Japan's Dilemma and the AIIB

Australian Journal of International Affairs, 2018

Scholarly narratives concerning China’s Belt and Road Initiative (BRI) tend to contextualise this project within China’s rivalry with the United States and Japan. Such interpretations often reduce and misconstrue Japan’s initiatives in Asian infrastructure finance as mere reactivity to China’s advances. This paper will showcase Japan’s own foreign and financial policies regarding infrastructure in Asia and the New Silk Road regions since the end of the Cold War. I argue that Japan’s presence in that field is underappreciated and under-researched, as Japan’s infrastructural footprint in the New Silk Road significantly pre-dates the BRI. Furthermore, I stress the fact that Japan’s foreign policy in Asian infrastructure finance featured important cooperative postures toward China, especially within multilateral development banks. The paper makes a contribution to emerging scholarship on the BRI—often reliant on strategic communications and projections— by highlighting Japan’s role in regional infrastructure to show how our understanding of international relations and international political economy in Asia can be better informed by economic history and area studies.

A key element of America’s strategy for managing China’s rise has been the effort to draw China into deep engagement as a “responsible stakeholder” within the existing rules-based, multilateral and liberal international order (LIO). While China has indeed come to play a growing role within the legacy institutions of the LIO, China has also, over the past decade, attempted to move from a rule-taker to a rule-maker through the creation of a new set of China-centered multilateral institutions, most having a regional focus. A key question is whether this parallel set of China-centered international institutions will serve to challenge and undermine or complement and support the pre-existing LIO. The new Asian Infrastructure Investment Bank (AIIB) provides a key test, as its mission overlaps with those of the World Bank and the Asian Development Bank. Moreover, while the AIIB has attracted a broad range of member countries, including many Western states, the United States and Japan have declined to join the Bank. This paper will offer a preliminary assessment of the compatibility of the AIIB and the LIO against the background of competing theoretical expectations associated with realism, liberal institutionalism, constructivism and social order models.

This paper examines the role of the Asian Infrastructure Investment Bank (AIIB) in China’s emerging normative power in international financial governance area. Based on the existing framework of normative power concept, the AIIB’s role in China’s normative power is examined from three angles: normative principles, norm diffusion, and external perception. As a Chinese initiative, the AIIB’s policy framework has inherited Chinese norms of unconditionality and infrastructure construction. The management structure of this new bank also manifests China’s preference of a lean internal arrangement. Moreover, Asian developing countries hold the majority of voting power of the AIIB. This distribution of votes also falls in line with China’s appeal of a fair governance structure in international financial institutions. The analysis reveals that with the endorsement of 57 member states, the AIIB will significantly enhance China’s normative power in the international society. Some other international institutions have changed their policies to adapt Chinese norms. Moreover, the cooperation between the AIIB and other financial institutions is a chance to improve the external perceptions of China’s normative power in western society, including European states and the United States. However, it is still necessary to observe whether China will be able to maintain its normative principles during the operation of the AIIB.

The establishment of the Asian Infrastructure Investment Bank (AIIB) has sparked many debates and controversies in the last five years since it was announced back in 2013. Amongst studies trying to explain the reason for the establishment of the AIIB, most of them are based on the analysis of Sino-U.S. relations especially on how they overlooked China as a replacement for global hegemon to the U.S. However, considering China’s foreign policy in the recent decade, the establishment of the AIIB is considered as a typical step to becoming a leader in regionalism of East Asia. This writing conclude that China is still only aiming to become regional leader in the scale of East Asia

Chinese Journal of International Politics, 2019

The rise of China raises fundamental questions about the future of the liberal international order (LIO) at a time when it is increasingly under strain. While China for many years focused on joining and participating in existing multilateral institutions, today China is increasingly building its own. Key among these is the Asian Infrastructure Investment Bank (AIIB), launched in late 2014. Against the background of contending theoretical expectations, this article examines the extent to which the AIIB reinforces or challenges the LIO, and highlights what this tells us about China’s broader relationship with the LIO. We provide a definition of the LIO that is based not on its formal characteristics but on its social purpose. While state-centric approaches offer insights into China’s decision to engage in new institution building via the AIIB, we argue that a focus on social purpose is necessary to assess the broader implications of the AIIB for the LIO. We find that, while conforming in large measure to existing institutional models, the AIIB boosts the Chinese Communist Party’s integration into global social networks, strengthens state-led development pathways, and is associated with the Chinese norm of non-interference. The AIIB foreshadows the possibility of an institutionalised international order indifferent to liberalism. In sum, the AIIB reflects the tensions between the socializing effects of the LIO and China’s growing externalisation of its own non-liberal, state-led model of political economy.

AIIB is a very recent Multilateral Development Banks which aims at to support the building of infrastructure in the Asia-Pacific region in a context of century of urbanization. However, the transformation of the AIIB into Chinese-centric institution is rasing concerns in Washington. In fact, AIIB could become one of the essential component of China's soft power during the 21st century. In fact, the New Strategy on Financing Operations in Non-Regional Members could directly challenge existing Development Banks. In other words, if it succeeds and regarded to current demand of Infrastructure spending due to the current century of urbanization, AIIB could challenge directly the WB and why not accelerate its rapid decline. Furthermore, Zhongzhou Peng and Sow Keat Tok (2016) examine the role of the Asian Infrastructure Investment Bank (AIIB) in China’s emerging normative power in international financial governance area. Based on the existing framework of normative power concept, the AIIB’s role in China’s normative power is examined from three angles: normative principles, norm diffusion, and external perception. They found that with the endorsement of 57 member states, the AIIB will significantly enhance China’s normative power in the international society. Furthermore, they found that some other international institutions have changed their policies to adapt Chinese norms. Moreover, they found that the cooperation between the AIIB and the other financial institutions is a chance to improve the external perceptions of China’s normative power in western society, including European states and the United States. In fact, throughout the AIIB, China is suggesting a « Fair Governance Structure » where the voting rights in the international institutions such as IMF and WB will be consistent with the current New Geography of economic activities and wealth. Accordingly Zhongzhou Peng and Sow Keat Tok (2016) found that a side from the norms of foreign aid and foreign investment, the AIIB is also a manifestation of China’s normative appeals regarding the financial governance structure. In recent years, China has been actively promoting the reform of governance structure in major multilateral financial institutions. In Chinese rhetoric, the aim is to establish a fair governance structure in multilateral organizations (Lu, 2011:89). The key point of this reform is the redistribution of voting rights. As a result, AIIB has started to be viewed as threat to US 21st century order. Therefore, Council on Foreign Relations (2018) found that despite U.S. efforts to convince other major donor countries to shy away from the AIIB, none did, except for Japan. Furthermore, Wu Zhenglong (2014) found that the United States has applied pressure behind the scenes on South Korea to refrain from joining the AIIB. And Japan has expressed its reluctance to accept an invitation to be one of the founding members of the AIIB on the excuse that Tokyo is “not convinced” of the necessity of launching a new bank. It seems that the United States and Japan view the AIIB as a threat, claiming that it would not only undermine the ADB but also marginalize American and Japanese influence in the region. The underlying assumption is simply a reflection of zero-sum mentality and obsession to dominate international financial organizations. However, several arguments are showing that AIIB will compliment existing Multilateral Development Banks (MDBs) such as IMF and WB on the one hand and won't be a threat to US 21st century global leadership on the second hand. For example, Robert J. Hanlon (2017) offers three arguments outlining the Asian Infrastructure Investment Bank's significance and to help policy planners navigate the complex relationship between China, the Bank and themes on sustainability : First, there is little uncertainty that China is serious about development and sustainability. The Asian Infrastructure Investment Bank is but one extension of China's increasing commitment to sustainability and should therefore be embraced by development stakeholders. Second, the Asian Infrastructure Investment Bank's commitment to infrastructure development complements other multilateral development banks and should not be considered a challenger to the existing order of development lending practices. Rather, China's interest in establishing the Asian Infrastructure Investment Bank points to competitive pluralism and poses no threat to the existing international order. He found for example that the AIIB is a China-led development agency set to compliment the longstanding Bretton Woods system includingWorld Bank and International Monetary Fund. Yet unlike its Western counterparts, the AIIB offers an alternative approach to development by offering loans for infrastructure that steers clear of the domestic political controversies often raised by other donor agencies. Finally, the Asian Infrastructure Investment Bank's sustainability guidelines are not unique and fall in line with similar policy of other large development banks. The Asian Infrastructure Investment Bank therefore reinforces sustainability norms while posturing itself as a partner fordevelopment. Then, this complementary within AIIB and existing Development Banks such as WB and IMF could temper any further tensions and destructive competition within them.Furthermore, before the emergence of the AIIB in December 2015, James Michael Walker (2014) did the creation of « Bank of Cities » that will lower the cost of borrowing money for cities and make it easier for them to support their « Upstream Infrastructures » spending. Secondly, he did suggest that the TTIP helps support the adoption of Smart Transportation and ICT-related Infrastructure. Thirdly, he did suggest the creation of the US Department of Twin Cities Project that will help develp Infrastructure Spending Bonds Markets that could include the one of STEM bonds and Healthcare Facilities Bonds Market. Fourthly, he found that regarded to the current global structural deficit, it could be relevant for the US to use an « Infrastructure spending » as geopolitics and geo-economics tools and strategies to support and strengthen its 21st century « Global Competitiveness and Leadership ». Therefore, the AIIB could be considered as personalization of the “Bank of Cities” at the Asian's level under the leadership of China. It's (AIIB) made to work with existing Multilateral Development Banks not to compete or eradicate them. Empirically, the current BRIs summit (April 25-27 2019) led by the IMF is providing the evidence of such cooperation. Furthermore, according to Robert J. Hanlon (2017), questions remain on how China will influence the intergovernmental organization. One concern that has increasingly been raised is how the AIIB will integrate themes of sustainable development and human rights within its framework. Furthermore, even if AIIB is an essential component of China's Soft Power, remain that China is a Soft Power Revisionist. Therefore, AIIB needs to make it easier for China to accelerate its democratisation if it wants to be credible and continue to lead the organization. By so doing, like all the democratic nations in the west, China won't cross the red line and declare a war to US even if they will be a significant competition within them. However, Germany and France were already some democratic nations when their rivalry did create the condition of WWI and WWII. So we need to temper our optimism and continue to work hard to build more cooperative and cooperative framework within US and China. This cooperative and collaborative framework could make it easier for the AIIB and other existing Multilateral Development Banks to become the drivers of the current : - Century of urbanization. - Global Value Chains Revolution and Trade and Prosperity Age. - Sustainability-driven Economy Era. Key Words: Chinese-led and Easternization of the Globalization; Asian Infrastructure Investment Bank (AIIB); New Global Governance Economic Order; New Regional Order; Multilateral Development Banks (MDBs); World Bank and International Monetary Fund; US 21st century global leadership.

This paper assesses whether the establishment of the Asian Infrastructure Investment Bank（AIIB）signals China's reformist intention in the area of international development. I use both descriptive and inferential statistics to compare power distribution in the World Bank, the Asian Development Bank（ADB）, and the AIIB, and the composition of the AIIB membership. Evidence shows that there is no obvious structural difference in voting power among the three banks. The major difference between them is that China is the most powerful state in the AIIB. For the time being, at least, the AIIB does not signal Beijing's intention to reform the current system. Instead, the bank seems to be an instrument for China to compete with established international financial institutions. However, Beijing may be faced with several challenges. First, dissatisfied members of the World Bank will not find a remedy for the organization's shortcomings in the AIIB. The problem of unequal representation structure remains. Second, the AIIB is unlikely to facilitate formation of a China-led alliance, nor is it likely to adopt global best practice due to disparity of interests among its members. Third, Washington and Tokyo are probably right to refuse to join the AIIB and to devote more attention to strengthening the World Bank and the ADB instead. Greater competition among the three is likely to reduce the AIIB's influence. To sum up, it is difficult to detect any reformist intention behind the AIIB, and it is still too weak an organization to facilitate formation of a strong alliance by means of which China can carry out its international agenda.

Global Asia, 2016