Concern grows that AIIB will mainly serve China's goals
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Is this "a bank made by China for China"? Misgivings that this is the case are only mounting.
A signing ceremony for an accord to establish the China-led Asian Infrastructure Investment Bank (AIIB) has been held in Beijing. After member nations complete their own approval processes, the bank is expected to be launched within this year.
Representatives from all 57 founding members of the AIIB attended the ceremony, but seven of them decided to postpone signing up. According to Chinese officials, this was because of delays in their domestic procedures.
Among the nations that refrained from putting pen to paper were the Philippines and Malaysia – two nations that have competing territorial claims with China over islands in the South China Sea. We wonder if their decision was an expression of displeasure with China’s moves to expand its maritime presence.
China will hold more than 26 per cent of voting rights at the AIIB. Given that some important decisions at the bank, such as the selection of the bank’s president, require the support of 75 per cent or more of votes, China has effectively secured a veto right.
Board members of the AIIB will not be stationed at the bank’s headquarters in Beijing. A former Chinese deputy finance minister is widely tipped to be appointed as the bank’s first president.
Under these conditions, we hold scant expectations that the bank’s operations will be transparent, fair and neutral.
Some estimates suggest infrastructure in Asia needs annual investments of $800 billion (Bt27 trillion) in the coming years.
The establishment of the AIIB is designed to capture some of the massive demand for capital in the region.
There is wariness over the framework of the AIIB and China’s intentions. It is no surprise that support has grown, both domestically and overseas, for the view that the decision by Japan and the United States to refrain from joining the bank is appropriate.
Chinese President Xi Jinping has emphasised that the AIIB and the proposed Silk Road initiative will solve Asia’s problems and lead to greater development.
The Silk Road initiative will create a huge economic sphere through China-led projects for new roads, railways and other infrastructure along with what, in former times, were maritime and overland trade routes known as the Silk Road that linked China and Europe.
It is obvious that China intends to use the AIIB to the full for its own profit.
There is strong concern that capital from the AIIB will be poured into port, harbour and other improvement projects that could be used as bases by the Chinese Navy, which is expanding the range of its activities as far as the Indian Ocean.
It would be unacceptable if the AIIB sets lax lending criteria that heighten the risk of bad loans and contribute to environmental destruction and government corruption.
It has been pointed out that past cases of corruption tied to aid provided by China have been reported in the recipient nations.
Japan and the United States must closely work with AIIB members including Britain, France, Germany and Italy, and carefully monitor the movements of the bank to ensure it does not disrupt the international financial order.
