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Asian Infrastructure Investment Bank

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Asian Infrastructure Investment Bank

Last week, Canada announced that they would become a member of the Asian Infrastructure Investment Bank. The AIIB was started by China to fund infrastructure requirements throughou ...

Last week, Canada announced that they would become a member of the Asian Infrastructure Investment Bank. The AIIB was started by China to fund infrastructure requirements throughout Asia, but has been met with resistance from the United States and Japan because of a lack of clarity about AIIB’s governance and concerns about the labor and procurement standards. It’s important to note that the U.S. and Japan are also the two largest stakeholders in similar funding initiatives, the World Bank and the Asian Development bank, respectively.

Traditionally, the World Bank has been the largest financial institution ($200+ bn) that provides loans to developing countries to promote social and economic development. Similarly, the Asian Development Bank has similar initiatives in Asia with Japan holding the largest stake. On the surface, the co-existence of the World Bank, ADB, and AIIB may seem prosperous for increased investment in developing countries, but behind the scenes, there is a heated diplomatic battle. The U.S. has lobbied its allies not to join the AIIB for reasons stated earlier. On the other hand, with the formation of the AIIB, China has taken matters into its own hand because of a “exasperation with the glacial pace of global economics governance reform.”1

It seems that tensions are growing higher as China is becoming more of an economic giant and leader in the role of global affairs: the South China Sea dispute, Chinese-Russian Oil agreements, and now the AIIB. I’m a little concerned about the future relationship between China and the U.S. given these conflicts, and upcoming U.S. elections do not help either.

However, I am still optimistic and hope for increased communication between China and the U.S. in making the collective world a better place…

1http://www.economist.com/blogs/economist-explains/2014/11/economist-explains-6

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