China Demonstrates its Power With AIIB

China Demonstrates its Power With AIIB

US allies defy Washington, defect to its investment bank


China is winning, of that there can now be no doubt at a time when most world powers are falling in with its plans, either in kowtow mode like the UK or with a somewhat more upright stance like India. The weakest-looking country in this scenario is the US, whose superpower status is being challenged rather faster than it expected and it loses its influence over allies including the usually-eager UK.

The trigger for this assessment is not renewed Chinese aggression in east Asia or the borders of India, nor is it China’s power plays in established international organisations or financial markets. Instead it is China’s plans for a new Asia Infrastructure Investment Bank (AIIB) and its growing interest in becoming involved, maybe rather more precariously, in Afghanistan’s peace talks.

Both initiatives demonstrate the diversity of its growing international self-confidence and ambitions under President Xi Jinping, who took office a year ago. The initiatives also meet a need because they fill gaps that China has spotted in existing arrangements – Asia’s need for massive infrastructure investment, and the diplomatic vacuum left in Afghanistan at a time when talks with the Taliban seem likely and the US gradually withdraws.

Tomorrow, March 31, is the deadline that China has set for countries to apply for founding membership of the new AIIB, and nearly 30 have already done so. The UK hit the headlines when it said it would join, prompting a US official to issue a rare criticism of a longtime friend. “We are wary about a trend toward constant accommodation of China, which is not the best way to engage a rising power,” the un-named official told the Financial Times.

David Cameron, Britain’s (possibly outgoing after the May 7 UK general election) prime minister deserved the kowtowing reprimand because he has constantly followed a pro-China line since Beijing side-lined him as a punishment for meeting the Dalai Lama in London in May 2012. In practical terms, the government hopes that doing what China wants will increase investment in the UK, though there is little evidence yet of that happening.

The UK however was only the first of many on the AIIB. Others that followed and said they want to become members have included Russia, Denmark, South Korea, the Netherlands, Brazil and Turkey, and America’s European allies France, Germany and Italy. Australia held out till yesterday, when it caved in.

The US is now having to reassess its position. The only significant ally it has left is Japan, which has expressed understandable concern about Chinese domination of the bank’s decisions and a lack of attention to environmental protection and controls over fundraising and quality of projects. Australia said yesterday that no one country should control the bank.

India became involved last year when the bank was first mooted, demonstrating Prime Minister Narendra Modi’s pragmatic approach to dealing with China. When President Xi visited India last September, Modi secured pledges of US$20 billion in investment in (unspecified) infrastructure projects over five years.

The AIIB is a potential challenger to the World Bank and Asian Development Bank, over which the US and Japan exert significant influence. The US and others have resisted reforms in the control of those two banks, and of the International Monetary Fund, so it is scarcely surprising that China is creating an alternative Asian power center for infrastructural investment.

Meanwhile China’s initiatives in Afghanistan are more tentative. There have been various moves since President Ashraf Ghani took office in Kabul last year and these have included Chinese meetings with Taliban leaders in Beijing as well as Pakistan and Quetta (where the Taliban has an office).

This is somewhat unknown territory for China, which has no track record in international diplomatic mediation, but it fits in with Beijing’s wish to become more established on the world stage. Chinese leaders are also worried about civil unrest in Muslim-dominated areas of its eastern province of Xinjiang. https://www.afghanistan-analysts.org/talks-with-the-taleban-again-this-time-for-real/

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