08 April 2015

China "Can't Believe Its Luck" On Investment Bank

Source: ZeroHedge

A few weeks back, we noted that China (via a state-run media outlet) appeared to be adopting a more conciliatory approach when it comes to describing Beijing’s vision for the Asian Infrastructure Investment Bank. The venture, which Washington did its best to undermine last year, has made an unlikely run at taking center-geopolitical-stage even as other, more ostensibly newsworthy events (such as the veritable collapse of the Yemeni state and the ongoing crisis in Greece) vie for the market’s very limited attention span.
And while we, more than perhaps any other news outlet, have gone to great lengths to demonstrate the importance of what is not only a move by Beijing to inaugurate a sino-Monroe Doctrine but to simultaneously start the world on the path to yuan hegemony, we were also quick to note thatthere’s such a thing as being too successful, especially when it comes to making sure a whole cohort of Western nations who have just gone out on the proverbial limb in defiance of The White House, are left with some assurance that there’s at least some part of the institution which is actually aimed at promoting infrastructure development rather than operating solely as Beijing’s newest foreign policy tool. 
Sure enough, as both the NY Times and FT report, China “can’t believe its luck.”
Via NY Times:
The sudden rush to join China’s new Asian development bank by this week’s deadline, including last-minute applications by countries hardly considered Beijing’s best friends, astonished even the Chinese.

Few in Beijing had believed that Taiwan, still considered a breakaway territory by China, would want in. Same for Norway, whose relations with the Chinese have been chilly since its decision five years ago to award the Nobel Peace Prize to a dissident Chinese writer.

But after the deadline, China announced that it had attracted 46 founding members for its new Asian Infrastructure Investment Bank. Among the surprises: While China had expected mainly to be joined by its neighbors, the final tally of countries clamoring to participate included 14 advanced economies of the Group of 20, many of them — like Brazil, France, Germany and Russia — from outside Asia.

“Such wide and warm support was unexpected,” said Jin Canrong, professor of international relations at Renmin University in Beijing.

The last-minute surge to join the bank is considered a major victory for China in a rare public showdown with the United States, which opposed the bank, as the two powers try to outmaneuver each other for influence in Asia. It was also a recognition of economic reality; China has deep pockets and the institutions backed by the United States have not met the growing demands for roads, railroads and pipelines in Asia.
...and here’s FT:
The Chinese government can scarcely believe its own luck. Heaping Asian insult upon Capitol Hill injury, last week Benjamin Netanyahu committed Israel to join Beijing’s new Asian Infrastructure Investment Bank.

While there is no love lost between the Israeli prime minister and US President
Barack Obama, who was embarrassed by Mr Netanyahu’s congressional address on March 3, Beijing could not have expected to attract such a longstanding American ally to the AIIB when it first conceived of the institution at least two years ago.

What began as a seemingly quixotic defection to the AIIB by the UK — the first US partner to turn a deaf ear to American protestations about the bank — has turned into an unalloyed strategic triumph for Beijing.
In other words, the only one tilting at windmills now is Washington, which is stuck between persisting on the idea that this institution is somehow lacking when it comes to Western underwriting “standards” and executing a completely humiliating mea culpa which isn’t really an option given The White House’s steadfast refusal to support the Chinese venture.

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