The US appears to have manoeuvred itself into an isolated corner by opposing a Chinese-backed development bank that has received support not only from France, Germany and Italy, but also from long-time US ally Britain.
The four largest members of the European Union have been approved as founding members of the Asian Infrastructure Investment Bank (AIIB), marking a major diplomatic coup for Beijing, which originated the idea.
A total of 57 countries have won approval as founding members of the infrastructure bank, Beijing said yesterday.
The 57 include four of the United Nations Security Council’s permanent five, 14 of the 28 European Union countries, and 21 members of the 34-strong Organisation for Economic Co-operation and Development (OECD).
The line-up does not include the United States or Japan but represents a major success for China after close US allies such as Britain, France, Germany and Australia decided to take part even after Washington initially opposed them signing up.
The institution is aimed at financing infrastructure across Asia rather than poverty reduction, and China’s official news agency Xinhua said in a commentary that it offered Western countries “lucrative business opportunities”.
China has repeatedly said the institution is “open and inclusive”. It approved Norway despite cutting all high-level ties with Oslo after the Nobel Peace Prize went to Liu Xiaobo in 2010.
The aim is for the development bank to invest in roads, ports, airports, energy provision and telecommunications in Asia, and European companies believe that participation in the bank will help open doors to business opportunities.
The initiative is part of a Chinese offensive, to make an “Asian dream” come true through the development of economic corridors, as President Xi Jinping has remarked in reference to his “Chinese dream” of a rejuvenated China.
China is to invest around $50bn in the new bank, which could in the end have assets of $100bnwith the contributions of other members.
The US is opposed, seeing the AIIB as competing with the World Bank and the Asian Development Bank, and expressing concerns on whether its governance will be in line with established practice.
By contrast, China sees the current international financial system as dominated globally by the US and regionally by Japan.
Beijing is also frustrated at Washington’s delays in implementing long-decided reforms to the International Monetary Fund that would give China and other developing countries a greater say.
Even though World Bank president Jim Yong Kim - a US appointee - publicly welcomed the new initiative, a White House official has expressed the Obama administration’s opposition.
Some Western analysts have criticised the US approach. Attempts to undermine an institution that could improve the lives of Asians are “short-sighted”, according to Tom Miller of the independent Gavekal Dragonomics research group in Beijing.


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