from New Eastern Outlook: In the area of finance and creation of new financial institutions much hope of many nations has been placed on China. Last year China played a catalytic role in helping establish a new BRICS Infrastructure Development Bank to finance infrastructure projects in select emerging economies. Soon after Beijing announced it was creating another Asian Infrastructure Investment Bank (AIIB) to finance a part of Asia’s huge infrastructure deficit. Now as the details of the just-launched AIIB become clearer, and as the Washington-based IMF appears finally eager to embrace China with larger voting rights, the question is whether Beijing is being seduced by a desire to be included in the “family” of the Western hegemon powers, the USA and the EU, the “Great White Masters.”
The Asian Development Bank (ADB) estimates that Asia will need $8 trillion over the next decade for energy, transportation, telecommunication and water sanitation. Now private investment in infrastructure runs a mere $13 billion a year, most in low-risk projects. Official development assistance adds another $11 billion a year, a shortfall exceeding $700 billion a year.
Early this year, China announced it was turning from the US-dominated IMF and its sister, the World Bank, and creating a new alternative that would presumably operate to address that $8 trillion infrastructure deficit across Asia and Eurasia. Washington was furious. The Obama Administration urged Britain and Germany, France and other major EU Western “allies” to boycott the new bank, to no avail. Washington then, like a petulant school bullyboy, arm-twisted loyal vassal Japan to boycott the membership in the Asian Infrastructure Development Bank. Where do we stand today, some eight months later, as Beijing celebrates the official opening of the AIIB?