China’s rejection of Taiwan’s bid to become a founding member of the Asian Infrastructure Investment Bank (AIIB), which Beijing recently confirmed through its Taiwan Affairs Office (TAO), came like a slap in the face.
The China-led AIIB is to be an international financial instrument serving Beijing’s “One Belt, One Road” (一帶一路) political and economic expansion strategy. Taiwan being shoved around within an international organization is nothing new; this rejection once more highlights China’s bullying of the nation.
Outrageously, President Ma Ying-jeou’s (馬英九) government has handled the case as if it were a mere game, although it insists that its strategy is effective, placing its hope on China’s acceptance of “Chinese Taipei” (中華台北) as an ordinary member of the bank. Even this is little more than wishful thinking.
Among the applicants for the founding members of the AIIB, only Taiwan and North Korea were rejected, and the Chinese authorities have yet to give any reason for this. Certain countries are suspicious of the bank because Beijing might use it to attempt to challenge the investment banks and financial order built by the US, Japan and European countries.
In recent interviews, Chinese Premier Li Keqiang (李克強) said that the AIIB would be complementary to the existing financial system. Multilateral Interim Secretariat of the AIIB secretary-general Jin Liqun (金立群) committed to “building a lean, clean and green bank,” while saying that China would not dominate the bank’s operations. However, China’s unreasonable rejection of Taiwan’s AIIB bid displayed the Chinese tradition of “saying one thing, but doing another.”
China’s monopolization of decisionmaking with regards to the bank will only serve to increase suspicions within the international community.
Apart from dominating the AIIB by excluding others’ participation, China has been criticized for establishing the bank just to share the risk of its overseas investments. The “One Belt, One Road” policy is Chinese President Xi Jinping’s (習近平) strategic plan for realizing the “Chinese dream” that he is promoting.
It is an expanded version of the massive Chinese investments in developing countries that we have seen in recent years, as China plans to link Europe with Asia through the land and sea. The Chinese government also proposed the grand Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road, a proposal that has been widely questioned.
However most importantly, in terms of the Chinese government’s aid and state-run enterprises’ investments abroad, the emphasis is on the political benefits over the economic ones. Not to mention that Beijing is notorious for colluding with or even bribing top officials of authoritarian regimes to obtain infrastructure contracts.
The Chinese are also notorious worldwide for their “doufuzha projects” (豆腐渣工程), meaning shabby construction work having the strength of tofu dregs. Many of its investments abroad have little actual economic benefit, and investments are often made on large, but useless, infrastructure projects. Eventually, many of the construction projects are canceled, suspended or become white elephants. Statistics show that about 90 percent of Chinese investments abroad suffer financial losses. The total amount of its bad loans to Venezuela and some other countries in recent years is in thought to be in the region of tens of billions of US dollars.
Since the AIIB might serve as an international financial instrument for China’s “One Belt, One Road” policy, Beijing is taking the initiative to lure other member states to establish the bank to share the risk, and such practice would certainly cause doubts. Besides, the “One Belt, One Road” passes through numerous countries, such as those bordering the South China Sea, Myanmar, India, Sri Lanka, Pakistan, Muslim areas around Xinjiang and Ukraine, many of which are tense regions, making it difficult for Beijing to push for the policy.
Since this is the nature of the “One Belt, One Road” strategy and the AIIB, Taiwan must not just jump on the bandwagon and accept wholesale whatever is on offer. Joining the AIIB might bring business opportunities such as a few development projects, syndicated financing, issuing bonds and participation in international financial exchanges, but sacrificing national sovereignty is too high a price to pay. In addition, the AIIB is very unlikely to bring a lot of business opportunities to Taiwan.
China has focused on economic reform and opening up to the rest of the world for more than three decades, and during this time, Taiwan’s government, media and business sectors have been pushing for investment there, but China’s economic expansion has brought Taiwan falling wages, increasing unemployment, an expanding wealth gap, a hollowed out industrial sector, economic hardship and — worst of all — it has absorbed all Taiwan’s political and economic power.
Although China’s position as the world’s factory has become gradually less important in recent years, those who continue to promote investment in China are still entranced by the myth about the “world market” that lies at the end of the road to China.
The “One Belt, One Road” strategy is part of Xi’s “Chinese dream,” and the Ma administration’s view is that this dream will help Taiwan succeed. This outlook is causing the government to handle the AIIB issue disgracefully. For example, former vice president Vincent Siew (蕭萬長) asked Xi for “instructions” during their 45-second meeting at the Boao Forum for Asia in China’s Hainan Province last month, and the Mainland Affairs Council submitted Taiwan’s AIIB membership application to the TAO — two actions that hurt Taiwan’s dignity.
Bringing out the arguments used to promote the Economic Cooperation Framework Agreement five years ago, Ma and others continue to claim that AIIB membership for Taiwan would be beneficial to cross-strait relations and a stepping stone for negotiating free-trade agreements, all in an attempt to once again deceive the Taiwanese public.
From a political perspective, “Chinese Taipei” is the result of a compromise with the international community, and China will not accept this title for Taiwanese membership in an international organization that it leads. At the same time, the Ma administration may claim to accept the so-called “1992 consensus,” which is an integral part of the “one China, different interpretations” view, but giving up names other than the Republic of China (ROC) or Taiwan to join the bank makes it clear that “one China, different interpretations” is just another deceptive slogan.
Most important, Taiwan must pursue membership in the proposed Trans-Pacific Partnership (TPP). As Japanese Prime Minister Shinzo Abe is traveling to the US to address the Congress, the days near that visit will bring a breakthrough to the multilateral trade agreement. Joining the TPP rather than the AIIB, which lacks a relevant leading principle, must be Taiwan’s only consideration.
Translated by Eddy Chang and Perry Svensson
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