On Oct 2nd, 2013, when President Xi Jinping met with the president of Indonesia Susilo Yudhoyono, Xi proposed to establish an Asia Infrastructure Investment Bank (AIIB) in order to fund infrastructure building in Asia. The proposal has been very well received by ASEAN countries. Apparently, however, the United States is looking at the proposal with suspicions. For the time being, the United States does not want to join the bank and told its regional allies not to join as well. I do not believe this is a constructive attitude.
Currently, I am in Washington D.C. and I have met quite a few American colleagues and friends, many of whom believe that the United States should be a part of the effort. They are right. AIIB should be a topic of cooperation between China and the United States. It should be a win-win project for the region. The reasons are obvious.
First, if you look around the world. There are so many crises. Middle East is the center of regional war, confrontation, and conflict. Ukraine crisis persists without any subsiding sign. Africa is struggling against Ebola with the help from the international community. World economy, in addition, is not in good shape. Some part of the world may slip again into recession. Against such a backdrop, East Asia remains the most dynamic and vibrant region in the world. Despite the tensions on territorial disputes, it still is the global growth engine. ASEAN—an important part of East Asia with a population of six hundred million—has tremendous economic potential. However, infrastructure is the bottleneck of its economic development. I went to Indonesia last April. My Indonesian friends told me that China has 104 thousands of kilometers of highway, while Indonesia has only 700 kilometers. If, one day, Indonesia succeeds in building its highway system around the country, the tremendous economic potential would be unleashed—for the benefit not only of Indonesia but also of the region.
Infrastructure building is very expensive. At this stage, Indonesia lacks sufficient investment. The same applies to many countries in the region. AIIB will be very useful to help many Asian countries in infrastructure building when it is found. If the United States and Japan join the AIIB together with China and the ASEAN countries, AIIB will play an important role in promoting growth of the region. The whole world will also benefit from it. Everybody will be a winner.
Second, AIIB is not designed to replace Asia Development Bank and/or any bank in the world, for many banks do not want to invest in infrastructure: it is a long-term investment and the return usually comes slow. This is why the demand of infrastructure in the region is huge. AIIB will partly fill up the vacuum. Take ASEAN as an example. As far as China’s concern, prosperity of ASEAN is excellent news. In 1978, the trade volume between China and ASEAN amounted to 859 million US dollars. Last year, it rocketed to 443.6 billion US dollars to the great satisfaction of both sides. Infrastructure building in Southeast Asia will give a strong push for the further economic and trade cooperation between China and ASEAN. That would be a piece of good news for everybody.
Third, AIIB can offer a good opportunity for Sino-US cooperation. The United States is the only superpower and the largest developed country. China is the largest developing country. June 2013, in Sunnyland, California, President Xi Jinping and President Obama agreed to build a new model of big power relationship, characterized by no conflict, no confrontation, mutual respect and win-win cooperation. The consensus reached by our two presidents shows the world that our two countries are determined to avoid a Thucydides trap. This is a reassurance not only to the region but also to the world. The new model of big power relationship is a wonderful framework. We need to put flesh on the bones. AIIB is part of the flesh.
Asia is rising. AIIB will contribute positively to the rise of Asia. China and the United States need to cooperate for this wonderful undertaking for the benefit of Asia and the rest of the world.