Japan Institute for National Fundamentals

Speaking out

Yasushi Tomiyama

【#291】AIIB Helps Chinese Regional Hegemony

Yasushi Tomiyama / 2015.03.26 (Thu)

March 23, 2015

     The Japanese government is reportedly exploring the possibility of participating in the Asian Infrastructure Investment Bank that China has taken the initiative in creating within this year. I think it ridiculous. The AIIB initiative has come as part of China's long-term strategy to expel the United States from Asia and develop its dominance in the region. Japan’s participation in the planned bank could only help China establish hegemony in Asia.

China challenging U.S.-led order
     Chinese government under President Xi Jinping aims to accomplish the "great revival of the Chinese nation" by 2049 to mark a centennial of the People's Republic of China. The biggest obstacle to the “Chinese Dream” is the U.S. huge presence in Asia.
     Since taking office in March 2013, Xi has come up with a series of initiatives to develop a new Sinocentric order in Asia. At an international conference last May, he called for establishing a regional security cooperation architecture excluding the United States, challenging the Asian security order based on U.S. alliances with Asian countries after World War II.
     In economic and financial fields, President Xi announced the Silk Road Economic Belt and 21st Century Maritime Silk Road initiatives, with China launching its $40 billion Silk Road Fund for infrastructure development in relevant countries. He separately proposed the AIIB initiative to create the Beijing-based bank with an initial capital size of $50 billion, of which China will cover a half. The bank is designed to develop infrastructure in Asia.
     Chinese media have called President Xi's Asian development support initiatives a "Chinese-version Marshall Plan" and positioned the Silk Road and AIIB initiatives as the two pillars of the plan. Needless to say, the original Marshall Plan was a large-scale Western Europe reconstruction support program the United States implemented to prevent communism from expanding in Europe after World War II. The so-called Chinese-version Marshall Plan indicates China's ambition to change the international economic and financial order that the United States has built.
     The New Development Bank that China has taken leadership in producing agreement among BRICS states (Brazil, Russia, India China and South Africa) to found also expected to financially support the Chinese-version Marshall Plan.

Don't be shaken by European participation
     The AIIB intends to meet growing Asian loan demand that the Asian Development Bank led by Japan and the United States fails to fulfill because of its tough financial screening standards. But China could make discretionary lending decisions at the AIIB in line with its dominant stake in the bank.
     Earlier, countries vowing to join the AIIB had been limited to Asian and Middle Eastern countries. Just before the AIIB founding members are fixed at the end of March, however, leading European countries including Britain, Germany, France and Italy announced their decisions to participate in the AIIB. European countries may feel little hesitation in joining the AIIB because China's dominance in Asia does not greatly damage their national interests. Japan's geopolitical position is different from that of Europearns. Japan does not have to be shaken by European participation in the AIIB.

Yasushi Tomiyama is Senior Fellow and Planning Committee Member at the Japan Institute for National Fundamentals.