LDP calls for cautious approach to China-led bank

Given Japan's total debt load (by far the highest among OECD countries), at almost 400% of GDP, she probably shouldn't get into a pi**ing contest with China, whose financial firepower has far surpassed Japan's.

One problem for and with initiatives from China (like this AIIB) is that they are perceived to come from one giant entity of China.

Chinese unilateral strategies, like reclaiming shallow ocean as land far from its borders, does not attract friends, not to mention confrontations over other territiory, whether with Japan in the ocean, or with India in the mountains. Investment strategies in far away places like Latin America and Africa, and the South Pacific (eg. a hospital ship in Tonga giving free medical care recently) also appear similarly unilateral.

This perceived unilateralism scares other parties, countries who share the same geographic, cultural and economic space. European G-7 members are not in the same space as Japan and the US who have very clear and well-defined interests in the Asian area. It is not surprising that the US and Japan have been non-commital at best.

Governance and other issues aside, as they become serious later, getting upset about Chinese initiatives is natural but not so useful. Instead, understanding the reality that they are happening and probably will happen more from now and knowing to deal with them on that basis is far more important. Engaging with Chinese institutions is better than getting upset - particular institutions rather than with a perceived entity that is 'China'.

Incidentally, Chinese institutions hold so much of a stake in the US debt, that if problems occur in the US economy, many investing institutions in China are not going to get the returns they would want. In a sense, the US already is heavily engaged with China economically on this basis alone.

The US does not want Japan to join. The US lead World Bank and IMF don't have enough money, and the US wants Japan's money. Japan will untimately join. If it is not a member, its companies will never get any contracts for Asian infrastructure. That would be a big loss for Japan and its companies.

I don't get it. China, the same country who just declared 2000 acres are theirs and are now building islands over reefs for a military base. The same China that criticizes Japan for Yasukuni but never acknowledges Tainanmen Square. The same China that has the worst air pollution and uses 47% of the world's coal. The same China where half of the surface water is undrinkable. The same China where about 40 percent of farmland relies on underground water for irrigation, and an estimated 90 percent is polluted.

This country is supposed to lead the world's bank?

Harvey, it is China that needs all the infrastructure work.

CrazyJoe

Given Japan's total debt load (by far the highest among OECD countries), at almost 400% of GDP,

Where did you get that statics? In 2014, Japan total debt was 230% of GDP. In 2015, it is more likely increased to 240% of GDP.

http://www.forbes.com/sites/mikepatton/2014/09/29/the-seven-most-indebted-nations/

http://www.tradingeconomics.com/japan/government-debt-to-gdp

Japanese government can default to citizens if it can not pay the interest to investors. Argentina defaulted many times and did not repay the debt. It is better defaulting earlier than overloading never ending interest bill for future.