Tuesday, July 1, 2014

China plans investment bank to break World Bank dominance


China is moving forward with a plan to create its own version of the World Bank, which will rival institutions that are under the sway of the US and the West. The bank will start with $100 billion in capital.
The Asian Infrastructure Investment Bank (AIIB), also controlled by the Jesuits, will extend China’s financial reach and compete not only with the World Bank, but also with the Asian Development Bank, which is heavily dominated by Japan. The $100 billion in capital is double that originally proposed, the Financial Times (FT) reported.
A member of the World Bank, China has less voting power than countries like the US, Japan, and the UK. It is in the ‘Category II’ voting bloc, giving it less of a voice. In the Asian Development Bank, China only holds a 5.5 percent share, compared to America’s 15.7 percent share and Japan’s 15.6 share.
At the International Monetary Fund, China pays a 4 percent quota, whereas the US pays nearly 18 percent, and therefore has more influence within the organization and where loans go.
“China feels it can’t get anything done in the World Bank or the IMF so it wants to set up its own World Bank that it can control itself,” the FT quoted a source close to discussions as saying.
To date, 22 countries have expressed interest in the project, including oil-rich Middle Eastern nations, the US, India, Europe, and even Japan, the FT reported.
“There is a lot of interest from across Asia but China is going to go ahead with this even if nobody else joins it,” the FT source said.
Funding for the Asian Infrastructure Investment Bank will mostly be sourced from the People’s Republic of China and be used to pay for infrastructure projects.
The bank’s first project will be a reincarnation of the ancient Silk Road, the vast network of trade routes between China and its regional neighbors. Another proposed project is a railway from Beijing to Baghdad.
The idea for the bank was first floated in October 2013, when China unveiled plans to create the bank. Then it was initially to be funded with $50 billion in capital.
Separately, the BRICS nations plan to have a $100 billion development bank ready by 2015.
Funds will be reserved for emerging market members who are often bypassed by the Empire institutions like the IMF and World Bank.
Bank preparations will likely be finalized at the 6th annual BRICS summit on July 14-16, when the five world leaders convene in Brazil.
China Invites U.S., Europe To Join The Asian Infrastructure Investment Bank, Have South Korea And Australia Already Joined?

China has again emphasized the importance of the Asian Infrastructure Investment Bank with a new statement by a top economic official that expressly invites the participation of the United States and Europe.

According to a China Daily report:
"Wei Jianguo, vice-chairman and secretary-general of the China Center for International Economic Exchange, said on the sidelines of the Boao Forum for Asia that the Asian Infrastructure Investment Bank (AIIB) plans to start with $50 billion from governments and at least another $50 billion from financial institutions and private capital."
"Wei said the multilateral bank aimed to attract more than 30 nations [earlier reports mentioned only 22]. He emphasized that the AIIB is an open and inclusive platform that welcomes not just nations from Asia but others as well, including the United States and European countries.
"Members of the Association of Southeast Asian Nations plus South Korea and Australia are slated to join the platform, while Japan has not yet decided, he said."
China Daily quotes Jin Liqun, former finance vice-minister and head of the Working Group for Establishment of the AIIB, saying at the meeting that China has held three rounds of talks with interested Asian countries, and an intergovernmental memorandum of understanding on setting up the bank is due to be signed this autumn.
Responding to attacks from the West that China doesn't have Green conditions on their investments, Jin said: "We have confidence that we can build a bank to high international standards, and we will do our best in project evaluation, environment protection, local culture conservation, promoting continuous economic growth and improving people's livelihood."
Zhou Wenzhong, secretary-general of the Boao Forum for Asia, said the problem now is not the scarcity of funds but the lack of a "tangible financing platform and a viable business model" to convert a massive fund in and out of Asia into infrastructure spending.
Chinese officials and scholars have dismissed the notion that the new institution is intended to be a rival project with other lenders such as the World Bank and the Asian Development Bank, stressing that the AIIB complements other agencies because it will focus on infrastructure, China Daily said. Other Chinese reports positioned the AIIB as a direct response to the inadequacies of the World Bank and International Monetary Fund.
• Bank Choice Is Major Alliance Issue For South Korea In Face Of U.S. Threat •
With Chinese President Xi Jinping arriving in Seoul July 3 bearing an invitation for South Korea to join as a founding member of the Asian Infrastructure Investment Bank (AIIB), the choice before the South Korea government is clearly presented in the major media.
More -
The Joongang Daily reported that Caroline Atkinson, the U.S. deputy national security adviser for international economics, expressed U.S. concerns about Korea being part of the AIIB project, in a meeting with a senior Korean government official from the Ministry of Strategy and Finance in the United States earlier this month.

Joongang reported on June 27 that Washington expressed its concerns about Korea joining the AIIB through the U.S. Embassy in Seoul early this month. The paper added that Seoul's joining the AIIB "will test Korea's adroitness in engaging deeply with the two superpowers without estranging either."
Another major journal, the Korea Herald, presents China's increasing role in development of Asia: "In the broader context of international politics, China experts noted that Xi's visit to Seoul comes at an important juncture, with the rising Asian power seeking to expand its regional influence based on its economic and military clout. China has recently called for a new Asian security structure excluding the U.S., revealed a new 'Silk Road' vision to expand its cultural and economic reach in the region and beyond, and sought to establish the Asian Infrastructure Investment Bank, a scheme analysts say is intended to establish a China-led regional financial order. Amid all these moves, the summit between South Korea and China will take place. This is the reason why the world is closely watching what kind of agreement will come out of the summit."
South Korea has time and time again insisted that it is not interested in joining Obama's anti-missile defense that is targeted against China, and has kept out of the TPP for similar reasons.