Asian Infrastructure Investment Bank (AIIB)
post date : 2015.04.10
Vol. 1 April 10, 2015
About 50 countries, including major European states, have announced their intention to join the China-led Asian Infrastructure Investment Bank (AIIB), with work underway to flesh out the new bank for its launch later this year. Japan and the United States—the two main players in the Asian Development Bank, which has helped generate high economic growth in Asia—did not join the AIIB as founding members. The two nations were and still are cautious about joining the Beijing-based bank, in which China would have the largest stake, out of concern that the bank may not be operated in a transparent and fair manner.
Four of Japan’s national dailies wrote about a series of developments over the planned establishment of the AIIB in their editorials.
The Yomiuri Shimbun hailed the government’s response in its editorial on March 26, saying there has been “persistent concern that China may be able to exert excessive control over the new international financial institution.” “Suspicion remains that the AIIB may be managed in a manner that benefits China, such as by demanding Chinese corporations receive orders for AIIB-financed projects if borrowers want their loan requests accepted,” the newspaper added.
The Mainichi Shimbun’s editorial on April 1 and The Nihon Keizai Shimbun (Nikkei)’s editorial on March 20, on the other hand, said the government should have proactively engaged in the establishment of the AIIB by making constructive proposals from within the new bank.
In its editorial on April 1, The Asahi Shimbun pointed out the possibility that weakened intergovernmental relations between Japan and China have scuttled Japan’s efforts to gather information on the AIIB, and urged the government to consider providing fund to the new bank as one option.
Opinions divided over government’s decision
Group of Seven (G-7) nations such as Britain, Germany, France and Italy were among the many nations that announced their entry to the AIIB just before the March 31 deadline for filing an application to become a founding member.
Three of the dailies, with the exception of The Mainichi, provided a similar analysis on this point, with The Yomiuri saying, “European nations have an apparent desire to build relations with China through the AIIB, thereby securing more investment opportunities in Asia, a growth center in the world.”
“Another factor seems to be that these countries do not face high hurdles to join the AIIB. European nations less frequently experience clashing interests with China in the field of security than Japan and the United States do,” The Yomiuri added.
The Yomiuri supported Japan’s decision not to become a founding member, saying “We are concerned that contributions to the AIIB from its member nations may be apportioned as China pleases, thus allowing that country to use some of the bank’s capital to increase its influence in Asia.”
The Mainichi, pointing to the fact that the government has not ruled out the possibility of participating in the bank in the future, said “If so, it would have been wiser for Tokyo to get involved in creating the framework for the bank and express opinions to make sure Japan’s proposals could be reflected in the bank’s policies.”
The newspaper made the argument from the following standpoint. Suppose Japan did participate in formulating an accord, which stipulates important items regarding how to build the bank’s structure and how to distribute the voting rights. “If Japan were to join hands with other countries with which it shares values in making necessary assertions but its opinions were dismissed, the Diet could vote to disapprove Japan’s participation in the AIIB.”
The Nikkei stressed that the once-dominant international structure of pitting Japan, the United States and major European nations against China has completely crumbled now that Britain, Germany, France and Italy came to support the AIIB plan despite the fact that Japan and the United States decided not to join out of security concerns. Given the shift in the global landscape, The Nikkei prodded Japan to take a realistic path, saying “Rather than denying or clashing with the AIIB, there should be a way to be proactively involved with it and make constructive requests as a member nation.”
The Asahi questioned if the government sufficiently communicated with the Chinese government before making the decision not to join. As an example of what can be taken as insufficient information-gathering on the part of the government, the newspaper cited an answer made on March 31 to the Diet by Finance Minister Taro Aso. Asked about loan standards to be adopted by the AIIB, Aso replied that he had not received any clarification on this point from China.
“Regardless of its choice—to join or not to join, the government must explain why it has reached that conclusion,” The Asahi said. “For this, Japan’s engagement with China must not be shallow.”
Japan’s future path
Japan and the United States are the only two major nations that did not join the AIIB from the start. Most of the papers said Japan’s future responses should include forging cooperative ties between the ADB and the AIIB in Asia, which, The Mainichi said, “needs at least 90 trillion yen in capital investment in infrastructure every year.”
The Mainichi said Japan should consider “more fundamental issues, such as the role Japan should aim to play in a rapidly changing Asia and how to face up to the reality of China’s growing influence.”
The paper also said the establishment of the new bank has provided an opportunity to check the every aspect of the ADB. “Asia needs contributions from both the ADB and AIIB, rather than selection or confrontation between the two entities,” The Mainichi said.
The daily concluded its editorial by saying: “Unlike the United States, Japan is an Asian country. As such, Tokyo will have no choice but to face similar regional initiatives led by China and India. Exercising caution alone cannot be an effective strategy.”
The Asahi pointed out “Japan has occupied a certain position (in the international financial regime) for many years by taking joint steps with the United States.” But, the paper said, the nation now faces this crucial question: What position will it aim to take in the international financial system, which is about to go through a major shift with the rise of China?
The newspaper also said it is necessary to watch closely to see if the AIIB makes sure that projects receiving loans from it will not result in environmental destruction or human rights violations. If fair and transparent operation by the bank is ensured, Japan’s provision of funds to the AIIB is one option to take, it said, adding that it is worth consideration for the ADB—to which Japan contributes the most funds—to cooperate with the AIIB through the provision of syndicate loans.
Saying “it is of utmost importance to design the apparatus of fair and transparent governance to prevent China from having its own way,” The Nikkei expressed its hope that founding members, including European states, will work from within to ensure the bank’s transparency. The economic daily then urged the government “not to rule out the option of Japan’s participation in the AIIB plan through the provision of funds” if the new bank becomes a highly neutral, “multinational institution.”
“Many Japanese companies fear that corporations from non-member countries will be barred from bidding (in AIIB-financed projects) and face other disadvantages,” The Nikkei said. “To ensure healthy growth of the AIIB, the Asian Development Bank (ADB), which is led by Japan and the United States, should boost its capital and deepen its engagement with the AIIB through both cooperation and competition.”
The Yomiuri also addressed its concerns. “It is undesirable that the global financial order—a basis of the world economy—should be shaken by possible difficulties facing the AIIB,” the newspaper said, urging the new bank to “ensure its operational transparency and fairness [are] commensurate with its status as an international institution.”
The United States is apparently seeking ways to ensure that the AIIB adequately examines and provides loans by bringing the bank into joint undertakings with the World Bank and the ADB, The Yomiuri said. “Japan must cooperate with the United States in working to make sure the AIIB operates under international rules.”
* English translations of The Yomiuri and The Mainichi are from The Japan News and The Mainichi, respectively. Those for The Asahi and The Nikkei are provisional. The content of this page was made by the Foreign Press Center Japan and does not reflect the opinion of the Japanese Government or any other organization.