Has Washington made its peace with China’s Asian Infrastructure Investment Bank (AIIB) at last?
An official fact sheet on U.S.-China economic relations, issued after Chinese President Xi Jinping’s meetings with U.S. President Barack Obama at the White House notes that “the United States welcomes China’s growing contributions to financing development and infrastructure in Asia and beyond.” The introduction to the fact sheet also noted that the “international financial architecture has evolved over time to meet the changing scale, scope, and diversity of challenges and to include new institutions as they incorporate its core principles of high standards and good governance.”
Though the AIIB wasn’t mentioned explicitly in the statement, the introductory language suggests that Washington is easing its tone on the new China-led financial institution which launched earlier this year with a founding membership comprising over 50 countries, including several Western European states and U.S. partners and allies. The fact sheet notes that both countries “resolve to further strengthen the World Bank, Asian Development Bank, African Development Bank, and Inter-American Development Bank by enhancing their financial capacity, reforming their governance, and improving their effectiveness and efficiency.” The AIIB is notably excluded from this list.
The Financial Times reported on the shifting U.S. position on the AIIB in the wake of Xi’s visit as well, noting that the U.S. officials had “declared what amounts to a truce in their campaign over China’s new Asian infrastructure bank.” Per the FT‘s report, U.S. officials have noted that Xi gave his assurances that the AIIB would “abide by the highest international environmental and governance standards.” U.S. officials cited concerns about the AIIB’s governance standards as one of their primary concerns when its allies started joining the institution. When the UK joined, for example, the White House issued a statement noting that “We hope and expect that the UK will use its voice to push for adoption of high standards.”
The AIIB his its deadline for prospective founding members on March 31, 2015. A framework agreement for the bank’s operations was signed on June 29, bringing some much-needed clarity on how the AIIB would manage capital and voting rights. The bank launched with 57 countries, comprising a quarter of the world’s nations and 16 of the world’s 20 largest economies. The United States, along with Japan, represent two notable economies that chose not to join the AIIB. The AIIB’s appealing doesn’t appear to be waning anytime soon too. Up to 20 countries are still waiting for their opportunity to join the AIIB, demonstrating that the institution’s appeal is far from having achieved global saturation with its inaugural founding members.
That Washington is coming around to the AIIB and softening its position on the institution is a good thing. With a bevy of pressing challenges in the U.S.-China relations, including cyber espionage, freedom of navigation in the East and South China Seas, and growing military competition, the United States is better off expending less diplomatic capital on opposition to institutions like the AIIB–which could ultimately serve as a net positive for a region where infrastructure financing is very much needed–and focusing its efforts on other issues.
If you’re looking for a more general look at the outcomes of Xi’s state visit, Shannon Tiezzi has a helpful compilation of the other issues discussed here.