politics

U.S., Japan isolated as allies line up to join China-led bank

43 Comments
By MATTHEW PENNINGTON

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43 Comments
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Ouch, this could get messy. Alarm bells went up for me when the Brits joined, whats really going on……hmmmm

2 ( +3 / -1 )

Ah, the Associated Press cut-and-paste articles. Gotta love 'em!

US/Japan "isolated...." Perhaps. From this single, China-dominated Asian development bank. Invited to join, but deciding on their own to not join.

But "isolated" from everything else in the whole wide world? "Isolated?" Not so much. File this report under, "Meh!"

-2 ( +5 / -7 )

"Isolated" sounds a bit strong. The US plays a leading role in the World Bank. Japan plays a leading role in the Asian Development Bank. Therefore neither really needs to play a lead role in the AIIB, but they will surely be associated with it in some ways, and Minister Aso has already indicated interest by Japan.

0 ( +3 / -3 )

Minimize the significance at your own risk. It's part of the beginning of the end of USD hegemony.

2 ( +6 / -4 )

I think Japan and USA are isolated and cornered. If AIIB is turned out to be managed in a fair and transparent way, Japan should join too.

5 ( +9 / -4 )

Looks like Abe backed the wrong horse!

2 ( +10 / -8 )

I have no doubt Japan will be asked to be 'the exception' and have the deadline extended while they form panels to talk about thinking about it -- or asked to be allowed in later if they change their minds. Aso's already saying he's been misunderstood and flip-flopped, let's see if they'll do it further in the two days left for business.

0 ( +7 / -7 )

No need to rush, China hasn't even built the building yet.

-6 ( +3 / -9 )

competition is good, having an extra lender will give borrowers (world governments) more bargaining power when it comes to interest rates charged

1 ( +3 / -2 )

U.S., Japan isolated as allies line up to join China-led bank

New world order, what they call it 'Chinese Century' or Chinese + Indian half century each !

0 ( +1 / -1 )

Beijing has pledged to put up most of the initial $50 billion in capital for the bank, which is expected to be set up by year's end.

The co-founders are asked to contribute money. China, holding majority of the shares, decides where to use the money.

-5 ( +1 / -6 )

No. Stay put. I remember how European countries rushed into Euro currency at beginning. Now it is a mess.

The U.S. has expressed concern the new bank will allow looser lending standards for the environment, labor rights and financial transparency, undercutting the World Bank,

This sounds trouble already to me. Shadow banking practice by China may bring China down, you know.

1 ( +6 / -5 )

The world is getting tired of the US controlling the flow of money, internationally intrusive tax/trade laws, currency manipulation, money politics and the NSA spying on all transactions. As Frederic suggested above, this is just the one of the first steps to removing the US dollar as the world currency.

The ramifications for the US will be huge, and most Americans are so used to being the one and only that they are completely clueless about what is going to happen. Even those in the US govt. are surprised, as evidenced by their stumbling and poorly thought out reaction.

Japan is stuck as the only one siding with the US here, not a good position to be in.

8 ( +12 / -4 )

China's horde of foreign exchange reserves is the reason behind France, Germany, Italy, and Britain willingness to 'join' the founding shareholders. Politics aside there is no clear policy on governance or lending, or any written memorandum of transparency standards.

The challenge for Japan is a political one, whether or not all the countries join is frankly irrelevant, the political attention afforded to the government of China and the perceived calculated attempt to undermine the primacy of the Asian Development Bank clearly has set the alarm bells ringing.

The facts when one scratches away the veneer, is congress will never divvy up funds to a organization or any organization run by the Chinese. Crunching the numbers, the current US administration is still in hock on its capital contribution to the Asian Development Bank. ADB and the IMF current estimates point to investment totaling trillions for national development infrastructure and hundreds of billions in regional infrastructure. Would any country commit this sort of finance to a development bank without clear protocols of how that money will be distributed, neither the ADB nor the AIIB combined can raise anywhere near the sums required.

1 ( +2 / -1 )

Japan should join too

And who said Japan would be let in?

0 ( +3 / -3 )

Running a multilateral development bank is hard work. It is the Americans which has encouraged China to contribute to the common public goods, and when China does and gets an endorsement from scores of America's friends and allies, the Americans slink into the corner to grumble, with only the Japanese now in that same corner.

It is time for the Americans to wish China and the AIIB co-founders well, and pledge technical help (since Congress will not authorize capital or participation) to make this institution work and work well.

You are an adult, America. Behave like one and be helpful and gracious. Even your Japanese friends are at least respectful.

3 ( +6 / -3 )

itsonlyrocknrollMar. 27, 2015 - 08:24PM JST

neither the ADB nor the AIIB combined can raise anywhere near the sums required.

China's foreign reserve is 3.8 trillion dollars, whereas that of US is 0.04 trillion dollars. By the way, US is the world's largest net debter nation. which is no problem, as long as US dollar is the key currency of the world trade.

China has to think of some good use of the 3.8 trillion dollars. But I do not think other nations should contribute money for the sake of China, unless they are convinced that they get more than they contribute.

Infrastructure loans are risky business, unless the money comes right back to the country as construction fees.

-4 ( +2 / -6 )

Infrastructure loans are risky business, unless the money comes right back to the country as construction fees.

Japanese banks under the phoney guise of "economic aid" under the Asian Development Bank, profited fabulously for decades. Now that easy lending business is being challenged by a stiff competition. It's about time.

1 ( +4 / -3 )

https://au.news.yahoo.com/thewest/business/world/a/26818173/us-stance-against-aiib-embarrassing/

Come on, US...accept the world is changing. Japan is the only one siding with you. The rest of the world won't lose this huge chance just because the US is acting childish. This time, in the EU we are doing our free choices, and they are right. Well done, Germany, UK, Italy, France, etc. Well done, South Korea and Australia! US and Japan: wake up!!!

2 ( +6 / -4 )

tinawatanabeMar. 27, 2015 - 05:16PM JST

I think Japan and USA are isolated and cornered

Do not worry, when US and Japan are combined, they are producing more than 1/3 world GDP.

-3 ( +6 / -9 )

This China lead banking will promote growth in the whole Asia. Can Japan really afford to stay outside? There is lot of export possibilties for the Japaneese companies if they join in. This China style investments are Always so big and there must be hugh profits when companies get contracts. Asia unite............................

3 ( +5 / -2 )

@globalwatcher: US/Japan vs the rest of the world. Please, both should join the new century. In the Western press tons of articles are making fun of the US because of this debacle. If the US want to ignore this, well, it's their choice, but it's not healthy for their own people.

1 ( +4 / -3 )

Hi CH3CHO, where is this all heading?........ Alex80 comments will be echoed allot more forcibly in future provision for a fast track negotiating authority for TPP executive branch jurisdiction over negotiations with all 12 nations. The government of China has skillfully engaged in their own political equivalent of Mahjong and effectively dislocated both US and Japan from Southeast Asia’s regional bloc. This makes Abe San landmark address to joint session of the Senate and House of Representatives pivotal to any 12-nation free-trade agreement.

3 ( +3 / -0 )

Do not worry, when US and Japan are combined, they are producing more than 1/3 world GDP.

It is not for purchasing power parity of GDP. Quartar, Luxemburg and Singapore are top of the world as GDP per capita.

AIIB not like other banks which are promoting for economic development and poverty relief. It is for infrastructure loans. US desperately needs modernized infrastructure. In NY, there was a gas leakage and fire explosion due to aging infrastructure. When I compare the Singapore and HK airports with most of the airports from US, US airports are backward and they are still sleepy as 20th century.

Japan does not desperately need modernized the infrastructure like US. However Japanese industries will get the explosive opportunity for export. For example selling Advanced clean brown coal blasting equipment to the nation like India. As a government, Japan is reluctant to join it. However Japanese industrialists wanted to join it. US will not become the major customer like India for Japan. Japan will lose export market for not joining it.

3 ( +5 / -2 )

When the US speak about "transparency" and "moral standard", they are just embarrassing themselves. Please, read this article by Martin Wolf.

http://www.ft.com/intl/cms/s/0/0dff595e-d16a-11e4-86c8-00144feab7de.html#axzz3VaaxNC2i

4 ( +5 / -1 )

There is no shame in walking away. There needs to be political consensus before a financial commitment of this size. Political consensus in the shape of normalizing stable diplomatic relationships between neighbors that not only could herald a Asian Infrastructure Investment Bank but could also bring lasting prosperity for generations to come.

-1 ( +1 / -2 )

Remember the Asian currency crisis about 2 decades ago when Japan proposed the Asian Monetary Fund to help Asian countries to develop and defend itself from foreign currency attacks? Well, it would have been a good institution for Asian countries but it ultimate failed when Japan caved in and gave up when U.S. and other G-7 told Japan not to do it. U.S and other G-7 countries think it would be a competition for IMF.

Contrasts Japan's AMF to China's AIIB. China stayed its course even when U.S. and its allies pressured and attacked it. In the end, with the perseverance from China and other initial founding members, even American's allies are changing their mind and are going to join AIIB.

AIIB will help Asian countries develop their much needed infrastructures. As AIIB is an open institution and Japan is welcome to join it as a founding member.(even Vietnam and Philippine are founding members)

Will Japan become a founding member and have its voice heard on the table or will it be watching from outside the windows? It is up to Japan.

2 ( +3 / -1 )

The American total debt to China is $1.3 trillion =1300 billion

and China is using $50billion of it to start a bank ... Can I have a Chinese account please

0 ( +2 / -2 )

Meh, the enemies of democracy and freedom of speech will cheer, but it is a pretty small victory. US stock market doesn't care in the slightest.

-8 ( +0 / -8 )

And who said Japan would be let in?

Because China asked them to join as early as last year.

中国の程永華駐日大使は27日、都内で記者会見し、中国主導のアジアインフラ投資銀行(AIIB)について、「昨年のかなり早い時期から中国のハイレベルの担当者が日本政府に積極的に参加するよう説明してきた」と明らかにした。 <http://www.sankei.com/world/news/150327/wor1503270047-n1.html

2 ( +5 / -3 )

China welcomes all the countries in the world. Included Japan, yeah.

http://www3.nhk.or.jp/nhkworld/english/news/20150320_41.html

A Chinese government official says it will welcome Japan if the country decides to join an international development bank. China proposed establishing the bank.

2 ( +2 / -0 )

scipantheist, this is not about stock market. As Frederic said above, it could be about the beginning of the end of USD hegemony, and then the end of US hegemony.

0 ( +3 / -3 )

the end of US hegemony.

It already started many years ago. It's normal, natural. It's hystory. The US must only accept the world changed, it's more multipolar, and everyone has to interact with the others peacefully, accepting the different cultural, economic and political systems.

1 ( +2 / -1 )

Will they let Greece in?

The last Trojan horse was not unleashed on Troy but on the EU.

Maybe US should encourage Greece's entry to the new bank, as a poison pill.

-3 ( +0 / -3 )

The participants in the JT environment are usually very uninformed about the situation in China. It is true that there are huge environmental problems and a huge amount of non-transparency and corruption in government at all levels.

That being said, there are actually massive and mostly positively developed transportation infrastructure projects within China and stretching out to and through its neighbors. The effect of this infrastructure is to not only speed up the movement of goods and people within China but also further integrate the supply chain network that undergirds the intense economic activity in the region. Xi Jinping's "belt and road" ideas are not pipe dreams but actually real and potential. That is why the neighbors want in on Chinese-led infrastructure development and also why the further destinations in Europe want in to.

This is not to say that there will not be governance issues for China and the AIIB, but we should also appreciate that China has probably the most outstanding infrastructure performance in recent years. Unlike in Japan, China's road and rail lines actually lead somewhere useful, and unlike in America, the Chinese understand the importance of transportation and other infrastructure to buttress prosperity.

The Chinese have credibility. In this instance the Americans do not, and while ironically Aso Taro makes sense when he posits the notion of possibly joining the AIIB the overall posture of the Abe government with its co-dependent relationship with America stops the Japanese from carrying through.

1 ( +1 / -0 )

Japan is only backing the US because Japan backed/controlled Asian Developent Bank also feels threatened by this new bank. Japan also wants the US backing on changing their constitution to allow military buildup and military adventurism. They also want the US to get involved in silencing the criticism against Japan's attempts to wipe out their war time records, and wants the US to get involved in any possible territorial clashes against China. Japan will sell the US down the river, even if it means benefits for Japan only. Americans should not trust Mr. Abe's snaked forked tongue government.

-4 ( +3 / -7 )

@Hotmail: you're fun. You are speaking like if Japan is stronger than the US, and the US is Japan's underdog. Honestly, it's vice versa.

1 ( +3 / -2 )

@keika1628MAR. 28, 2015 - 12:26AM JST The American total debt to China is $1.3 trillion =1300 billion and China is using $50billion of it to start a bank ... Can I have a Chinese account please

Don't forget next to China, USA owes to Japan -- China stopped to loan now. So, its debts to Japan is increasing close to its debt to China, Let's wait to see how other Asian countries will talk Japan to join their movement.

-2 ( +2 / -4 )

PM Abe please do what is best for Japan and not the United States.

4 ( +7 / -3 )

As AIIB will be more influential than ADB soon, Japan can have greater share of ADB. Congrats to Abe and his followers, another way of moving towards isolation.

5 ( +5 / -0 )

Why don't US & Japan combine the two and make a "World Development Bank" with the largest capital funding? Besides nobody knows about the real economic state of the China and with Europe's economy in shambles, they're happy with any hand-out from China.

0 ( +3 / -3 )

What Chinese do not understand is that AIIB is destined to make a huge amount of bad debt.

The question is what AIIB or China is going to do about the inevitable bad debt. Writing off the debt as the developed countries did is a peaceful way, but China has to lose a lot of money. Using military threat for debt collection is the other way. But in the latter case, China is going to build a solid bad name. Either way, China is a loser.

-1 ( +0 / -1 )

If it happens, so what happens afterwards? Anybody think another bank would be different than the banks we have now? Is it just another way to lose money?

0 ( +0 / -0 )

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