Mon, Mar 30, 2015 - Page 8 News List

AIIB’s stakes are high for Taiwan

By Eric Chiou 邱奕宏

Earlier this month, France, Germany and Italy jointly announced they would join China’s initiative of the Asian Infrastructure Investment Bank (AIIB), right after Britain — the closest ally of the US — had already decided to participate in the new bank. As a result, four of the G7 members have delivered their endorsements of China’s new financial institution, despite objections from the US.

Furthermore, Australia and South Korea, who were originally dissuaded by Washington, are showing a renewed interest in signing up, although no final decisions have yet been made.

More astonishingly, even Japan, which had consistently echoed the views of the US and questioned issues of transparency and governance concerning the China-led bank, might consider joining the AIIB if some concerns could be guaranteed, Japanese Minister of Finance Taro Aso said

Meanwhile, Minister of Finance Chang Sheng-ford (張盛和) also said in the Legislative Yuan last week that, if invited, Taiwan would love to join, as it would open opportunities for Taiwan’s abundant capital.

As an increasing number of countries openly embrace China’s new financial initiative, some commentators have been quick to conclude that the developments surrounding the AIIB indicate a significant touchstone of Beijing’s diplomatic success and another example of the US’ waning influence. Nevertheless, whether growing sponsorship of Chinese-led banks implies a forthcoming collapse of the US-dominated world order remains to be seen.

BENIGN INTENTION

Since Beijing proposed the idea of launching a new multinational bank, its objectives and motivations have been broadly discussed. Beijing claimed that given the growing need for infrastructure financing in developing economies in Asia, it is important to provide sufficient finance. This would deepen regional economic integration and further sustain economic growth in the region. The Asian Development Bank (ADB) estimates US$8 trillion will be needed for infrastructure projects in Asia this decade.

Against this backdrop, Chinese President Xi Jinping (習近平), during his visit to Southeast Asian countries in October 2013, proposed creating a new bank to provide more funds supporting infrastructure development. One year later, the blueprint of the AIIB was drawn up, obtaining endorsements from more than 20 countries as co-founding members.

To lessen suspicion from Western countries, Beijing says that the new bank only aims to fill an urgent need for infrastructure financing in Asia, and it will still work alongside existing international financial institutions.

Despite Beijing’s allegedly benign intention, the AIIB — just one of many of China’s newly founded financial institutions — has been broadly perceived as a diplomatic tool for Beijing to extend its political clout and reshape the existing international financial order, which has been dominated by the West since World War II.

Noticeably, in addition to its commitment of US$50 billion for the AIIB, Beijing has also pledged US$40 billion for the Silk Road infrastructure fund, while promising US$10 billion for the BRICS bank, namely, the New Development Bank, which was co-founded by Brazil, Russia, India and South Africa, along with providing another US$41 billion toward a currency contingency fund.

China has single-handedly pledged nearly US$150 billion, revealing that Beijing is fairly dissatisfied with current international financial arrangements and intends to put more pressure on existing international financial institutions, if not radically overhaul or replace those with new ones.

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