More than 40 countries have added their names to a growing list of those seeking to become founding members of China’s multibillion-dollar Asian Infrastructure Investment Bank, but the United States and Japan say they will remain on the sidelines.
Just days before the deadline at the end of March, Russia added its name to the list that has more than doubled since China announced its plans to build the bank late last year.
A growing number of Washington’s allies in Asia and Europe have lined up to participate, and in a last minute surprise, Taiwan announced its desire to join.
The Taiwan bid to become a founding member came late Monday. It was not immediately clear whether Beijing would accept the application.
China and Taiwan do not have official diplomatic relations, and while the island economy has huge strengths it is not a member of the United Nations or any organization that is similar to the AIIB, such as the World Bank or Asian Development Bank.
China and Taiwan split amid a civil war in 1949, but relations between the two governments have improved since President Ma Ying-jeou was elected in 2008. Membership in the AIIB requires statehood and Beijing considers the self-ruled island to be a part of its territory.
Taiwan’s Premier Mao Chih-kuo says the application to join was sent through channels the two sides use to communicate. “It would suit Taiwan’s national interests, if it could participate in Asian Infrastructure Investment Bank with dignity,” Mao told reporters in Taipei.
Almost immediately after the announcement, opposition lawmakers in Taiwan were raising concerns about the proposal.
Shi Yinhong, a political scientist at Beijing’s Renmin University said it is likely China will not give Taiwan’s request or other special requests from international organizations high priority.
“From China’s perspective this would show its good will toward cross-strait relations,” Shi said. “On the other, if it opposes Taiwan’s incorporation that would be lost - the opportunity to attract popularity on the Taiwan island.”
The key attraction for many of those seeking to join the bank is the massive business opportunities in Asia for infrastructure development. According to the Asian Development Bank, Asia needs $800 billion each year for roads, ports, power plants or other infrastructure projects.
Beijing says countries that want to be involved include those from Africa, Europe, South America, Asia and the Pacific.
Shi said the rapid increase in the number of those seeking to become members has exceeded China’s expectations and helped Beijing win diplomatic prestige. But he said that from Beijing’s perspective this has benefits and costs.
“The membership of European powers, South Korea and Australia will make China’s leading role much (more) reduced than it otherwise would have been,” Shi said.
He adds that China cannot and will not play a prominent role other than being an initiator for the bank and given their number Western powers could have an advantage in pressing for international standards.
Similarly Shi said Russia’s decision to become a founding member has risks, noting Moscow has long been suspicious of China’s Silk Road Initiative and efforts to extend its reach into Central Asia. Its participation in the bank could help ease some tensions, he said.
“I don’t think Russian membership will add much of a positive element in operation of the bank and in the making of the rules, because Russia generally (speaking) in this field is a maverick,” Shi said.
For Russia, it is an opportunity to build investment and business opportunities in Asia while its economy is struggling under the weight of international sanctions over the Ukraine crisis and a slide in oil prices.
The United States and Japan say they are holding off joining, citing concerns about how the bank will be run and what it will do to guarantee social and environmental standards are upheld. Most of the crucial details about voting rights and standards for loans will be worked out after the final list of founding members is announced in mid-April.
Washington’s decision to wait has been criticized by some economists and scholars in the United States.
Douglas Paal, vice president of the Washington-based Carnegie Endowment for International Peace said he thought some of the concerns about the bank were misplaced. Paal said he did not believe the bank is a threat to institutions the United States led the way in establishing following World War II.
“This has come very slowly to the U.S. government,” Paal said in a recent interview with Chinese state-run broadcaster CCTV. “I'm rather embarrassed that my government was not foresightful enough to take a hold of this issue and shape it to the mutual benefit of all the participants from the beginning, but took a hostile attitude toward it, which I think was counter-productive and diminished American influence in the process."
But Paal added there is still plenty of room for institutions such as the World Bank and Asian Development Bank to cooperate with the AIIB.
China has taken the snub in stride and officials have said they welcome U.S. participation whenever that may happen.
On Tuesday, the overseas edition of the Communist Party run People’s Daily argued that by citing concerns about “high standards,” Washington risked isolating itself internationally.
The article argued that the U.S. decision to hold off was driven in part by concern about the threat the bank might pose to Washington’s leadership in global finance and global influence.
China’s Asian Infrastructure Investment Bank is expected to be launched with funding of as much as $100 billion, most of it Chinese money.