The Asian Infrastructure Investment Bank will Help to Expand China’s Regional Power
By admin March 20, 2015

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On March. 19th, 2015, according to local newspaper Donga Ilbo, South Korea plans to officially announce its decision to join the Asian Infrastructure Investment Bank (AIIB). Ahn Jong-beom, the senior presidential secretary for economic affairs of South Korea, however, claimed that joining the AIIB hasn’t yet been decided at a press briefing the day before. Nevertheless, we will know South Korea’s attitude and decision very soon as the deadline to becoming a member of AIIB is March 31.

As early as October 2013, Chinese President Xi Jinping pledged to set up an Asian investment bank to help fund infrastructure projects as he visited the Southeast Asian region. About a year later, on Oct 24, 2014, Representatives from 21 Asian nations signed an agreement to establish the AIIB. As of January 2015, 26 nations have joined the AIIB, including all the ASEAN members, New Zealand and other Asian countries.

The AIIB will be based in China and help those nations with their financial needs for infrastructure development. Even though the Asian Development Bank (ADB) and World Bank are both acting as similar roles of funding these projects, it is believed that there is a huge gap between supply and need. The ADB estimated that the East Asia region alone would need at least $8-trillion worth of infrastructure investment in the next decade.

Besides economic interest, the establishment of AIIB will expand China’s regional power in various other aspects including political power. That’s why Washington is trying to urge western nations to think twice before joining the AIIB. Unlike ADB which is led by Japan mostly, AIIB will be led by China and the United States will not have much say towards its operations or decisions. A strong AIIB will break the balance of power that the United States wants to keep. However, western nations seem to be more interested in the economic interest of Asia and are simply ignoring the plea from Obama’s administration. On March 12, 2015, the UK confirmed joining the AIIB as a founding member and as the first major western nation to do so. The UK Finance minister George Osborne said:” Joining the AIIB at the founding stage will create an unrivaled opportunity for the UK and Asia to invest and grow together.” Soon after the United States expressed its concerns over the governance and transparency of the AIIB, France, Germany and Italy agreed to become members of the AIIB on March 17th. One day later, Luxembourg confirmed its intention of becoming a founding member of the AIIB.

The voices from China seem to be friendly, Hong Lei, a Foreign Ministry spokesman said that China wants to set up a mutually beneficial infrastructure investment and financing platform to contribute to regional development. Regardless of what each party’s true intention is, there is no doubt that the AIIB, which is expected to be launched by the end of 2015, will largely expand China’s regional power and reshape the current balance of power in the future.

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