About-face ! Australia May Not Join New Asian Bank After All

[Kompromat]

That's what I was thinking, too. I mean, Australia is a major raw materials exporter to China, both have growing economic trade relations, and heck, they're even integrating through an FTA. But it just behooves me why it doesn't join the AIIB.

The Lucky Country Is About to Run Out of Luck | The Diplomat

Asia Unbound » The Lucky Country Is About to Run out of Luck

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[LeveragedBuyout]

To be honest I don't see why the Australians can't be part of this bloc. I would actually like to know why they didn't join, aside from the proverbial security apparatus everyone talks about. But that doesn't make sense since China and Australia already have agreed to an FTA.

@Horus , @LeveragedBuyout , @SvenSvensonov , can you guys give me an explanation?

I've been struggling to understand the harm in the creation of these new institutions, or why the US would pressure allies not to join. The best I can come up with is an analysis I read a day or two ago, that the fear is that China will lend money to various emerging markets through these institutions (leveraged up by its dupe cash-cow partners), and when the projects inevitably fail to produce sufficient cash flow to cover the debt, China will offer to forgive the debt in return for certain "favors" (political, military, economic).

It seems extremely far-fetched to me, and would take over a decade for such a plan to come to fruition, but who knows what the Obama administration is thinking these days. Personally, if China wants to lend more money for infrastructure, I'm all for it. And if anyone wants to join them, I can't see why that would harm us. If anything, the faster GDP growth that better infrastructure would enable would only help us economically, by creating more consumption and demand for our products. The bonus is that the US could finally free-ride off of Chinese efforts, instead of the reverse scenario of the last 30 years.

Clearly, I'm missing something.

 

[Aepsilons]

I financial and economic wizard I am not, but I do have a nose for dirty politics and this smells of US action. It's been reported, i'll post a link to an article on The Diplomat, that the US was making the rounds in East-Asia to dissuade its friends not to join. Add Australia's own misgivings about getting too close to China in with the US pressure and this was an eventuality that was all but certain. Australia may join eventually, and I would put my money on them doing so, but only after they work out a backroom deal with the US. Japan is in the same boat.

Why the US Is Trying to Squash China’s New Development Bank | The Diplomat

Japan has to join the Chinese' led economic partnership group, it simply must. Japan and China's bilateral trade is the greatest in the entire region. Trade between China and Japan is some 100 billion more than trade between Japan and the United States. China's market is just simply untapped. America is well, already tapped.Besides, China is home to the majority of Japan's production wing. We are so deeply integrated (over 4,500 Japanese businesses call China home).

But how to do this without angering too much our buddy ol' pal Uncle Sammy. That is what I'm thinking.

 

[Aepsilons]

I've been struggling to understand the harm in the creation of these new institutions, or why the US would pressure allies not to join. The best I can come up with is an analysis I read a day or two ago, that the fear is that China will lend money to various emerging markets through these institutions (leveraged up by its dupe cash-cow partners), and when the projects inevitable fail to produce sufficient cash flow to cover the debt, China will offer to forgive the debt in return for certain "favors" (political, military, economic).

It seems extremely far-fetched to me, and would take over a decade for such a plan to come to fruition, but who knows what the Obama administration is thinking these days. Personally, if China wants to lend more money for infrastructure, I'm all for it. And if anyone wants to join them, I can't see why that would harm us. If anything, the faster GDP growth that better infrastructure would enable would only help us economically, but creating more consumption and demand for our products. The bonus is that the US could finally free-ride off of Chinese efforts, instead of the reverse scenario of the last 30 years.

Clearly, I'm missing something.

Thanks Sir. That is what I had feared, something smelled like another trace of Obama's failure in foreign policy initiatives.

Still, i can't help but scratch my own head in trying to comprehend this entire situation. Just boggles me' mind.

 

[SvenSvensonov]

Japan has to join the Chinese' led economic partnership group, it simply must. Japan and China's bilateral trade is the greatest in the entire region. Trade between China and Japan is some 100 billion more than trade between Japan and the United States. China's market is just simply untapped. America is well, already tapped.

But how to do this without angering too much our buddy ol' pal Uncle Sammy. That is what I'm thinking.

How to do it without angering the US is not too difficult, just act as our man on the inside. The US and Japan (and Australia) will come to some sort of agreement that sees the US retain its leverage. Probably providing a bit of inside information on the internal politics of the bank... that's my guess anyways. I also agree that Japan should and has to join, it's not in its interest not too and would leave Japan out of a lucrative opportunity.

And to @LeveragedBuyout perhaps political favors, but too few nations in the region will want to buddy up (buy their stuff, yes, but not other military actions such as hosting bases) to China's military so I can't see that as a major obstacle or sticking point when nations sign up to a Chinese-led bank and run into debt problems. East-Asia has seen what happens when you let your guard down to the Chinese military and act weak or out of a favor that is owed... you end up like the Philippines and lose some of your territory.

 

[LeveragedBuyout]

How to do it without angering the US is not too difficult, just act as our man on the inside. The US and Japan (and Australia) will come to some sort of agreement that sees the US retain its leverage. Probably providing a bit of inside information on the internal politics of the bank... that's my guess anyways. I also agree that Japan should and has to join, it's not in its interest not too and would leave Japan out of a lucrative opportunity.

And to @LeveragedBuyout perhaps political favors, but too few nations in the region will want to buddy up (buy their stuff, yes, but not other military actions such as hosting bases) to China's military so I can't see that as a major obstacle or sticking point when nations sign up to a Chinese-led bank and run into debt problems. East-Asia has seen what happens when you let your guard down to the Chinese military and act weak or out of a favor that is owe... you end up like the Philippines and lose some of your territory.

I wish I could agree with you, but what about China's String of Pearls strategy? It's already happening, so it's not unreasonable for it to continue elsewhere, this time with some added economic inducements.

 

[SvenSvensonov]

I wish I could agree with you, but what about China's String of Pearls strategy? It's already happening, so it's not unreasonable for it to continue elsewhere, this time with some added economic inducements.

Yes and no to the String of Pearls. It's a bit like the US Asia pivot from a military perspective, a bit of token presences here and there, but no real concrete steps to maintain a long-term and effective force. In the Seychelles, Pakistan, Sri Lanka, all parts of the Chinese String of Pearl, China has a presence, but its too little and faces serious logistical problems and push-back from India and other regional nations which have a problem with China. Maybe in the long-term the String of Pearls will become a realistic overseas basing method and option for China, but that is still a long ways a way given the current lack of progress beyond a few token deployment and unmet commitments.

Economically China has a larger impact on each nation included in the String of Pearls, but its military presence is limited at best.

China’s foreign ports: The new masters and commanders | The Economist - The Economist had an interesting article on the economic, but limited military developments, though the article is dated (from 2013).

For an India perspective on China's String of Pearls military prospects see this article: Does India Still Fear China's Growing Military Might? | The National Interest

 

[Tridibans]

Now we know who are the free nations and who are the slaves.

But as per fellow Chinese posters, India is a slave of US/UK. Then how come we are one of the major participant in this bank?

 

[Genesis]

But as per fellow Chinese posters, India is a slave of US/UK. Then how come we are one of the major participant in this bank?

That's a weird one, names has been called, but not really this one.

I've been struggling to understand the harm in the creation of these new institutions, or why the US would pressure allies not to join. The best I can come up with is an analysis I read a day or two ago, that the fear is that China will lend money to various emerging markets through these institutions (leveraged up by its dupe cash-cow partners), and when the projects inevitably fail to produce sufficient cash flow to cover the debt, China will offer to forgive the debt in return for certain "favors" (political, military, economic).

It seems extremely far-fetched to me, and would take over a decade for such a plan to come to fruition, but who knows what the Obama administration is thinking these days. Personally, if China wants to lend more money for infrastructure, I'm all for it. And if anyone wants to join them, I can't see why that would harm us. If anything, the faster GDP growth that better infrastructure would enable would only help us economically, by creating more consumption and demand for our products. The bonus is that the US could finally free-ride off of Chinese efforts, instead of the reverse scenario of the last 30 years.

Clearly, I'm missing something.

Apparently, from what I read, the US is scared of a race to the bottom, where we lend money to countries without asking for human rights or something like that and would thus take away a US "weapon" in dealing with these bastard nations on such issues.


Now I'm all for human rights and such, but without economy, what kind of right can the nation give it anyways. Can the Philippines give good schools or clean water and healthy food without cash? Can India provide electricity to all parts of India without cash or building roads to make health care a better reality? Can any of the 20+ nations provide basic rights that the US enjoy without the economy to back it up?

The US think so, but Libya, Egypt, Ukraine and whatever else has suggested hell no.

 

[Genesis]

Yes and no to the String of Pearls. It's a bit like the US Asia pivot from a military perspective, a bit of token presences here and there, but no real concrete steps to maintain a long-term and effective force. In the Seychelles, Pakistan, Sri Lanka, all parts of the Chinese String of Pearl, China has a presence, but its too little and faces serious logistical problems and push-back from India and other regional nations which have a problem with China. Maybe in the long-term the String of Pearls will become a realistic overseas basing method and option for China, but that is still a long ways a way given the current lack of progress beyond a few token deployment and unmet commitments.

Economically China has a larger impact on each nation included in the String of Pearls, but its military presence is limited at best.

China’s foreign ports: The new masters and commanders | The Economist - The Economist had an interesting article on the economic, but limited military developments, though the article is dated (from 2013).

For an India perspective on China's String of Pearls military prospects see this article: Does India Still Fear China's Growing Military Might? | The National Interest

A good observation, but lacks a little something.

The number one question is can China achieve the type of dominance in the Indian Ocean region that US has enjoyed? Answer is no, and probably not for a long time.

How many Fifth gen fighter can we base their, how many helicopters, how many men? How much experience do we have in the region and more.


That's changing, first we will sent subs, and do anti pirate missions to get experience operating in the seas there.

Second, build up a sizeable trade interest there to justify us being there.

Third, build up a military force that can project far and wide.

The first will take time, but we been doing it for the past 7+ years or so and we will continue to do so. The second is also catching up fast, Bangledesh already has a presence in China bigger than in India and Pakistan is our natural ally. Sri Lanka's political leadership can depend on our support and our expertise in ports and such are second to none and it's showing.

The third is both the hardest and the easiest. We will see how our economy unfold for the next two decade and see where our spending is to see how this plays out.

 

[JSCh]

"Australia May Not Join New Asian Bank After All"
Is that news? I thought the bank has already been formally established month ago. There are 21 founding members, and Japan, South Korea, Indonesia, and Australia did not sign up.

A week ago, Indonesia said they decided to join as a founding member. And I am not aware that Australia has indicate that they would follow suit.

Australia’s reason for pulling out so suddenly has to do with U.S. and Japanese pressure, apparently. News came just as the APEC summit in Beijing was getting underway.

How do you pull out if you are not even in in the first place?? How would that be a about face? Is there news that Australia is planning to join prior to this decision?

I did found this, but it said nothing about Australia going to join.

China leaves door open for Australian turnaround on Asia bank

PUBLISHED: 27 Oct 2014 00:09:00 | UPDATED: 27 Oct 2014 16:50:44​

Australia has been given until the end of next year to become a founding member of the China-led Asian Infrastructure Investment Bank, after a divided cabinet and opposition from Washington prevented the government reaching a decision last week.

China and 20 countries signed a memorandum of understanding in Beijing on Friday to launch the infrastructure bank, which is set to become one of the region’s biggest lenders. India and Singapore were among the first round of founding members. Despite last-minute negotiations, Beijing was unable to persuade Australia, South Korea and Indonesia to sign up.

Those countries will miss out on the opportunity to negotiate the bank’s articles of agreement, expected to be completed by the end of 2015.​