My last blog post mentioned that several European banks have signed up for China’s new development bank, despite U.S. opposition. As of yesterday, the Wall Street Journal published another article relating to the Asian Infrastructure Investment Bank (AIIB). China’s plans for a new development bank to fund infrastructure in Asia poses a challenge to Japan, which has been a major donor in the region and controls a decades-old institution with similar responsibilities, the article says. Many other Asian countries are following the Europeans in their decision to join, however Japan is an exception.
The U.S. and Japan control the Asian Development Bank (ADB), and the push to set up a new China-backed lender is a direct challenge to Japan’s reign. Former U.S. ambassador to the ADB, Curtis Chin, says the two development banks “will be very much competitors.”
China, among other emerging nations, complains they lack influence over the ADB, since it is dominated by the U.S and its allies. Japanese officials raise concerns over whether the new development bank will follow global standard practices. For now, Japan will “maintain an extremely cautious stance” toward joining the bank, they say.