Sat, Apr 18, 2015 - Page 8 News List

China’s cracks beginning to show

By Wu Hui-lin 吳惠林

Several major European countries — the UK, France, Italy and Germany among them — agreed last month to join the China-initiated Asian Infrastructure Investment Bank (AIIB), with hardly a thought of how the US might take this news. Surprisingly, the first to jump was the UK, with which the US is said to enjoy a “special relationship.”

The British chancellor of the exchequer, having resisted his US counterpart’s requests over the phone to think carefully before proceeding down this road, gleefully announced that the UK was to be the “first major Western country” to join the AIIB. This quick work was not very popular with France, Germany or Italy, all of which rushed to follow suit, leaving the US battered and bruised, having lost this particular battle in the international relations war.

Beijing’s unexpected international relations coup has raised questions whether this is an indication that major European powers are now thinking of expanding their trade relations with China in the hope of securing for themselves a larger slice of the Chinese market pie.

The beginnings of the AIIB go back to 2010, when an agreement to expand China’s voting rights in the IMF were opposed by the US Congress. On the surface, Washington says it doubts the AIIB will be able to meet international standards on human rights, the environment and workers’ rights, but in fact it is reluctant to see a further expansion of Chinese influence. Unfortunately for the US Congress, its boycott has backfired, giving Beijing the opportunity to gain the initiative.

When Chinese President Xi Jinping (習近平) visited neighboring Asian countries in September 2013, he floated the idea of setting up a “Silk Road economic belt” and a “21st-century maritime Silk Road,” together known as the “One Belt, One Road” initiative. The “belt” seeks to link China with Europe via a northern route through Russia and Central Asia, while the “road” is to link China to the southwest via a maritime route, down the Taiwan Strait, and passing India and East Africa and up into Europe.

China began implementing this strategy last year, signing agreements in Beijing with 20 countries to establish the AIIB with investment capital of US$100 billion. At the end of last year, it also set up a US$40 billion Silk Road infrastructure fund. Xi is hoping to find new momentum and outlets to drive economic development with this belt and road strategy, and to strengthen cooperation with other countries en route, to move away from the current US domination of international politics and economics. This is all in the interests of realizing its aspiration of becoming a superpower. The AIIB and the Silk Road fund are just financial instruments for the implementation of this “one belt, one road” initiative.

China is seeking to kill two birds with one stone by taking the lead with the AIIB. The “One Belt, One Road” initiative will not only enable Beijing to find an outlet for its unwanted production capacity — sending it to other nations along the Silk Road, which will solve its problems with excess production and funds — it will also drive economic development in its inland regions in central and west China. This will allow Chinese companies to develop, promoting economic restructuring and consolidating energy supply from Central Asia.

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