Pages

Thursday, June 30, 2016

The New Age of Financial Cooperation in the Asia-Pacific Region


Eric Chiou
     In the end of 2015, a new multilateral financial institution, the Asia Infrastructure Investment Bank (AIIB) had formally launched its debut and became the only regional bank focused on providing financial assistances to infrastructure projects for countries in the Asia-Pacific region.

From various perspectives, the formation of the AIIB may be a good news for the Asia-Pacific region as a whole, since this region is indeed in short supply of financial loans for infrastructure projects, and desperately in need of related transportation and telecommunication facilities for enhancing economic development and connectivity between countries and people in the region.

In 2013, when Indonesia was a host economy of APEC, it had highlighted "promoting connectivity" as one of three priorities of the year, and singled out physical connectivity, institutional connectivity, and people- to-people connectivity as the major themes for the efforts. Without doubt, infrastructure development and promotion of infrastructure investment are keys to achieve physical connectivity and to facilitate economic exchanges and regional integration.

Despite the significance of infrastructure development to fostering APEC's connectivity, many APEC members and countries in the region are troubled due to lack of sufficient financial support to undertake some infrastructure projects. According to the Asian Development Bank (ADB), another regional financial institution with recent concentration on poverty alleviation, it estimates that Asia totally needs about 8 trillion dollars for infrastructure projects from 2010-2020. Both ADB and the World Bank currently could not provide necessary funding to this demand, which opens the window of opportunity for the formation of the AIIB.


The proposal of the AIIB initiated by China had been discussed in fora of APEC meetings in 2013 and 2014. Some members, like the United States and Japan, were suspicious of this idea and afraid of its competition with existing international financial institutions, like the World Bank and the ADB, while other members, such as many developing economies, held relatively positive views and anticipated more friendly and generous terms for the loans of infrastructure projects.

Against the backdrop of US objection but other countries' endorsements, the AIIB was eventually launched in 2015, including 57 countries as its members. Nevertheless, two regional heavy-weight countries, the United States and Japan, were not included, which makes the AIIB become one of few international financial institutions completely dominated by developing countries, since China is single-handedly taking 26.06% of initial capitalization shares of the bank. It is followed by India's 7.51%, Russia's 5.92%, Germany's 4.15%, and South Korea's 3.50%. The proportion of share structure in the AIIB is distinctly different from those in the World Bank and the ADB, which are dominated by the United States, Japan and other western countries.

In other words, the fact that China possesses overwhelming power in the AIIB suggests that Beijing is likely to dictate its direction without any objection. The significance of this change that China takes the lead in this new multilateral financial institution highlights the following points that deserve much attention.

First, it brings challenges to existing lending terms of international financial institutions. One distinctive characteristic between the China-led AIIB and other existing international financial institutions is that China emphasizes the principle of non-interference when considering loan assistances. In other words, the loans from the AIIB may be more appealing to many developing countries, since their terms will not be as strict and demanding as the existing financial institutions. The loans from the latter usually require developing countries to undertake some controversial reforms in economic and political fields, which are not well-received by developing countries. Thus, the competition with the AIIB will place pressure on the World Bank and the ADB to revise their lending terms for developing countries.

Second, it creates and spreads a distinct development model from the West. The establishment of the AIIB signifies the contribution of a rising China to the world, while it also indicates another successful pathway to remarkable economic development for developing countries. In other words, with the operation of the AIIB, Beijing can steadfastly promote its unique model of "state capitalism" overseas with the financial leverage of the AIIB, which is likely to undermine the influences of existing international financial institutions under the so-called Bretton Wood system established after the World War Two, while reducing intrusive political agenda of the West embedded in financial loan packages for developing countries.

 Third, it establishes an international financial institution without the clout of US veto. Another critical implication of the AIIB is that it is an independent multilateral financial institution completely without the US influences, which enables China to master and shape the direction and priorities of the AIIB based on Beijing's interests. Meanwhile, the AIIB can also allow Beijing to facilitate its regional economic agenda, such as "One Belt One Road," with neighboring and related targeted countries. As a result, with the increasing loan projects funded by the AIIB, the role of China in global financial stage will become more crucial and its economic clouts overseas are likely to be more conspicuous than ever, which may finally overturn the current global economic order dominated by the US in the long run.

Despite the potential competition between the AIIB and other financial institutions, there are signs for cooperation and collaboration among these institutions. For instance, the ADB has indicated its intention to keep close cooperation with the AIIB in financing infrastructure projects in the region, while it also announces that a significant increase of its funding, up to 20 billion dollars, for infrastructure projects starting in 2017. Likewise, the president of the World Bank has also expressed his welcome attitude toward the AIIB and looked forward to more cooperation between the two.

Hence, it seems optimistic to conclude that the formation of the AIIB may generally produce more good than harm to most countries in the region, since its objectives and functions are designed to appropriately satisfy the severe shortage of financial loans for infrastructure projects. Although its actual performances remain time to tell, the effects of the AIIB stimulating more attention to and debates over the financial needs of developing countries have already generated some positive results, which impel the existing financial institutions to seriously confront the needs of developing countries and adjust their modus operandi from a debtor's perspective, not just condescendingly to require developing countries to do whatever they think best for them from a creditor's view. And the expected outcomes of more progressive infrastructure developments due to sufficient financial support are likely to reinforce connectivity in the region, boost economic growth, and spread more economic benefits for all members in the end.
(Eric Chiou is an Assistant Professor of National Chiao Tung University.)

2 comments:









  1. i couldn't believe that i would ever be re-unite with my ex-lover, i was so traumatize staying all alone with no body to stay by me and to be with me, but i was so lucky one certain day to meet this powerful spell caster Dr Akhere,after telling him about my situation he did everything humanly possible to see that my lover come back to me,indeed after casting the spell my ex-lover came back to me less than 48 hours,my ex-lover came back begging me that he will never leave me again,3 months later we got engaged and married,if you are having this same situation just contact Dr Akhere on his email: AKHERETEMPLE@gmail.com thanks very much sir for restoring my ex-lover back to me,his email: AKHERETEMPLE@gmail.com or call/whatsapp:+2349057261346












































































































































































    hindi ako makapaniwala na kailanman ay muling makiisa ako sa aking kasintahan, labis akong na-trauma sa pananatiling nag-iisa na walang katawan na manatili sa akin at makakasama ko, ngunit napakasuwerte ako sa isang tiyak na araw upang matugunan ito malakas na spell caster na si Dr Akhere, matapos sabihin sa kanya ang tungkol sa aking sitwasyon ginawa niya ang lahat ng makataong posible upang makita na ang aking kasintahan ay bumalik sa akin, sa katunayan matapos na ihagis ang spell ang aking dating kasintahan ay bumalik sa akin ng mas mababa sa 48 oras, dumating ang dating kasintahan ko. bumalik sa pagmamakaawa sa akin na hindi na niya ako pababayaan, 3 buwan mamaya kami ay nakipag-ugnay at nag-asawa, kung nagkakaroon ka ng parehong sitwasyong ito makipag-ugnay lamang kay Dr Akhere sa kanyang email: AKHERETEMPLE@gmail.com maraming salamat sa sir sa pagpapanumbalik ng aking dating kasintahan bumalik sa akin, ang kanyang email: AKHERETEMPLE@gmail.com o tumawag / whatsapp: +2349057261346

    ReplyDelete








  2. i couldn't believe that i would ever be re-unite with my ex-lover, i was so traumatize staying all alone with no body to stay by me and to be with me, but i was so lucky one certain day to meet this powerful spell caster Dr Akhere,after telling him about my situation he did everything humanly possible to see that my lover come back to me,indeed after casting the spell my ex-lover came back to me less than 48 hours,my ex-lover came back begging me that he will never leave me again,3 months later we got engaged and married,if you are having this same situation just contact Dr Akhere on his email: AKHERETEMPLE@gmail.com thanks very much sir for restoring my ex-lover back to me,his email: AKHERETEMPLE@gmail.com or call/whatsapp:+2349057261346












































































































































































    hindi ako makapaniwala na kailanman ay muling makiisa ako sa aking kasintahan, labis akong na-trauma sa pananatiling nag-iisa na walang katawan na manatili sa akin at makakasama ko, ngunit napakasuwerte ako sa isang tiyak na araw upang matugunan ito malakas na spell caster na si Dr Akhere, matapos sabihin sa kanya ang tungkol sa aking sitwasyon ginawa niya ang lahat ng makataong posible upang makita na ang aking kasintahan ay bumalik sa akin, sa katunayan matapos na ihagis ang spell ang aking dating kasintahan ay bumalik sa akin ng mas mababa sa 48 oras, dumating ang dating kasintahan ko. bumalik sa pagmamakaawa sa akin na hindi na niya ako pababayaan, 3 buwan mamaya kami ay nakipag-ugnay at nag-asawa, kung nagkakaroon ka ng parehong sitwasyong ito makipag-ugnay lamang kay Dr Akhere sa kanyang email: AKHERETEMPLE@gmail.com maraming salamat sa sir sa pagpapanumbalik ng aking dating kasintahan bumalik sa akin, ang kanyang email: AKHERETEMPLE@gmail.com o tumawag / whatsapp: +2349057261346

    ReplyDelete