China’s $50bn banking venture battles with US lobbies

China and US

Beijing’s Asia Infrastructure Investment Bank (AIIB) will launch tomorrow in a challenge to the Western-dominated World Bank – but vehement US lobbying means it has few nations on board.

Only 20 states, mostly small economies, have signed up to become founding members of the bank, and many of these are widely thought of as client states of China.

India is believed to be the only major economy to be attending the sing-up ceremony in Beijing, alongside Middle Eastern states Kuwait, Qatar and Oman, and Asian countries Sri Lanka, Pakistan, Nepal, Mongolia, Bangladesh, Uzbekistan and Kazakhstan. With the exception of long-time US ally Indonesia, all ASEAN member states, which include Thailand, Malaysia, Singapore and Vietnam, will also be signatories.

A number of European states, as well as Australia and South Korea, initially seemed receptive to the concept when Beijing unveiled the plans last year, but intense pressure by the US led all of these to withdraw. However, it is thought that some may look to join the project at a later date.

While Washington claims that its opposition is down to concerns over the AIIB’s lack of safeguards for environmental or human rights, China insists that the US is trying to monopolise control over Asia’s economy.

You could think of this as a basketball game in which the US wants to set the duration of the game, the size of the court, the height of the basket and everything else to suit itself,” said Wei Jianguo, a former vice-minister of commerce, told the Financial Times. “In fact, the US just wants to exclude China from the game.”