Over the past year in an attempt to expand its economic influence, China has begun proposing the Asian Infrastructure Bank. This regional development bank would focus on infrastructure construction and economic cooperation in Asia. China has promised to provide most of the US$50 billion in initial capital with the understanding they would be the largest shareholder. China has begun pitching this idea to more than 20 nations and has support from leading Middle Eastern nations, Saudi Arabia and Qatar.
Economists project Asia will “need as much as $8 trillion in investments in physical infrastructure by 2020” (New York Times). This number is much greater than what the World Bank and Asian Development Bank will be able to provide to this region. China plans to play off of these banks capital limitations to gain support for their proposed bank. However, the Asian Infrastructure Bank desperately needs South Korea and Australia’s commitment if it hopes to establish itself as a major international Bank.
It will be very interesting to see if China can convince South Korea and Australia to join the growing list of nations committed to the Asian Infrastructure Bank. Both nations are allies of the United States. The U.S. vocally opposes this bank, viewing it as a “deliberate effort to undercut the World Bank and the Asian Development Bank” (New York Times). I don’t foresee Australia and South Korea going against the U.S. and committing to the Asian Infrastructure Bank. However, Singapore, a U.S. ally went against the U.S. and committed to the bank.