On Tuesday (3/17), the countries of Germany, Italy and France announced their intentions to join the Chinese-led Asian Infrastructure Investment Bank. The three countries decided to join the bank despite direct pleas from the Obama administration asking them not to.
The United States views the new bank as a rival to the U.S.-led World Bank and International Monetary Fund. For the past 70 years, these institutions have been the two main options for countries in need of large developmental loans, making them extremely influential players in the world economy.
By giving countries in need of a loan an alternative to the World Bank and the IMF, the new Chinese bank will likely reduce the amount of influence that these two U.S.-led institutions currently wield in the world.
Theresa Fallon is a China expert at the European Institute for Asian Studies, a research group based in Brussels.
“China is shaping an alternative universe and getting America’s European allies to support it,”
Fallon says, adding that China is offering countries a…
“…whole economic and political package that provides an alternative to the creaking international structures shaped by the U.S. in the postwar period.”
The United States had asked its European allies to hold off on joining the bank until China agreed to a number of conditions concerning transparency and how the new bank will be governed.
However, Germany, Italy and France chose to ignore these warnings and follow the lead of the UK, which signed up to be a founding member of the bank earlier this month.
The U.S. was also critical of the way in which China went about approaching potential members. According to The New York Times,
“American officials have fumed that China never approached the Group of 7 — the consortium of economic powers that the United States has led — but rather decided to pick off individual members, setting a deadline of the end of March for them to decide whether to join the new organization.”
The new bank was proposed by Chinese President Xi Jinping to help fund infrastructure projects in impoverished Asian countries.
Since coming to power in 2012, Xi has been steadily expanding a long-standing Chinese policy of increasing political influence through lending and investment.
China has already pledged a large portion of the bank’s initial goal of $50 billion in preliminary capital, but is still actively courting other countries to join the new bank.
Read the full story from The New York Times.
Feature photo courtesy of EPA.