The US resistance to a Chinese-led Asian regional bank has left it isolated among its Asian and European allies, and given some heft to China’s frequent complaints that Washington wants to contain its rise as a world power.
South Korea, one of America’s closest friends in Asia, announced Thursday it will join the Asian Infrastructure Investment Bank (AIIB) which is intended to help finance the construction of roads and other infrastructure.
Beijing has pledged to put up most of the initial $50 billion in capital for the bank, which is expected to be set up by the year’s end. The US has expressed concern that the new bank would allow loosen lending standards for the environment, labor rights and financial transparency, undercutting the World Bank — where the US has the most clout, and the Asian Development Bank — where it is the second-largest shareholder after Japan.
Vikram Nehru, an expert on south-east Asia at the Carnegie Endowment for International Peace, said Chinese officials have made positive statements about the new bank cooperating with other lenders. He said the AIIB would benefit from tapping into the experience of the Asian Development Bank and World Bank, and supporting projects that those lenders already have in the pipeline.
But ever since Britain broke up with Washington two weeks ago and announced it was signing up for the AIIB, France, Germany, Italy and Switzerland quickly followed. India and all 10 members of south-east Asia’s regional bloc are among the more than 30 governments that have so far sought to join the bank, before a March-31 deadline. Australia has hinted that it would also join. But, Japan, which has tense relations with China, is still holding out.