AIIB closes Asian funding gaps
- By Mitchell Blatt
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E-mail China.org.cn, October 3, 2015
He also encouraged the U.S. to join, although this poses something of a catch-22 situation for Washington. The U.S. had initially feared that, if too many Western countries joined, the legitimacy this would give the bank could change the world financial order. Yet, by staying out, America has no say in how it will work, and the bank is already legitimized with or without American membership.
China, by virtue of contributing nearly 30 percent of the AIIB's $100 billion initial capitalization, effectively holds veto power, as a 75 percent vote is necessary for major decisions. In contrast to the World Bank, the AIIB also gives Asian countries more representation, reserving at least 75 percent of the voting share for them.
While those factors could be cited as reasons for U.S. apprehension, the new bank ultimately serves the same goals and adds some competition to the existing banking structure. The real clients are the countries in need of development, not the countries that want to project soft-power by offering investment capital.
As Xi said: "I don't believe any country is capable of rearranging the architecture of global governance toward itself. Obviously, such practice goes against the trend of the times. The improvement of global governance architecture should be decided by all countries."
That said, it is also true that projects can serve cross purposes. America's fear that it could lose power as a result of declining influence in the control of international banking systems itself implies that the United States views investment partially in terms of soft power.
But, whether America likes it or not, China's power is a reality it must work with. It would be better to work with China where possible than to resist China every step of the way. For something posing such a small threat as a new investment bank, America's opposition seems petty and ultimately fruitless. However, the success of Xi's U.S. visit also shows the two countries can still get along even with such disputes.
The author is a columnist with China.org.cn. For more information please visit:
http://www.china.org.cn/opinion/MitchellBlatt.htm
Opinion articles reflect the views of their authors, not necessarily those of China.org.cn.
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