AIIB (Asian Infrastructure Investment Bank) news

[Yizhi]

Japan to hold finance dialogue with China, could discuss AIIB

By Tetsushi Kajimoto

TOKYO (Reuters) - Japan and China plan to hold finance discussions in Beijing in June, which could include topics such as the China-led Asian Infrastructure Investment Bank (AIIB), Finance Minister Taro Aso said on Tuesday.

The talks would mark the first bilateral finance dialogue since Prime Minister Shinzo Abe took office in late 2012 as diplomatic relations have been strained between the two countries over the wartime past and territorial disputes in the East China Sea.

Japan and China have held the finance talks four times since their first meeting in 2006, aimed at deepening financial cooperation. Discussions have included senior officials from the international bureau as well as budget, tax and other bureaus.

No specific agenda has been set for the June meeting, but issues including the AIIB, China's yuan and shadow banking are likely be discussed, Aso told reporters after a cabinet meeting.

"China is becoming a major economic power in Asia. There are various issues to discuss between the two countries, such as the yuan, finance and shadow banking," Aso said.

Asked whether the AIIB would be discussed during the meeting, Aso said: "We've told China the same things (concerns) all along but we did not receive responses from them by the end of March ... We would tell them the same if I discuss the AIIB with (Finance Minister) Lou Jiwei."

More than 40 countries have applied to join the AIIB, with the United States and Japan as notable absentees.

Japan shrugged off the March 31 deadline to become a founding member of the Beijing-based institute, arguing that it would attach greater importance to conditions being met to ensure its credible governance, rather than when to join.

Japan is caught between the misgivings about the AIIB expressed by its biggest ally, the United States, Tokyo's rivalry with Beijing, and the desire of some officials and businesses to partner with the rapid growth of China, the world's second-biggest economy.

The next key juncture is seen at the end of June when participants sign the charter of the AIIB.



(Editing by Chris Gallagher & Kim Coghill)


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Japan could join by June? .

@Nihonjin1051
bro where have you been? seldom see you around lately.

 

[ahojunk]

A post-mortem of Japanese handling of the AIIB affair.

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Finance, foreign ministries criticized over AIIB handling - The Japan News

Japan's Finance, foreign ministries criticized over AIIB handling
9:44 pm, April 05, 2015
The Yomiuri Shimbun

The government may have been too slow in responding to the envisaged launch of the China-proposed Asian Infrastructure Investment Bank (AIIB), according to some critics.

Some top officials at the Prime Minister’s Office and in the ruling and opposition parties attribute this to overly optimistic views held by the Finance Ministry and the Foreign Ministry about whether other Group of Seven nations would participate in the founding of the AIIB.

Since China proposed establishing the AIIB, the government has distanced itself from moves to be a founding member of the new international financial institution. This has led to a lack of serious discussion within the government and the ruling parties about the AIIB.

Prior to the deadline set at the end of March for entry to the AIIB, four G-7 members — Britain, France, Germany and Italy — and Australia declared plans to join. All this has raised the number of AIIB participants to about 50, making the AIIB an international body Japan cannot afford to ignore.

Prime Minister Shinzo Abe therefore instructed the LDP on Tuesday to hold internal debate on the matter. On Wednesday, the LDP began a joint conference of its party organs, including the Foreign Affairs Division chaired by Kenya Akiba.

In the joint conference, LDP members began debate over whether Japan should join the AIIB. The conference will begin collecting opinions from experts this Tuesday, and the LDP aims to decide on a basic policy about the issue by June, when the AIIB’s charter is to be established.

Some in the LDP have voiced dissatisfaction with the ministries. A senior LDP member said: “The issue is different from what we’ve heard from the government. Was the Foreign Ministry’s awareness low?”

After the AIIB is established, it may be a rival to the Asian Development Bank, which is led jointly by Japan and the United States.

Because many ADB presidents have been chosen from among Finance Ministry bureaucrats, a junior LDP member said the ministry “might have underestimated China’s moves due to excessive fears about a decline in the ADB’s influence.”

An aide to Abe also said: “Both the Finance Ministry and the Foreign Ministry’s explanations were poor. They told us the G-7 countries would not join.”

Opposition parties are increasingly critical of the government’s response to the issue, calling it a diplomatic failure.

Democratic Party of Japan President Katsuya Okada said at a press conference Friday: “It was a big failure that G-7 countries failed to take concerted actions. I regret that Japan’s diplomatic skills are as poor as they have been shown to be on this issue.”

Okada voiced doubts about the reactions of Japan and the United States, and said Japan has the option of participating in the AIIB.

Mito Kakizawa, chairman of the Japan Innovation Party’s policy research council, said at a press conference Friday, “Did the government pay attention only to the United States, before looking at moves all over the world?”

He indicated his intention to examine the government’s responsibility for its response, saying, “Discussions and reexaminations are necessary.”

The ADB was established in 1966 at the initiative of Japan and the United States to eliminate poverty in the Asia-Pacific region. Sixty-seven countries and territories, including China and India, belong to the ADB, which mainly extends loans to developing countries.

Japan and the United States are the largest fund contributors to the ADB, and all the presidents of the bank have been Japanese.

Demand for infrastructure investment in Asia from 2010 through 2020 will amount to $8 trillion, according to one estimate. Some experts have said the ADB will not be able to meet this demand alone.

There are also concerns that if the AIIB functions smoothly, the ADB’s influence in Asia may wane.
.

 

[大汉奸柳传志]

..Iran got in as founding member (that was fast)

 

[Edison Chen]

The red part relates to "先富论", right?

I guess so! You know 先富论？It exactly means to encourage some specific groups in some places to become rich first and let them help the others.

As a matter of fact，these people，especially the Vietnameses，should feel thankful to a China that has advanced to the next level of development，thereby leaving opportunities to those on the lower rungs of the commercial and industrial value chain。

Instead of staying silent as a token of gratitude，these ungrateful people get excited by posting news about low-value added、labour intensive and often polluting manufacturers，foreign or Chinese，exiting China to find a greener patch called under-developed country。

Too true. I feel sad they never understand such path is a necessity for any country, now we are almost on different levels, let them be.

 

[ahojunk]

A post-mortem of the AIIB affair, this time from America.

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Articles: The White House Loses Face

The White House Loses Face

April 4, 2015
By Michael Curtis, American Thinker

The Obama administration has shown a lack of historic understanding concerning its policy towards China’s proposal to establish the Asian Infrastructure Investment Bank (AIIB). The White House must understand that its policy lacks judgment when former Secretary of State Madeleine Albright, in unladylike language, refers to it as “we screwed it up.” The kindest remark she might have made is that the White House misread the situation.

The president now faces a self-inflicted predicament of possible strained relations with an increasing number of major countries, allies that have defied American pressure and decided to join the AIIB.

The planned establishment of the AIIB is a new factor in the challenge by China and other powers to American leadership in global financial institutions, and what some consider excessive dominance as well as for leadership of the world economy.

The AIIB is an obvious rival to the World Bank that the IMF created, largely by the decisions of John Maynard Keynes and Harry Dexter White, at the Bretton Woods Conference in 1944 to oversee development of the world economy and to establish management of exchange rates. The two institutions did contribute significantly to the growth of the world economy after World War II, and clearly the U.S. has been the dominant factor in this.

Noticeably, the U.S. has 17% of voting share at IMF, compared with China’s 4%. China has long wanted a larger participation in both. Both developed and developing countries in the world have objected to American dominance of both the IMF and World Bank. The president of the World Bank by tradition is American; the head of the IMF is French. Equally, the Asia Development Bank, a regional bank with 67 member countries started in 1966 to provide loans and grants to help developing member countries in Asia evolve into modern economies, has a Japanese citizen as president. Both the World Bank and the IMF have declined in significance in recent years for financial and technical reasons.

The objective of AIIB is to provide funding for development of roads, ports, water, energy, sanitation, and telecommunication projects. It is one of a number of institutions started or proposed by China to create a financial center to compete with the Western-led institutions. The bank, with an initial capitalization of $50 billion, and anticipated $4 trillion in reserves, will be run by a multinational secretariat and have a recognized management structure. China is providing half of the initial financing.

The Obama administration lobbied hard on the issue in the attempt to prevent countries from joining the bank that would be an obvious rival to U.S.-dominated international institutions, and perhaps be an expression of Chinese economic, political, and military interests. In its pressure, the U.S. expressed concern that the bank would not meet the high standards of the World Bank, especially the standards of transparency.

It came as a surprise to the White House that a number of important countries have declared they will join the nascent AIIB, the details of which are still being formulated. For the American administration it was particularly troubling that George Osborne, British Chancellor of the Exchequer announced, with the approval of Prime Minister David Cameron, on March 12 that the UK would join and become a founding member of the Bank. Osborne had made no secret of his intention to increase in London overseas business transacted in Chinese currency.

At its meeting in January 2015 the Group of Seven, the world’s leading economies, agreed not join AIIB unless they could reach a consensus, but this could not be done. The U.S. did not provide leadership on the issue. Britain was the first G7 country to join the Bank, thus giving it greater credibility.

By now, more than 50 countries have announced their intention to join the AIIB. Among them are New Zealand, Luxembourg, Switzerland, France, Germany, Italy, Austria, and Israel, as well as Asian and Middle Eastern countries. They believe that since the bank is a multilateral investment institution it is not likely to become an instrument of Chinese foreign policy.

All the countries that intend to join the bank have been eager to extend their business and financial arrangements with China. In 2013 the UK welcomed China in every part of the UK economy, including the financial district and the nuclear power sector.

The Chinese economy, measured in purchasing power, is now larger than that of the U.S., and will probably, because of its size, population, expanding consumer market, fast economic development, large amount of venture capital finance, and foreign-exchange reserves, soon be greater than the American in absolute terms. It can be expected to play a larger role in the world economy. Though China is less powerful militarily than the U.S., it is increasing its military budget, and may be considered a challenge to U.S. prominence in the Asian and Pacific region.

It is evident that China is planning to exercise more power in the Asian region. It has promoted an Asia-Pacific free trade deal, different from the one sponsored by the U.S. If not a vehicle of its foreign policy, the AIIB will allow China more political and economic influence in the world, not only Asia. The Chinese leader, Xi Jinping, has already initiated an ambitious economic policy to expand Chinese influence. He unveiled plans for two large multibillion trade and infrastructure projects connecting China and Europe: the New Silk Road Economic Belt, and the New Maritime Route. Already, China had set up a security group of nations, the Shanghai Cooperation Council, as the center of a group of eastern and central European countries to provide investment to the 16 member countries.

While China may not soon replace the Unites States as the foremost player in the global economy, the White House should have taken more care in its consideration of the proposal for the new bank. As in the case of relations with Israel, the White House has displaced its peevishness towards traditional allies. In doing so it has lost both face and clout..

 

[Al Bhatti]

I guess so! You know 先富论？It exactly means to encourage some specific groups in some places to become rich first and let them help the others.

It was mentioned in a lesson in a Chinese language economics and trade college text book i am reading. The lesson was about the five year plans.

 

[Edison Chen]

It was mentioned in a lesson in a Chinese language economics and trade college text book i am reading. The lesson was about the five year plans.

Nice....Man, are you a Pakistani college student in China? It seems you have gained very well understanding of Chinese.

 

[Al Bhatti]

Nice....Man, are you a Pakistani college student in China? It seems you have gained very well understanding of Chinese.

No, i am not a student nor am i in China. I am trying to study myself through text books.

 

[Edison Chen]

No, i am not a student nor am i in China. I am trying to study myself through text books.

It could be hard if you're trying to master that language but not in that environment. But you know quite a lot Chinese, 加油！

 

[ahojunk]

http://www.ft.com/cms/s/0/1c73b174-d9df-11e4-9b1c-00144feab7de.html

China cannot believe its luck over new investment bank
Tom Mitchell in Beijing

A man carries a package as he walks along a street at in Beijing's central business district. China scored a diplomatic coup by enticing almost 50 countries including key US allies to join its new development bank

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.

More than 50 countries, including traditional US military allies such as Australia and South Korea, have signed up. Only Japan has — so far — stood by Washington’s side, echoing the Obama administration’s concerns about governance and transparency standards at the new bank.

The Chinese government’s success with the AIIB is not just luck, however, it is the fruit of a very smart policy adjustment.

From its declaration of an air defence identification zone over the East China Sea in November 2013 to its deployment of an oil rig near Vietnam last May, Beijing’s assertion of “hard power” appeared to be putting it on a collision course with almost all of its regional neighbours.

The nadir came on May 26, when a small Vietnamese fishing vessel harassing the oil rig was run down and sunk by a much larger Chinese trawler. The incident, which arguably amounted to attempted homicide on the high seas, has since been immortalised on youtube.

In private, Chinese foreign policy experts acknowledge that the violent protests that erupted across Vietnam after the over-reach in the South China Sea provided a powerful wake-up call. With the annual Asia Pacific Economic Co-operation summit scheduled to be held in Beijing just six months later, the Chinese government decided to ditch hard-power projection for soft-power persuasion.

At APEC, the Chinese government backed down from a looming confrontation with Japan over the contested Senkaku or Diaoyu islands; signed unexpected environmental and military accords with the US; and unveiled a $40bn fund to support an infrastructure-focused “New Silk Road” linking Asia to Europe. The AIIB will contribute at least another $100bn to this initiative in which Beijing intends to assume the role once held by Venetian bankers along the old Silk Road.

China’s strategic volte face has benefited from an almost comic series of mis-steps by its great geopolitical rival. US congressional reluctance to sign off on reforms giving China and other developing nations a greater role at the World Bank and International Monetary Fund has been compounded by the Obama administration’s inability to, as they like to say on Capitol Hill, “count the votes” on the AIIB.

It is one thing to oppose an institution behind-the-scenes and fail quietly; it is quite another to do so brazenly. Worse for Mr Obama, his standing in the Asia-Pacific region will deteriorate even further if he cannot secure congressional “fast-track” authority to seal the deal on the Trans-Pacific Partnership trade talks, which pointedly exclude China.

Should TPP fail, then the economic component of the US president’s “pivot” towards Asia will — to Beijing’s surprise and delight — have completely unravelled.

Chinese President Xi Jinping cannot, however, celebrate just yet. While 2015 may have started out as an annus mirabilis for Beijing, an evolving diplomatic mess in Sri Lanka is a reminder of how quickly geostrategic momentum can change.

China’s crisis in Colombo is largely of its own making, having bankrolled some $5bn-worth of infrastructure projects on the assumption that Mr Xi’s erstwhile ally there, Mahinda Rajapaksa, had as firm a grip on power as the Chinese Communist party does.

Mr Rajapaksa’s shock election defeat in January has exposed China’s Sri Lankan infrastructure investments — and related lending packages — to unwelcome scrutiny from the new government in Colombo. If proven, the accusations there of a lack of transparency and worse will perfectly illustrate Washington and Tokyo’s worst fears about potential governance lapses at the AIIB.

Beijing’s challenge now is to ensure that the mistakes in Sri Lanka are not repeated under the auspices of its popular new bank.
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[cnleio]

Until to 2015.04.07, there'r 55x foreign nations apply for AIIB.

 

[Dakila]

A little competition might be good for the World Bank and Asian Development Bank.

 

[Jlaw]

you indian lack of toilet, so you don't shit?

This is fxxking hilarious

 

[TaiShang]

On Monday, Larry Summers' published an op-ed in The Washington Post, which opened with the former Treasury Secretary and Harvard president writing, "This past month may be remembered as the moment the United States lost its role as the underwriter of the global economic system."

"The point of Summers' commentary is clear and significant: The global economic tide has started receding from the US and moving toward China."

Larry Summers has a major warning for the US economy, and everyone should be paying attention

This is a big deal.

On Monday, we published Larry Summers' latest op-ed in The Washington Post, which opened with the former Treasury Secretary and Harvard president writing, "This past month may be remembered as the moment the United States lost its role as the underwriter of the global economic system."

What Summers is referring to is the creation of the Asian Infrastructure Investment Bank, a new banking consortium led by China that will back investment in Asian and emerging-market economies. This bank serves as a direct challenge to the World Bank and the IMF, the traditional sources of international funding, and organizations in which US economic interests have a strong voice.

The AIIB's founding members include Russia, Brazil, and India, as well as major European economies like France, Germany, and the UK.

Last week, Business Insider's Mike Bird outlined how the formation of the AIIB has been an embarrassment for the US government all along.

Here's the key point from Bird (emphasis ours):

"The infrastructure bank isn't going to be a massive boom for the UK economy, or even for nearer nations like Japan, and the US will not retaliate. The point is that the UK is willing to take a very modest improvement in economic and political ties with China in exchange for a small deterioration in ties with the US. Pretty much every country has decided that this is the right move."

And so while the US has been the dominant global economic power of the past 50 years, the point is that now countries all across the globe are seemingly falling over themselves to be more closely aligned with China.

In his op-ed on Monday, Summers continues (emphasis ours):

I can think of no event since Bretton Woods comparable to the combination of China's effort to establish a major new institution and the failure of the United States to persuade dozens of its traditional allies, starting with Britain, to stay out.

This failure of strategy and tactics was a long time coming, and it should lead to a comprehensive review of the U.S. approach to global economics. With China's economic size rivaling that of the United States and emerging markets accounting for at least half of world output, the global economic architecture needs substantial adjustment. Political pressures from all sides in the United States have rendered the architecture increasingly dysfunctional.

In his post, Summers has some policy prescriptions for US lawmakers, among which is a suggestion that US leaders have a "bipartisan foundation," which is the kind of thing you can write when you're not an elected official but which few people in and around US politics likely believe is anywhere near possible.

But the point of Summers' commentary is clear and significant: The global economic tide has started receding from the US and moving toward China.

 

[Jlaw]

I am surprised that Hungary has applied to join AIIB.
Don't think it is a donor country, so is it interested in getting loans?
Don't think it qualifies as it is not an Asian country.

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Hungary to join China-backed AIIB investment bank - PM Orban| Reuters

Hungary to join China-backed AIIB investment bank - PM Orban
ASTANA, April 1

(Reuters) - Hungary has decided to join the China-led Asian Infrastructure Investment Bank (AIIB), Prime Minister Viktor Orban said on Wednesday.

More than 40 countries, including Australia, South Korea, Britain, France, Germany and Italy, have said they would sign up to the AIIB, with Japan and the United States the two notable absentees.

"I would like to announce here that we will join the Asian international development bank," Orban, referring to the AIIB, told a news briefing during a visit to Kazakhstan.

"We will follow the example of Kazakhstan," he added, giving no further details.

China set a March 31 deadline to become a founding member of the AIIB, an institution that could enhance Beijing's regional and global influence.

Washington initially tried to dissuade its allies from joining the AIIB, seeing it as a challenge to the World Bank and Asian Development Bank over which the U.S. exerts considerable influence, but changed tack after many signed up for it. (Reporting by Raushan Nurshayeva; Additional reporting by Krisztina Than in Budapest; Writing by Dmitry Solovyov; Editing by Alison Williams)

Not surprised. Hungary had a bad experience wih Jewish controlled IMF bank.

Hungary asks IMF to leave the country after early payback — RT Business
Hungary asks IMF to leave the country after early payback
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Hungary asks IMF to leave the country after early payback
Published time: July 16, 2013 14:37
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Hungary has announced plans to repay its bailout loan from the International Monetary Fund early and asked the organization to leave the country.

The head of Hungary’s Central Bank Gyorgy Matolcsy wrote a letter to IMF Managing Director Christine Lagarde on Monday asking for it to close its representative office in Budapest as it was "not necessary to maintain" it any longer.

The IMF says it is ready to agree since the current IMF representative in Hungary is due to leave soon anyway.

Hungary is heading for a general election next year, and many see the move as an attempt to show the government’s ability to avoid austerity programs and to act without outside help.

In 2008, amid the global crisis Hungary was saved from bankruptcy with a $26 billion rescue package from the IMF and the EU. Two years later Prime Minister Viktor Orban's government decided not to renew the deal to avoid closer IMF scrutiny of its economic policies.

However, in 2011, Economy Minister Matolcsy turned to IMF for a precautionary deal but didn’t get any reply.

In February 2013 Prime Minister Orban issued the country’s first international bond since 2011, thus demonstrating the country could go it alone by borrowing on global financial markets.

Relations between Orban’s government and the IMF have always been strained. In 2010, when Orban came to power, his government issued new laws, which were criticized as curtailing democracy, the justice system and freedom of speech.

The European Parliament responded with a resolution calling on Hungary to repeal the "anti-democratic changes."

Hungary still owes $2.125 billion to the IMF from its original credit line of $25.5 billion.

I always feel it laughable when some Vietnamese or Turkish members claim that due to the absence of low cost labor of China, western capital is now switching to better places such as Southeast Asia. The truth is, China used to boost her economy by "low cost labor", now it's through the "capital". Think about it, which one is more profitable or sounds better? To make money by directly selling your physical strength or by your brain and capital? China has passed the primary stage of capital accumulation, now it's our turn to invest in the world, because China hold large amount of foreign reserve, it's an important topic about how to increase our ROA by investment, or it will depreciate. This is all the developed countries have been doing. AIIB and "One belt One road" is the best initiate to increase the ROA or our global investments. Till the end of 2014, China has 6.4 trillion USD foreign assets, 4.6 trillion liabilities. The net asset is 1.8 trillion, looking good, but the deficit of foreign investment return is like more than 30 billion dollars. Because China mainly invests in some low return sovereign debt, but the liability part is direct investment of high return. Hope China can make some changes.

no one takes vietnamese people seriously.