In spite of the fact that China considers Taiwan a breakaway territory, Taiwan wants to join. It will be required to join under another name. Norway also will join even though relations with China have been rather chilly since the Nobel Peace Prize was awarded to a Chinese dissident writer. The bank is described in Wikipedia: The Asian Infrastructure Investment Bank (AIIB) is an international financial institution proposed by the government of China. The purpose of the multilateral development bank is to provide finance to infrastructure projects in the Asia region.[2] AIIB is regarded by some as a rival for the IMF, the World Bank and the Asian Development Bank (ADB),[3] which are regarded as dominated by developed countries like the United States.[3]
As an article in Zero Hedge notes, development of the bank was aided by the slow pace of voting reforms to the International Monetary Fund and World Bank. The U.S. Congress helped by further delaying reforms.
The U.S. has been annoyed at the number of its allies that have joined the bank including the UK.: The Financial Times quoted a senior US official saying there had been “virtually no consultation” on the UK’s participation in the set-up of the Asian Infrastructure Investment Bank (AIIB).The source also said the decision appeared to be part of a trend towards “constant accommodation” of China by the UK.
The US is concerned that the AIIB will undercut the World Bank and the International Monetary Fund that are both based in the US. Obama has expressed concerns about the governance and transparency of the operations of the new bank. The president of the World Bank, Yong Kim, welcomed the activities of the new bank and said that the need for infrastructure development in the developing countries in Asia was very great. A list of all the participating countries can be found here. The UK is not the only country from Europe to join the AIIB, with France and Germany also joining. Brazil also is joining and U.S. allies Australia and New Zealand. India, the Philippines and other Asian countries will join along with Russia. One holdout so far is Japan.
Jin Canron, a professor of international studies at Renmin University in Beijing, said that “such wide and warm support was unexpected.” Wu Xinbo, director of the American Studies Center at Fudan University said: “This has shown China that you don’t always have to work your way with the United States, that you can work your way with the region and many others outside the region. As long as people think what you are doing is beneficial and that you are providing for the public good, you don’t need U.S. approval.”
The Americans are nervous about the development of the new bank. Bonnie Glaser, senior Asia adviser at the Center for Strategic and International Studies in Washington, said that Obama had taken a hard line against Chinese power being extended throughout the Asian region and had warned allies against joining the new bank. Glaser said of Obama: “He said China should not be able to write the rules — the United States should write the rules.”
After clearly losing the battle, the U.S. is now trying to get the World Bank and the Asian Development Bank to cooperate with its competitor to ensure that projects meet certain standards. World Bank projects themselves have been criticized for violating human rights at times. The Chinese organizers will need to meet transparency and environmental standards. The interim head of the bank Jin Liquin has experience working both in the World Bank and the Asian Development Bank. Nicholas Lardy a senior fellow from the Peterson Institute for International Relations in Washington describes Liquin as an experienced and knowledgeable person who is hiring an able staff of about 40 people. About half his staff will be from the Chinese Finance Ministry but half will be recruited internationally. Given that the U.S. is always touting the virtues of competition surely it should be welcoming the new bank on the block.
