Worldmeets.US,
Just recently, a presentation at the annual Boao
Forum on the southern Chinese island of Hainan provided an opportunity to
learn more about the Chinese initiative under the theme "Asia's New Future
- Toward a Common Destiny." Asian heads of state and government flocked to
the presentation. Internationally, though, the powwow was poorly attended. Austria
was the highest-ranking European country to attend and there was nary to be
found a Swiss Federal Councilor, almost always to be had for a little trip.
After all, the Silk Road strategy was outlined again in more detail by head of
state and party leader Xi Jinping. Yet the Boao Forum in contrast to the World Economic Forum, barely warranted a mentioned in Western media.
In Western capitals and media, the question is now being
asked is whether creation of the AIIB is a now,
separate version of the Bretton Woods institutions. China, they say, is now seeking
hegemony over international financial matters. Is this the "beginning of
the end of the dollar's global dominance?,"
puzzled financial analysts in Frankfurt, Zurich, London or New York whisper
inquiringly. Yet in Tokyo, Hong Kong and Singapore, analysis was more precise
and relaxed.
Hysterical U.S. Response to AIIB Diminishes American Influence (Huanqiu, China)
"All this," said a commentator from the daily Global Times - an offshoot of another state
mouthpiece, namely the ReniminRibao, the voice
of the Communist Party - "has nothing to do with the truth." Historically,
the situation is different from what it was when the Bretton Woods institutions
were created in 1944. The AIIB will not turn the global
financial order on its head. "On the contrary, the spirit of the AIIB," according to the Global Timescommentator, "is one of
diversity and fairness."
Also, with respect to the dollar as the current global reserve
currency, China is taking a relaxed stance. "The Bretton Woods system is a
product of the old days," judges the Global
Times. New global trends created the AIIB and
there is no reason now to look back to the old days of a single currency."
The International Monetary Fund and consequently the United
States has already responded below the radar of the general public. As IMF chief
Christine Lagarde said recently in a speech at Shanghai's
Fudan University, negotiations are underway to
include China in the IMF's special
drawing rights – a kind of artificial currency.
In addition to the dollar, the euro, the British pound and
the Japanese yen, the Chinese yuan will be part of
the IMF "currency basket." Of course, this isn't the end of the
dollar's global dominance, but the beginning of the end - or the beginning of
the transition to a multipolar global structure.