http://topproducerlasvegas.com/SiteServer/Ajax/ajaxOtherService.aspx?type=SiteTemplateDownload In the aftermath of WWII two institutions emerged from the Bretton Woods conference that changed global finance forever. One was the World Bank, which advocated for conservative fiscal policies while making loans for reconstruction—largely on infrastructure projects. The other was the International Monetary Fund, which cemented the US dollar as the dominant global currency and generally sought to diminish restrictions on international transactions. Both of these institutions were the brainchildren of the West; Britain and the United States are responsible for their creation. Now, with the launch of the Asian Infrastructure Investment Bank (AIIB) last year, China seeks to assert its influence in the realm of global financial institutions for the first time. The creation of the AIIB represents a convergence and over-lapping of boundaries in the international financial arena, and one that deserves close attention.
buy cheap Deltasone online free consult For the second largest economy in the world, China has comparatively little say in the governance of the World Bank. China’s voting power is comparable to that of Germany, and is usurped by Japan. In the Asian Development Bank, China has only half the voting power of Japan. One possible reason for this apparent lack of power is that the Presidents of the Manila-based ADB have traditionally been Japanese; Chinese efforts to gain more influence in either of these groups, or with the IMF, have repeatedly stalled. Attempts at reforming the IMF—including a redistribution of executive board seats to emerging markets—have failed for years in Congress, and House Republicans are eager to maintain China’s subordinate role in the World Bank, as well.
Up until the launch of the AIIB, the West (read: the United States) has taken their global financial reach for granted; the prevailing financial institutions have not had many boundaries imposed on them.
As such, after several frustrating decades within the system China decided to take matters into its own hands by creating the AIIB. The primary goal of the AIIB is to minimize the USD $8 trillion investment gap that the ADB has forecast will be necessary to invest in building railways, power plants, and roads to sustain growth in East Asia. Singaporean Prime Minister Lee Hsien Loong praised China’s bold move, arguing “The balance of economics influence has changed and [the World Bank and IMF] have not caught up.” From the other side of the table, US President Barack Obama has been cautious in his statements about the AIIB, stating that “we’re all for [the AIIB]” as long as it is “[run] based on best practices,” especially on matters of environmental safety and the bank’s leadership.
With this move, China moves to amplify its power in new directions. As the primary contributor to the AIIB, China will have the largest say within the AIIB and be given a voice on matters of global finance. The USD $100 billion AIIB will also allow China to exert “soft power” over developing nations, dictating foreign policy in exchange for additional funding. The AIIB will thus work in tandem with China’s “Silk Road Infrastructure” project, connecting China with the rest of Asia and Europe in order to boost trade. Infrastructure spending will allow to China to appease its allies, whilst simultaneously boosting economic growth.
Perhaps what has been most surprising about this situation is the United Kingdom’s entry into the AIIB in March, along with a handful of other American allies. These new supporters of the AIIB, including Australia, South Korea, and a number of other European countries, openly back the new institution, defying the Obama administration. Rather than sit outside of China’s inner circle and criticize its conduct (as the US has done), these countries have taken the wiser and pragmatic approach to shaping and developing the AIIB according to their own view of international governance and finance. The United Kingdom has thus taken a leadership role in shaping how China operates in the future, nominally affecting policy from London rather than Washington. For this decision to have come from the US-friendly George Osborne is indicative of the new institution’s weight. There is room in the world economy for a competitor of the World Bank’s, and many doubt the potential for the ADB and World Bank to cover even current Asian development needs.
As such, the collective membership of the now 57 patrons of the AIIB has lent a serious sense of legitimacy to China’s actions, simultaneously casting the worries of the Obama administration in a churlish light. In this case the US made the mistake of forcing their allies to choose between their own economic interests and their relationship with the US, and unfortunately, private economic interests won the day. By putting their allies in such a difficult position, and then failing to convince them to side against the new institution, the Obama administration’s year-long initiative to delegitimize the AIIB came to a dismal end. To argue the American Century has ended is perhaps melodramatic, but, at the very least, there is an impending collision. These institutions act as extensions of their respective patrons’ spheres of influence; the US will now have to operate in a diminished international space. Boundaries have now been set on their financial institutions.
As China continues to carve out a place for itself at the table of international leaders, current leaders seem unsure of how to react. But even as China’s influence waxes, the ability of other nations, even those as formidable as the United States, to assert themselves seems to wane. A new moon is rising in the East, and the tides are begin to turn.