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The US Disappoints in Asian Economic Development

Nov 03 , 2014
  • Wu Zurong

    Research Fellow, China Foundation for Int'l Studies

On October 24, 2014, twenty-one Asian countries signed an intergovernmental memorandum of understanding for the establishment of the Asian Infrastructure Investment Bank (AIIB). It is a milestone agreement, which will pave the way for funding regional infrastructure projects in the near future. As there is a huge need of about 8 trillion USD in infrastructure investments in Asia in the next decade to maintain the current economic growth rate, the establishment of the AIIB is like having a welcome rain after a long drought for developing countries in Asia. There is no doubt that the AIIB will promote economic development and prosperity in Asia, which will provide impetus to the recovery of the world economy. Therefore, it deserves help and support from all countries in the world, particularly from the United States and other developed countries. It could set a good example of close cooperation among developing countries, as well as between developed and developing nations.

However, what the US has said and done about the establishment and operation of the AIIB is disappointing, and in a certain sense it damages its own image. When China and other AIIB members are emphasizing that they will never compromise on international standards and that their talks and consultations on the establishment of the AIIB are conducted in broad daylight, the US State Department spokeswoman, according to the news report, said that “Secretary of State Kerry has made clear directly to the Chinese as well as other partners that we welcome the idea of an infrastructure bank for Asia, but we strongly urge that it meet international standards of governance and transparency.” While people in Asia may feel that the US advice is appreciated, they really find it very hard to understand what the US statements actually mean. However, people all agree that the US is not offering valuable expertise in running a multilateral bank in a charitable manner, as the only superpower in the world should.

What is more disturbing is the Australian Financial Review’s news report of October 24, which said that “US Secretary of State John Kerry had personally asked the Australian Prime Minister Tony Abbott to keep Australia out of the AIIB.” According to many observers, both Australia and the Republic of Korea (ROC) had expressed their interest in joining the bank before, but under strong US lobbying and political pressure, they became hesitant, and then absent from the signing ceremony on October 24. The US actions are certainly very unpopular in Asia and also in other parts of the world. It also raises a question of what role the US is playing in Asia, which has been under discussion for a long time. With regards to the AIIB, what the US did to Australia and the ROC is obviously playing a divisive role. The US is not helping and encouraging Asian countries to work together for economic development, but sowing seeds of discord among them. It is not in the interests of Australia and the ROC as well. And the two countries may change their minds as time goes on.

What the US has said and done with regard to the establishment and operation of the AIIB is not wise. The US will never succeed, and will, most probably, suffer in the long run if it continues to apply a military alliance strategy to its economic arena in Asia. It is also harmful to the economic recovery of the world. As economic globalization surges forward, the economic interdependence of all countries will continue to strengthen instead of weaken. The US and other developed countries are on the same boat. It would be a mission impossible to separate them. The world can become more prosperous only by strengthening economic cooperation between developed and developing countries.

Frankly speaking, the root cause for the US actions towards the AIIB lies in the fact that the US still refuses to give up the Cold War mentality and zero sum logic. The continued desire of the US to dominate Asian affairs leads to its opposition to any innovation and progressive change in Asia. US worries about the AIIB are absolutely unnecessary. The AIIB can only complement and help the World Bank and the Asian Development Bank (ADB) in supporting Asian economic development projects, and will never, in any way, harm them. There is no zero sum game, nor competition for dominance. The three banks have every reason to work together, and not a single reason to compete. Hopefully, the US will change course to encourage and support Australia and the ROC to join the AIIB in the near future.

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