Kiss_of_the_Dragon
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AIIB (Asian Infrastructure Investment Bank) news
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ahojunk
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Madeleine Albright is spot on with her honest assessment.
Now the following is the viewpoint of an investor.
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AIIB: The End of American Domination
AIIB: The End of American Domination
Posted By: The Sovereign Investor Posted date: April 01, 2015 06:55:08 PM
AIIB: The End of American Domination by Jeff D. Opdyke, The Sovereign Investor.
It goes that a wolf, in one of Aesop’s fables, was passing through a pasture and came upon some shepherds in a hut dining on a haunch of mutton. The wolf approached and said to the shepherds: “What a clamor you would raise if I were to do as you are doing!”
The moral: Men are apt to condemn in others the very things they practice themselves.
Which brings us to the United States government and the hissy fit it’s throwing over the Asian Infrastructure Investment Bank. The affair points, first and foremost, to the hypocrisies endemic in America today. More importantly, it shows that America’s place in the world — and by association, the dollar's place in the world — is diminishing. Those who understand this are in position to prepare for what’s to come.
The infrastructure bank, known as the AIIB, is the brainchild of China. Given China’s wealth, size, new-found global openness and expanding power and influence around the world, the Chinese have begun building doppelgangers of Western institutions that for years have shaped global economic policies. China and Russia, for instance, are behind a push to create a new iteration of the International Monetary Fund that would aid less-developed nations and do so without “the harassment of countries that do not agree with some foreign policy decisions made by the United States and their allies.”
Now comes the AIIB, designed to compete against the World Bank and its Asian offshoot, the Asian Development Bank. The AIIB mission: To finance infrastructure projects throughout Eurasia and Africa.
Like a schoolyard bully no one respects anymore, the U.S. has belittled the AIIB, claiming any Chinese-led lending institution will fail to impose rules and standards that would protect the environment (not that America has such a pristine record of doing so, but that’s neither here nor there).
The U.S. had a chance to join the bank as a founding member. It spurned that opportunity … and then in a fit of ignorance laced with latent jealousy, it told its key allies to spurn the bank, too.
Only … NO ONE LISTENED!
And therein we find a flashing marquee sign pointing to a very painful reality for Americans who blindly buy into the awkward — and fading — notion of American Exceptionalism.
Nothing More Than a Bully
It is no surprise that a rash of more than 20 Central, Southern and Southeast Asian nations have signed on as AIIB members, including America’s regional ally, South Korea. It’s probably no surprise that Russia and Turkey have joined, as have the Saudis and other Middle Eastern nations that are purportedly friendly to America.
But it should come as a shocker that Britain — America’s closest ally — signed on as a founding member of the AIIB … despite Washington’s protestations. It should also cause a mental ripple that Australia, Austria, Brazil, France, Germany, Italy, Luxembourg, Netherlands, New Zealand, Spain and Switzerland have joined. Japan will join, too. Taiwan and Norway are on deck, as well. That leaves the U.S. (and Canada, to a much lesser degree) conspicuously absent.
Why, you have to wonder, is the U.S. playing the role of intransigent narcissist as the rest of world rushes to join a bank that will help lift the living standards of several billion people from Southeastern Asia all the way to West Africa?
Very, very simple. The U.S. dollar.
America fears that the Asian/European economic cooperation necessary inside the AIIB — and the developing-nation acceptance of AIIB investments — will undermine dollar hegemony. For once, the U.S. is right. That is exactly what will happen — and, honestly, is already happening.
America has spent the post-World War II decades imposing its will on the world, in the process pissing off a lot of people, even our friends. Some of that is reflected, even if covertly, in decisions made by Western nations to join the AIIB.
And, yet, anger at America isn’t the only reason, or the best reason, to join the AIIB. Opportunity is — which is exactly what every nation is pursuing when they join the AIIB.
The bank’s footprint covers a (very large) swath of the world where economies and consumers are rapidly emerging. If I’m Britain or Germany — or Australia or Brazil — I absolutely want deep access to those economies, and I don’t care if I disregard the wishes of my friend, because my friend’s wishes run counter to my personal success.
Key Protection
For America, this is the most serious existential threat we face as a nation.
This isn’t just a story about friends snubbing our desires. It’s the story of the knock-on effects here at home of a world in which dollar hegemony recedes into history. Painful repercussions radiate from that.
Because of the size of our national debt — now exceeding $18 trillion — America must constantly rollover boatloads of U.S. Treasury paper, one-third of which we sell globally to fund our profligacy. As demand for the dollar wanes (and the AIIB is just another example of why that will happen), U.S. interest rates must rise in order to attract a similar level of investment from global buyers of our debt.
That, in turn, raises the cost of keeping the lights on in America. It also raises the costs — likely beyond affordability — of keeping U.S. troops stationed in various parts of the world, which ultimately reduces our influence. And it screams through the U.S. economy, leaving in its wake hardship and increasing poverty (and remember: we are a country where fully one-half the population already cannot afford a $500 emergency expense).
The AIIB, and our friends who have joined the bank as founding members, brings into harsh focus the troubling reality that we are now in the midst of an empire’s collapse. It’s hard to see from the inside, and not something most of us want to accept.
But the dots methodically continue to connect. The only protection is having some of your wealth outside the dollar. When the end of the U.S. dollar comes — and it will — the rising value of foreign currencies relative to the dollar will be the only saving grace protecting your lifestyle from the radiating pain.
Until next time, stay Sovereign…
Jeff D. Opdyke
Editor, Profit Seeker
.
Now the following is the viewpoint of an investor.
-----------------------
.
AIIB: The End of American Domination
AIIB: The End of American Domination
Posted By: The Sovereign Investor Posted date: April 01, 2015 06:55:08 PM
AIIB: The End of American Domination by Jeff D. Opdyke, The Sovereign Investor.
It goes that a wolf, in one of Aesop’s fables, was passing through a pasture and came upon some shepherds in a hut dining on a haunch of mutton. The wolf approached and said to the shepherds: “What a clamor you would raise if I were to do as you are doing!”
The moral: Men are apt to condemn in others the very things they practice themselves.
Which brings us to the United States government and the hissy fit it’s throwing over the Asian Infrastructure Investment Bank. The affair points, first and foremost, to the hypocrisies endemic in America today. More importantly, it shows that America’s place in the world — and by association, the dollar's place in the world — is diminishing. Those who understand this are in position to prepare for what’s to come.
The infrastructure bank, known as the AIIB, is the brainchild of China. Given China’s wealth, size, new-found global openness and expanding power and influence around the world, the Chinese have begun building doppelgangers of Western institutions that for years have shaped global economic policies. China and Russia, for instance, are behind a push to create a new iteration of the International Monetary Fund that would aid less-developed nations and do so without “the harassment of countries that do not agree with some foreign policy decisions made by the United States and their allies.”
Now comes the AIIB, designed to compete against the World Bank and its Asian offshoot, the Asian Development Bank. The AIIB mission: To finance infrastructure projects throughout Eurasia and Africa.
Like a schoolyard bully no one respects anymore, the U.S. has belittled the AIIB, claiming any Chinese-led lending institution will fail to impose rules and standards that would protect the environment (not that America has such a pristine record of doing so, but that’s neither here nor there).
The U.S. had a chance to join the bank as a founding member. It spurned that opportunity … and then in a fit of ignorance laced with latent jealousy, it told its key allies to spurn the bank, too.
Only … NO ONE LISTENED!
And therein we find a flashing marquee sign pointing to a very painful reality for Americans who blindly buy into the awkward — and fading — notion of American Exceptionalism.
Nothing More Than a Bully
It is no surprise that a rash of more than 20 Central, Southern and Southeast Asian nations have signed on as AIIB members, including America’s regional ally, South Korea. It’s probably no surprise that Russia and Turkey have joined, as have the Saudis and other Middle Eastern nations that are purportedly friendly to America.
But it should come as a shocker that Britain — America’s closest ally — signed on as a founding member of the AIIB … despite Washington’s protestations. It should also cause a mental ripple that Australia, Austria, Brazil, France, Germany, Italy, Luxembourg, Netherlands, New Zealand, Spain and Switzerland have joined. Japan will join, too. Taiwan and Norway are on deck, as well. That leaves the U.S. (and Canada, to a much lesser degree) conspicuously absent.
Why, you have to wonder, is the U.S. playing the role of intransigent narcissist as the rest of world rushes to join a bank that will help lift the living standards of several billion people from Southeastern Asia all the way to West Africa?
Very, very simple. The U.S. dollar.
America fears that the Asian/European economic cooperation necessary inside the AIIB — and the developing-nation acceptance of AIIB investments — will undermine dollar hegemony. For once, the U.S. is right. That is exactly what will happen — and, honestly, is already happening.
America has spent the post-World War II decades imposing its will on the world, in the process pissing off a lot of people, even our friends. Some of that is reflected, even if covertly, in decisions made by Western nations to join the AIIB.
And, yet, anger at America isn’t the only reason, or the best reason, to join the AIIB. Opportunity is — which is exactly what every nation is pursuing when they join the AIIB.
The bank’s footprint covers a (very large) swath of the world where economies and consumers are rapidly emerging. If I’m Britain or Germany — or Australia or Brazil — I absolutely want deep access to those economies, and I don’t care if I disregard the wishes of my friend, because my friend’s wishes run counter to my personal success.
Key Protection
For America, this is the most serious existential threat we face as a nation.
This isn’t just a story about friends snubbing our desires. It’s the story of the knock-on effects here at home of a world in which dollar hegemony recedes into history. Painful repercussions radiate from that.
Because of the size of our national debt — now exceeding $18 trillion — America must constantly rollover boatloads of U.S. Treasury paper, one-third of which we sell globally to fund our profligacy. As demand for the dollar wanes (and the AIIB is just another example of why that will happen), U.S. interest rates must rise in order to attract a similar level of investment from global buyers of our debt.
That, in turn, raises the cost of keeping the lights on in America. It also raises the costs — likely beyond affordability — of keeping U.S. troops stationed in various parts of the world, which ultimately reduces our influence. And it screams through the U.S. economy, leaving in its wake hardship and increasing poverty (and remember: we are a country where fully one-half the population already cannot afford a $500 emergency expense).
The AIIB, and our friends who have joined the bank as founding members, brings into harsh focus the troubling reality that we are now in the midst of an empire’s collapse. It’s hard to see from the inside, and not something most of us want to accept.
But the dots methodically continue to connect. The only protection is having some of your wealth outside the dollar. When the end of the U.S. dollar comes — and it will — the rising value of foreign currencies relative to the dollar will be the only saving grace protecting your lifestyle from the radiating pain.
Until next time, stay Sovereign…
Jeff D. Opdyke
Editor, Profit Seeker
.
Last edited:
Kiss_of_the_Dragon
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Finance, foreign ministries criticized over AIIB handling
The Yomiuri Shimbun The government may have been too slow in responding to the envisaged launch of the China-proposed Asian Infrastructure Investment Bank (AIIB), according to some critics.
Some top officials at the Prime Minister’s Office and in the ruling and opposition parties attribute this to overly optimistic views held by the Finance Ministry and the Foreign Ministry about whether other Group of Seven nations would participate in the founding of the AIIB.
Since China proposed establishing the AIIB, the government has distanced itself from moves to be a founding member of the new international financial institution. This has led to a lack of serious discussion within the government and the ruling parties about the AIIB.
Prior to the deadline set at the end of March for entry to the AIIB, four G-7 members — Britain, France, Germany and Italy — and Australia declared plans to join. All this has raised the number of AIIB participants to about 50, making the AIIB an international body Japan cannot afford to ignore.
Prime Minister Shinzo Abe therefore instructed the LDP on Tuesday to hold internal debate on the matter. On Wednesday, the LDP began a joint conference of its party organs, including the Foreign Affairs Division chaired by Kenya Akiba.
In the joint conference, LDP members began debate over whether Japan should join the AIIB. The conference will begin collecting opinions from experts this Tuesday, and the LDP aims to decide on a basic policy about the issue by June, when the AIIB’s charter is to be established.
Some in the LDP have voiced dissatisfaction with the ministries. A senior LDP member said: “The issue is different from what we’ve heard from the government. Was the Foreign Ministry’s awareness low?”
After the AIIB is established, it may be a rival to the Asian Development Bank, which is led jointly by Japan and the United States.
Because many ADB presidents have been chosen from among Finance Ministry bureaucrats, a junior LDP member said the ministry “might have underestimated China’s moves due to excessive fears about a decline in the ADB’s influence.”
An aide to Abe also said: “Both the Finance Ministry and the Foreign Ministry’s explanations were poor. They told us the G-7 countries would not join.”
Opposition parties are increasingly critical of the government’s response to the issue, calling it a diplomatic failure.
Democratic Party of Japan President Katsuya Okada said at a press conference Friday: “It was a big failure that G-7 countries failed to take concerted actions. I regret that Japan’s diplomatic skills are as poor as they have been shown to be on this issue.”
Okada voiced doubts about the reactions of Japan and the United States, and said Japan has the option of participating in the AIIB.
Mito Kakizawa, chairman of the Japan Innovation Party’s policy research council, said at a press conference Friday, “Did the government pay attention only to the United States, before looking at moves all over the world?”
He indicated his intention to examine the government’s responsibility for its response, saying, “Discussions and reexaminations are necessary.”
The ADB was established in 1966 at the initiative of Japan and the United States to eliminate poverty in the Asia-Pacific region. Sixty-seven countries and territories, including China and India, belong to the ADB, which mainly extends loans to developing countries.
Japan and the United States are the largest fund contributors to the ADB, and all the presidents of the bank have been Japanese.
Demand for infrastructure investment in Asia from 2010 through 2020 will amount to $8 trillion, according to one estimate. Some experts have said the ADB will not be able to meet this demand alone.
There are also concerns that if the AIIB functions smoothly, the ADB’s influence in Asia may wane.
Finance, foreign ministries criticized over AIIB handling - The Japan News
----
Japan can still apply as regular member with observation status instead been a founding member which can enjoy the right to participate and engage on rule setting to the bank...better be late than never...it's not a total lost...歓迎日本 (Kangei Nihon)
The Yomiuri Shimbun The government may have been too slow in responding to the envisaged launch of the China-proposed Asian Infrastructure Investment Bank (AIIB), according to some critics.
Some top officials at the Prime Minister’s Office and in the ruling and opposition parties attribute this to overly optimistic views held by the Finance Ministry and the Foreign Ministry about whether other Group of Seven nations would participate in the founding of the AIIB.
Since China proposed establishing the AIIB, the government has distanced itself from moves to be a founding member of the new international financial institution. This has led to a lack of serious discussion within the government and the ruling parties about the AIIB.
Prior to the deadline set at the end of March for entry to the AIIB, four G-7 members — Britain, France, Germany and Italy — and Australia declared plans to join. All this has raised the number of AIIB participants to about 50, making the AIIB an international body Japan cannot afford to ignore.
Prime Minister Shinzo Abe therefore instructed the LDP on Tuesday to hold internal debate on the matter. On Wednesday, the LDP began a joint conference of its party organs, including the Foreign Affairs Division chaired by Kenya Akiba.
In the joint conference, LDP members began debate over whether Japan should join the AIIB. The conference will begin collecting opinions from experts this Tuesday, and the LDP aims to decide on a basic policy about the issue by June, when the AIIB’s charter is to be established.
Some in the LDP have voiced dissatisfaction with the ministries. A senior LDP member said: “The issue is different from what we’ve heard from the government. Was the Foreign Ministry’s awareness low?”
After the AIIB is established, it may be a rival to the Asian Development Bank, which is led jointly by Japan and the United States.
Because many ADB presidents have been chosen from among Finance Ministry bureaucrats, a junior LDP member said the ministry “might have underestimated China’s moves due to excessive fears about a decline in the ADB’s influence.”
An aide to Abe also said: “Both the Finance Ministry and the Foreign Ministry’s explanations were poor. They told us the G-7 countries would not join.”
Opposition parties are increasingly critical of the government’s response to the issue, calling it a diplomatic failure.
Democratic Party of Japan President Katsuya Okada said at a press conference Friday: “It was a big failure that G-7 countries failed to take concerted actions. I regret that Japan’s diplomatic skills are as poor as they have been shown to be on this issue.”
Okada voiced doubts about the reactions of Japan and the United States, and said Japan has the option of participating in the AIIB.
Mito Kakizawa, chairman of the Japan Innovation Party’s policy research council, said at a press conference Friday, “Did the government pay attention only to the United States, before looking at moves all over the world?”
He indicated his intention to examine the government’s responsibility for its response, saying, “Discussions and reexaminations are necessary.”
The ADB was established in 1966 at the initiative of Japan and the United States to eliminate poverty in the Asia-Pacific region. Sixty-seven countries and territories, including China and India, belong to the ADB, which mainly extends loans to developing countries.
Japan and the United States are the largest fund contributors to the ADB, and all the presidents of the bank have been Japanese.
Demand for infrastructure investment in Asia from 2010 through 2020 will amount to $8 trillion, according to one estimate. Some experts have said the ADB will not be able to meet this demand alone.
There are also concerns that if the AIIB functions smoothly, the ADB’s influence in Asia may wane.
Finance, foreign ministries criticized over AIIB handling - The Japan News
----
Japan can still apply as regular member with observation status instead been a founding member which can enjoy the right to participate and engage on rule setting to the bank...better be late than never...it's not a total lost...歓迎日本 (Kangei Nihon)
TaiShang
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ahojunk
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AIIB to hold first working meeting at end of month｜WantChinaTimes.com
AIIB to hold first working meeting at end of month
Huang Hsin and Staff Reporter
2015-04-04 14:27 (GMT+8)
Jin Liqun speaks at the 2015 China Development Forum in Beijing, March 22. (Photo/Xinhua)
The China-led Asian Infrastructure Investment Bank (AIIB) will hold its first working meeting in Beijing this month to discuss share distribution and select a bank governor and other officials.
Guangzhou-based 21st Century Business Herald said the first meeting was originally scheduled for March 30, but because more countries than expected applied, it was postponed until the end of April.
According to the latest figures from China's Ministry of Finance, 52 countries, including Taiwan, applied to join the AIIB as founding members before the March 31 deadline.
Among them, the applications of 33 countries have been approved and the remaining applicants will be notified by April 15 if their applications are successful.
Jin Liqun, secretary-general of the Multilateral Secretariat for Establishing the AIIB, said AIIB's authorized capital will be US$50 billion initially and this will eventually increase to US$100 billion.
Asian countries will account for around 75% of the shares, while countries outside of Asia will have around 25%.
Shares will be allocated based on members' gross domestic products, guaranteeing that China will become the bank's largest single shareholder.
Jin said the low ratio of shares for countries outside Asia stems from China's original vision of their roles.
When China first invited developed European countries to join, Jin said, it was not to raise capital but rather to capitalize on their experience in corporate governance and technical support in promoting the development of the AIIB.
As to potential candidates to lead the bank, one Chinese official said a Chinese serving as the AIIB's first governor would have a positive effect, but the mechanism still has to be discussed. There could also be several deputy governor seats.
Some countries have actively lobbied to have one of their nationals be made a deputy governor.
Indonesia, for example, has previously said publicly it should have at least one deputy governor seat because it could be the largest client of the bank given its urgent need for infrastructure development.
Jin Canrong, an expert in international relations, said European countries such as the UK and Germany have not applied to join the bank unconditionally and they are sure to ask for a seat in the management of the bank.
Satisfying the needs of all the members will test China's ability to coordinate.
AIIB to hold first working meeting at end of month｜WantChinaTimes.com
AIIB to hold first working meeting at end of month
Huang Hsin and Staff Reporter
2015-04-04 14:27 (GMT+8)
Jin Liqun speaks at the 2015 China Development Forum in Beijing, March 22. (Photo/Xinhua)
The China-led Asian Infrastructure Investment Bank (AIIB) will hold its first working meeting in Beijing this month to discuss share distribution and select a bank governor and other officials.
Guangzhou-based 21st Century Business Herald said the first meeting was originally scheduled for March 30, but because more countries than expected applied, it was postponed until the end of April.
According to the latest figures from China's Ministry of Finance, 52 countries, including Taiwan, applied to join the AIIB as founding members before the March 31 deadline.
Among them, the applications of 33 countries have been approved and the remaining applicants will be notified by April 15 if their applications are successful.
Jin Liqun, secretary-general of the Multilateral Secretariat for Establishing the AIIB, said AIIB's authorized capital will be US$50 billion initially and this will eventually increase to US$100 billion.
Asian countries will account for around 75% of the shares, while countries outside of Asia will have around 25%.
Shares will be allocated based on members' gross domestic products, guaranteeing that China will become the bank's largest single shareholder.
Jin said the low ratio of shares for countries outside Asia stems from China's original vision of their roles.
When China first invited developed European countries to join, Jin said, it was not to raise capital but rather to capitalize on their experience in corporate governance and technical support in promoting the development of the AIIB.
As to potential candidates to lead the bank, one Chinese official said a Chinese serving as the AIIB's first governor would have a positive effect, but the mechanism still has to be discussed. There could also be several deputy governor seats.
Some countries have actively lobbied to have one of their nationals be made a deputy governor.
Indonesia, for example, has previously said publicly it should have at least one deputy governor seat because it could be the largest client of the bank given its urgent need for infrastructure development.
Jin Canrong, an expert in international relations, said European countries such as the UK and Germany have not applied to join the bank unconditionally and they are sure to ask for a seat in the management of the bank.
Satisfying the needs of all the members will test China's ability to coordinate.
Kiss_of_the_Dragon
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China, Japan And The US -- A Complex Combustible Triangle
Taro Aso, Japanese Finance Minister and Deputy Prime Minister, announced on 2 April that Japan would not join the Asian Infrastructure Investment Bank (AIIB) out of loyalty to the US. He is the grandson of Shigeru Yoshida. Yoshida, a wily highly capable diplomat, was Japan’s prime minister during the immediate post-World War II years; he was the principal interlocutor with the Supreme Command Allied Pacific, General Douglas MacArthur, and is considered the architect of post-war Japan. After him is named the “Yoshida Doctrine” according to which Japan focuses on economics and to that end forsakes independence in foreign affairs in exchange for being protected militarily by the US. In 1952 the Japan-US security treaty was signed. (See illustration below: Yoshida signing the security treaty.)
Shigeru Yoshida, Taro Aso and indeed all Japan have ample reasons to be highly grateful to the US. Having invaded China, Japan joined Nazi Germany in World War II to fight against the allies, proceeding to bomb Pearl Harbor on 7 December 1941 and expelling all European imperialist powers from their Southeast Asian colonies. Following the two atomic bombs on Hiroshima and Nagasaki in August 1945, Japan surrendered. Four years later, in October 1949, came the “Liberation” in China, as the government of General Chiang Kai-shek was overthrown by the forces of Mao Zedong, Japan was overnight transformed from the US’ erstwhile hated enemy to become its pampered protégé.
American Occupation policy changed 180◦ as war criminals – including the grandfather of Prime Minister Shinzo Abe, Nobusuke Kishi, who also became Prime Minister – were released from prison and brought back into public life. Chiang Kai-shek fled to Taiwan where he set up the government of the Republic of China (ROC) in Taipei in opposition to and conflict with the People’s Republic of China (PRC) in Beijing. Washington recognized the ROC as the legitimate government of China, instructed all its allies to follow suit, and ensured that China’s permanent seat at the UN Security Council should be reserved for the representative from ROC and not PRC!
Whereas some allies broke ranks and established diplomatic relations with Beijing – notably France under de Gaulle in 1964 – Japan meekly followed the US’ lead and recognized Taipei. (Taiwan had been a Japanese colony from 1895 to 1945.) In February 1972, however, Tokyo was shocked to discover that, without any pre-consultation, President Richard Nixon had showed up in Beijing. (It was certainly a surprise, not just to Tokyo; I still remember today exactly where I was and what I was doing when I heard the quite astonishing news.) Having overcome the shock, then Japanese Prime Minister Kakuei Tanaka scurried to Beijing, following which relations between Tokyo and Taipei were officially “normalized”.
Japan was able to thrive under the American nuclear umbrella. From the ruins of defeat it became an economic giant, with a GDP per capita rising from US$3500 in 1950 to US$40,000 in 1983. In the 1980s as Japan’s economy was growing seemingly on anabolic steroids it was predicted by many experts (always beware of experts!) that it would overtake the US within twenty years.
Gratitude can be pretty ephemeral. In the 1980s US-Japan relations became tense arising from “trade friction” (boeki masatsu in Japanese). As Americans were carping on (rather tiresomely and often unjustifiably) about Japan’s trade surplus, Japanese leaders and pundits became convinced they did not really need the US anymore and that Japan was superior. This was epitomized by the 1989 book co-authored by rightist politician, governor of Tokyo, Shintaro Ishihara, and founder of Sony Akio Morita, entitled The Japan that Can Say “No” – “No” to Ieru Nippon). Whereas there was a tradition since the war of anti-Americanism, particularly on the left, known as hanbei (against America), in the 1980s and early 90s there emerged the syndrome known as kenbei (contempt for America), predominantly from the right.
A 1991 article from the Los Angeles Times, “In Japan Scorn for America”, provides choice samplings of comments made by some prominent Japanese. The cineaste Toshiro Ishido said “I have nothing but contempt for America”. Novelist and member of the upper house of the Japanese parliament Akiyuki Nosaka said looking at the United States is like watching “a test run for the decline of the human race.” Fujitsu Chairman Takuma Yamamoto labelled the US a “vegetating nation”. The then director general of the cultural affairs department at Japan’s Ministry of Foreign Affairs Kazuo Ogura, one the US’ harshest critics repeatedly stated: “There is something wrong with American society”. There were of course many kenbei inspired articles in the media and among academia.
With the turn of the century circumstances changed dramatically. In the early 1990s the Japanese economy tanked as it entered its lost decades; the dream of overtaking the US in GDP evaporated. Whereas the Japanese prided themselves (rightly) on their electronic industry, when companies such as Toshiba, Hitachi, NEC, Fujitsu, etc, could rival GE, Westinghouse, Texas Instruments, etc, this was in manufacturing. No Japanese company could rival Microsoft, because it does not exist. While the IT revolution was taking place, the Japanese were out to lunch. Kenbei became unreal.
And then, most important, was the rapid rise of China. Whereas contempt for America was quite recent and ultimately ephemeral, contempt for China was deeply entrenched in the Japanese psyche for over a century; ever since their victory in the 1894-95 Sino-Japanese War. Chinese, in Japanese popular perceptions, were dirty, backward, lazy, etc. I was based in Tokyo in the 1980s and can confirm that the alleged “Chinese challenge” was not taken seriously – a bit, as I would tell my Japanese interlocutors, like the failure of Europeans and Americans to take seriously the “Japanese challenge” in the 1960s and 70s when the label “Made in Japan” was seen to be synonymous with cheap and shoddy. Both reactions reflected myopic racial prejudice.
The rise of China as a great power is one of the most defining transformative realities of the 21st century. The paradigm throughout the second half of the 20th century was that of Japan as the leading nation of Asia, allied to the US. China’s economic and increasingly geopolitical rise is upsetting that pattern. This is uncomfortable for the US; it is extremely uncomfortable for Japan. After all, the US and China were never engaged in war against each other. Japan was at war with both China and the US. Having mistakenly chosen Nazi Germany as a seemingly strong ally to confront the US in the 1930s, after defeat Tokyo chose Washington. This has served Japan extremely well for over half-a-century.
Far from kenbei, current Japanese policy is to side up to the US as much as possible. Thus Tokyo has opted not to join the AIIB as founder member. In the meantime it is actively pursuing negotiations with Washington to conclude the Trans Pacific Partnership (TPP) – which officially includes 12 “partners”, but has basically come down to a US-Japan trade deal – which excludes China. It is presented as part of Washington’s “pivot” to Asia strategy aimed at containing China. (See illustration below)
This Washington-Tokyo two-some to contain China is a highly dangerous potentially combustible policy. While Washington, as I have argued in a previous blog, should be seeking to engage Beijing strategically, constructively and intelligently – whereas its policy to oppose the AIIB and to influence its friends to do like-wise was un-strategic, unconstructive and unintelligent – it should also be encouraging Tokyo to face up to the new realities – and in so doing to face up to the past crimes committed against China.
Unlike Germany and its European neighbors, China is not at peace with its neighbors. Germany’s peace with its neighbors has ensured Western Europe has been at peace for seventy years. For peace to endure in Asia Pacific in the future, Japan must make genuine peace with its neighbors. Just as Shigeru Yoshida recognized after World War II that Japan had to face the new realities and build a solid relationship with its erstwhile great enemy. The new 21st century realities demand that Tokyo build a solid relationship with China. Statesmanship of the Shigeru Yoshida kind is needed. Unfortunately it does not look as if Taro Aso is in a position to fill his grandfather’s shoes.
China, Japan And The US -- A Complex Combustible Triangle - Forbes
Taro Aso, Japanese Finance Minister and Deputy Prime Minister, announced on 2 April that Japan would not join the Asian Infrastructure Investment Bank (AIIB) out of loyalty to the US. He is the grandson of Shigeru Yoshida. Yoshida, a wily highly capable diplomat, was Japan’s prime minister during the immediate post-World War II years; he was the principal interlocutor with the Supreme Command Allied Pacific, General Douglas MacArthur, and is considered the architect of post-war Japan. After him is named the “Yoshida Doctrine” according to which Japan focuses on economics and to that end forsakes independence in foreign affairs in exchange for being protected militarily by the US. In 1952 the Japan-US security treaty was signed. (See illustration below: Yoshida signing the security treaty.)
Shigeru Yoshida, Taro Aso and indeed all Japan have ample reasons to be highly grateful to the US. Having invaded China, Japan joined Nazi Germany in World War II to fight against the allies, proceeding to bomb Pearl Harbor on 7 December 1941 and expelling all European imperialist powers from their Southeast Asian colonies. Following the two atomic bombs on Hiroshima and Nagasaki in August 1945, Japan surrendered. Four years later, in October 1949, came the “Liberation” in China, as the government of General Chiang Kai-shek was overthrown by the forces of Mao Zedong, Japan was overnight transformed from the US’ erstwhile hated enemy to become its pampered protégé.
American Occupation policy changed 180◦ as war criminals – including the grandfather of Prime Minister Shinzo Abe, Nobusuke Kishi, who also became Prime Minister – were released from prison and brought back into public life. Chiang Kai-shek fled to Taiwan where he set up the government of the Republic of China (ROC) in Taipei in opposition to and conflict with the People’s Republic of China (PRC) in Beijing. Washington recognized the ROC as the legitimate government of China, instructed all its allies to follow suit, and ensured that China’s permanent seat at the UN Security Council should be reserved for the representative from ROC and not PRC!
Whereas some allies broke ranks and established diplomatic relations with Beijing – notably France under de Gaulle in 1964 – Japan meekly followed the US’ lead and recognized Taipei. (Taiwan had been a Japanese colony from 1895 to 1945.) In February 1972, however, Tokyo was shocked to discover that, without any pre-consultation, President Richard Nixon had showed up in Beijing. (It was certainly a surprise, not just to Tokyo; I still remember today exactly where I was and what I was doing when I heard the quite astonishing news.) Having overcome the shock, then Japanese Prime Minister Kakuei Tanaka scurried to Beijing, following which relations between Tokyo and Taipei were officially “normalized”.
Japan was able to thrive under the American nuclear umbrella. From the ruins of defeat it became an economic giant, with a GDP per capita rising from US$3500 in 1950 to US$40,000 in 1983. In the 1980s as Japan’s economy was growing seemingly on anabolic steroids it was predicted by many experts (always beware of experts!) that it would overtake the US within twenty years.
Gratitude can be pretty ephemeral. In the 1980s US-Japan relations became tense arising from “trade friction” (boeki masatsu in Japanese). As Americans were carping on (rather tiresomely and often unjustifiably) about Japan’s trade surplus, Japanese leaders and pundits became convinced they did not really need the US anymore and that Japan was superior. This was epitomized by the 1989 book co-authored by rightist politician, governor of Tokyo, Shintaro Ishihara, and founder of Sony Akio Morita, entitled The Japan that Can Say “No” – “No” to Ieru Nippon). Whereas there was a tradition since the war of anti-Americanism, particularly on the left, known as hanbei (against America), in the 1980s and early 90s there emerged the syndrome known as kenbei (contempt for America), predominantly from the right.
A 1991 article from the Los Angeles Times, “In Japan Scorn for America”, provides choice samplings of comments made by some prominent Japanese. The cineaste Toshiro Ishido said “I have nothing but contempt for America”. Novelist and member of the upper house of the Japanese parliament Akiyuki Nosaka said looking at the United States is like watching “a test run for the decline of the human race.” Fujitsu Chairman Takuma Yamamoto labelled the US a “vegetating nation”. The then director general of the cultural affairs department at Japan’s Ministry of Foreign Affairs Kazuo Ogura, one the US’ harshest critics repeatedly stated: “There is something wrong with American society”. There were of course many kenbei inspired articles in the media and among academia.
With the turn of the century circumstances changed dramatically. In the early 1990s the Japanese economy tanked as it entered its lost decades; the dream of overtaking the US in GDP evaporated. Whereas the Japanese prided themselves (rightly) on their electronic industry, when companies such as Toshiba, Hitachi, NEC, Fujitsu, etc, could rival GE, Westinghouse, Texas Instruments, etc, this was in manufacturing. No Japanese company could rival Microsoft, because it does not exist. While the IT revolution was taking place, the Japanese were out to lunch. Kenbei became unreal.
And then, most important, was the rapid rise of China. Whereas contempt for America was quite recent and ultimately ephemeral, contempt for China was deeply entrenched in the Japanese psyche for over a century; ever since their victory in the 1894-95 Sino-Japanese War. Chinese, in Japanese popular perceptions, were dirty, backward, lazy, etc. I was based in Tokyo in the 1980s and can confirm that the alleged “Chinese challenge” was not taken seriously – a bit, as I would tell my Japanese interlocutors, like the failure of Europeans and Americans to take seriously the “Japanese challenge” in the 1960s and 70s when the label “Made in Japan” was seen to be synonymous with cheap and shoddy. Both reactions reflected myopic racial prejudice.
The rise of China as a great power is one of the most defining transformative realities of the 21st century. The paradigm throughout the second half of the 20th century was that of Japan as the leading nation of Asia, allied to the US. China’s economic and increasingly geopolitical rise is upsetting that pattern. This is uncomfortable for the US; it is extremely uncomfortable for Japan. After all, the US and China were never engaged in war against each other. Japan was at war with both China and the US. Having mistakenly chosen Nazi Germany as a seemingly strong ally to confront the US in the 1930s, after defeat Tokyo chose Washington. This has served Japan extremely well for over half-a-century.
Far from kenbei, current Japanese policy is to side up to the US as much as possible. Thus Tokyo has opted not to join the AIIB as founder member. In the meantime it is actively pursuing negotiations with Washington to conclude the Trans Pacific Partnership (TPP) – which officially includes 12 “partners”, but has basically come down to a US-Japan trade deal – which excludes China. It is presented as part of Washington’s “pivot” to Asia strategy aimed at containing China. (See illustration below)
This Washington-Tokyo two-some to contain China is a highly dangerous potentially combustible policy. While Washington, as I have argued in a previous blog, should be seeking to engage Beijing strategically, constructively and intelligently – whereas its policy to oppose the AIIB and to influence its friends to do like-wise was un-strategic, unconstructive and unintelligent – it should also be encouraging Tokyo to face up to the new realities – and in so doing to face up to the past crimes committed against China.
Unlike Germany and its European neighbors, China is not at peace with its neighbors. Germany’s peace with its neighbors has ensured Western Europe has been at peace for seventy years. For peace to endure in Asia Pacific in the future, Japan must make genuine peace with its neighbors. Just as Shigeru Yoshida recognized after World War II that Japan had to face the new realities and build a solid relationship with its erstwhile great enemy. The new 21st century realities demand that Tokyo build a solid relationship with China. Statesmanship of the Shigeru Yoshida kind is needed. Unfortunately it does not look as if Taro Aso is in a position to fill his grandfather’s shoes.
China, Japan And The US -- A Complex Combustible Triangle - Forbes
I believe that Japan will join, irrespective of not being a founding member, the Nation of Japan will most probably join. As much as Japan is cooperative with not only the ADB and the IMF, I believe that joining the AIIB is but a complementary and synergistic process for regional development, something that Japan is committed to.
Looking forward to seeing more progress on this matter.
Looking forward to seeing more progress on this matter.
Al Bhatti
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April 5, 2015
UAE signs up as founding member of Asian Infrastructure Investment Bank
The UAE has joined the China-led US$50 billion Asian Infrastructure Investment Bank (AIIB) as a founding member, the government announced on Sunday.
The Abu Dhabi Fund for Development, which has Dh8bn in capital, will represent the UAE government on the AIIB’s board of directors. Founding members have the right to create governance and operational rules for the bank.
The UAE joins fellow AIIB founder members Saudi Arabia, Oman, Qatar, Egypt and Jordan, as well as 29 other countries from Asia and Europe, including the UK, Germany and Russia.
“In the light of joint strategic ties between the UAE and China, and their mutual interests in fuelling growth and infrastructure development in developing countries, both countries have partnered to set up a strong international platform to actively drive development efforts,” said Sultan Al Jaber, UAE Minister of State.
“Being a founding member of AIIB will boost the prime economic role played by the UAE regionally and internationally, by focusing efforts on development projects with great socio-economic benefits.”
The AIIB, which was proposed by the Chinese president Xi Jinping in late 2013, will support infrastructure and development projects across Asia. China is expected to hold around a third of the voting power in the AIIB’s governing council.
Widely regarded as a competitor to the IMF and World Bank, analysts regard the new bank as a Chinese attempt to wrest control of the world’s global economic institutions from the West.
This follows complaints both inside and outside China that the IMF and World Bank are dominated by western countries, who enjoy outsized voting powers in both organisations, as a result of how contributions to the funds are calculated.
The leader of the IMF is traditionally a European, while the World Bank chief has always been an American.
A number of critics, including the Chinese government, have called for the IMF to increase the representation of emerging markets in the institution’s decision-making. Progress has been slow, with the G20 communique from November last year expressing “deep disappointment with the continued delay” to reform of the IMF’s quota system, which determines the voting powers of IMF members. The US Congress has repeatedly refused to sign off on reform to the IMF’s quota system.
The US initially called for its allies not to join the bank, with Jack Lew, the US Treasury secretary, stating that the AIIB would not reach the “highest global standards” for governance or lending. US officials have also expressed worries that the bank forms part of Chinese efforts for the yuan to replace the dollar as the global reserve currency.
Given the long list of US allies who have signed up to the bank, including all of the US-allied governments of the GCC except Bahrain, American worries appear to have been ignored.
“I think we screwed up. We should not have gone about it this way,” said the former US secretary of state Madeleine Albright at a meeting of the Centre for Strategic and International Studies, a Washington-based think-tank.
“Not just the Chinese but others have said that the United States has been too dominant in the World Bank.”
UAE signs up as founding member of Asian Infrastructure Investment Bank
UAE signs up as founding member of Asian Infrastructure Investment Bank
The UAE has joined the China-led US$50 billion Asian Infrastructure Investment Bank (AIIB) as a founding member, the government announced on Sunday.
The Abu Dhabi Fund for Development, which has Dh8bn in capital, will represent the UAE government on the AIIB’s board of directors. Founding members have the right to create governance and operational rules for the bank.
The UAE joins fellow AIIB founder members Saudi Arabia, Oman, Qatar, Egypt and Jordan, as well as 29 other countries from Asia and Europe, including the UK, Germany and Russia.
“In the light of joint strategic ties between the UAE and China, and their mutual interests in fuelling growth and infrastructure development in developing countries, both countries have partnered to set up a strong international platform to actively drive development efforts,” said Sultan Al Jaber, UAE Minister of State.
“Being a founding member of AIIB will boost the prime economic role played by the UAE regionally and internationally, by focusing efforts on development projects with great socio-economic benefits.”
The AIIB, which was proposed by the Chinese president Xi Jinping in late 2013, will support infrastructure and development projects across Asia. China is expected to hold around a third of the voting power in the AIIB’s governing council.
Widely regarded as a competitor to the IMF and World Bank, analysts regard the new bank as a Chinese attempt to wrest control of the world’s global economic institutions from the West.
This follows complaints both inside and outside China that the IMF and World Bank are dominated by western countries, who enjoy outsized voting powers in both organisations, as a result of how contributions to the funds are calculated.
The leader of the IMF is traditionally a European, while the World Bank chief has always been an American.
A number of critics, including the Chinese government, have called for the IMF to increase the representation of emerging markets in the institution’s decision-making. Progress has been slow, with the G20 communique from November last year expressing “deep disappointment with the continued delay” to reform of the IMF’s quota system, which determines the voting powers of IMF members. The US Congress has repeatedly refused to sign off on reform to the IMF’s quota system.
The US initially called for its allies not to join the bank, with Jack Lew, the US Treasury secretary, stating that the AIIB would not reach the “highest global standards” for governance or lending. US officials have also expressed worries that the bank forms part of Chinese efforts for the yuan to replace the dollar as the global reserve currency.
Given the long list of US allies who have signed up to the bank, including all of the US-allied governments of the GCC except Bahrain, American worries appear to have been ignored.
“I think we screwed up. We should not have gone about it this way,” said the former US secretary of state Madeleine Albright at a meeting of the Centre for Strategic and International Studies, a Washington-based think-tank.
“Not just the Chinese but others have said that the United States has been too dominant in the World Bank.”
UAE signs up as founding member of Asian Infrastructure Investment Bank
ahojunk
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I didn't know that UAE was interested in joining the AIIB. It very cleverly flew under the radar and didn't attract any unwanted attention.
----------------------------------------
UAE joins AIIB as founding member
- Xinhua | English.news.cn
UAE joins AIIB as founding member
English.news.cn 2015-04-06 01:52:54 Editor: Mu Xuequan
DUBAI, April 5 (Xinhua) -- The United Arab Emirates (UAE) said Sunday it has joined the Asia Infrastructure Investment Bank (AIIB) as a founding member, state news agency WAM reported.
Sultan Bin Ahmed Sultan Al-Jaber, UAE Minister of State, said this milestone has been possible due to the wise directives and unlimited support of the UAE's leadership.
"In the light of joint strategic ties between the UAE and China, and infrastructure development in developing countries, both countries have partnered to set up a strong international platform to actively drive development efforts", he said.
"Given Asia has significant infrastructure needs, AIIB will play a pivotal role in promoting Asia's development," Al-Jaber added.
The Abu Dhabi Fund for Development will represent the UAE government on the AIIB's board of directors. Founding members have the right to create governance and operational rules for the bank.
The AIIB, which was initiated by the Chinese President Xi Jinping, aims to accelerate the construction of infrastructure and projects across Asia and in particular along the Belt and Road Initiative.
As of now, there are more than 4,000 Chinese companies registered in Dubai, of which more than 95 percent are small and medium business enterprises.
Last week, Fahad Al-Gergawi, the CEO of Dubai's foreign direct investment office told Xinhua that the UAE had itself "perfectly positioned" to be part of the new Silk Road.
Abu Dhabi
Burj Khalifa, Dubai.
----------------------------------------
UAE joins AIIB as founding member
- Xinhua | English.news.cn
UAE joins AIIB as founding member
English.news.cn 2015-04-06 01:52:54 Editor: Mu Xuequan
DUBAI, April 5 (Xinhua) -- The United Arab Emirates (UAE) said Sunday it has joined the Asia Infrastructure Investment Bank (AIIB) as a founding member, state news agency WAM reported.
Sultan Bin Ahmed Sultan Al-Jaber, UAE Minister of State, said this milestone has been possible due to the wise directives and unlimited support of the UAE's leadership.
"In the light of joint strategic ties between the UAE and China, and infrastructure development in developing countries, both countries have partnered to set up a strong international platform to actively drive development efforts", he said.
"Given Asia has significant infrastructure needs, AIIB will play a pivotal role in promoting Asia's development," Al-Jaber added.
The Abu Dhabi Fund for Development will represent the UAE government on the AIIB's board of directors. Founding members have the right to create governance and operational rules for the bank.
The AIIB, which was initiated by the Chinese President Xi Jinping, aims to accelerate the construction of infrastructure and projects across Asia and in particular along the Belt and Road Initiative.
As of now, there are more than 4,000 Chinese companies registered in Dubai, of which more than 95 percent are small and medium business enterprises.
Last week, Fahad Al-Gergawi, the CEO of Dubai's foreign direct investment office told Xinhua that the UAE had itself "perfectly positioned" to be part of the new Silk Road.
Abu Dhabi
ahojunk
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The following are the views from Australia, taken from this link -
Weekend catch-up: Yemen, AIIB, China's regionalism, Great Moderation and more
The AIIB was the other major topic this week, with Susan Harris-Rimmer writing on Australia's decision to join:
Philippa Brant also wrote on the new bank and China's plans for regional economic integration:
Mike Callaghan argued that the best board structure for the AIIB should be non-resident and high-level:
Weekend catch-up: Yemen, AIIB, China's regionalism, Great Moderation and more
The AIIB was the other major topic this week, with Susan Harris-Rimmer writing on Australia's decision to join:
Heaven knows, it is not that existing multilateral development banks have been so perfect in their interventions in our region all these decades. They have improved because they were forced to change by civil society actors. And the governance of those banks has not represented the reality of shifting power for about a decade. The US and Japan have only themselves to blame for that.
China should take the safeguards concerns on board, improve them where possible. In the AIIB, China's global governance reputation will be on the line, and at the same moment China assumes the G20 presidency with the world watching.
China should take the safeguards concerns on board, improve them where possible. In the AIIB, China's global governance reputation will be on the line, and at the same moment China assumes the G20 presidency with the world watching.
Philippa Brant also wrote on the new bank and China's plans for regional economic integration:
In a clear case of the US shooting itself in the foot, the AIIB now looks like it is becoming a global institution. With the UK joining up, others did not want to be left out. Russia, Australia, Denmark, Brazil and the Netherlands are the latest to signal intentions to join. In addition to jumping on the bandwagon, there has been recognition that commercial and development cooperation interests will be affected by the AIIB and so it is better to be involved to try and influence the bank's investment decisions from the beginning.
But in signing onto the AIIB, countries have implicitly agreed to support China's regional vision. The challenge will be to make sure that infrastructure investments really are 'win-win'.
But in signing onto the AIIB, countries have implicitly agreed to support China's regional vision. The challenge will be to make sure that infrastructure investments really are 'win-win'.
Mike Callaghan argued that the best board structure for the AIIB should be non-resident and high-level:
Best-practice governance arrangements for the AIIB should involve articulating the roles and objectives of the AIIB, preparing clear operating principles and guidelines to achieve these objectives, outlining the roles and responsibilities of management and staff, and having robust review and accountability mechanisms.
Such an approach is more in line with a high-level, non-resident board. Capitals will need to take a close interest in the activities of the bank, but with modern technology this no longer requires a full-time resident board.
.Such an approach is more in line with a high-level, non-resident board. Capitals will need to take a close interest in the activities of the bank, but with modern technology this no longer requires a full-time resident board.
terranMarine
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I didn't know AIIB still accepts new members after the deadline. Guess there might be a seat left for Japan (we shall see)
With the rich UAE joining our initiative bank, who knows we can amass >100 bln
With the rich UAE joining our initiative bank, who knows we can amass >100 bln
Edison Chen
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I always feel it laughable when some Vietnamese or Turkish members claim that due to the absence of low cost labor of China, western capital is now switching to better places such as Southeast Asia. The truth is, China used to boost her economy by "low cost labor", now it's through the "capital". Think about it, which one is more profitable or sounds better? To make money by directly selling your physical strength or by your brain and capital? China has passed the primary stage of capital accumulation, now it's our turn to invest in the world, because China hold large amount of foreign reserve, it's an important topic about how to increase our ROA by investment, or it will depreciate. This is all the developed countries have been doing. AIIB and "One belt One road" is the best initiate to increase the ROA or our global investments. Till the end of 2014, China has 6.4 trillion USD foreign assets, 4.6 trillion liabilities. The net asset is 1.8 trillion, looking good, but the deficit of foreign investment return is like more than 30 billion dollars. Because China mainly invests in some low return sovereign debt, but the liability part is direct investment of high return. Hope China can make some changes.
Yizhi
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Larry Summers: The Past Month May Go Down as a Turning Point for U.S. Economic Power
Larry Summers: The Past Month May Go Down as a Turning Point for U.S. Economic Power - Bloomberg Business
Time US leadership woke up to new economic era | Lawrence H. Summers
Time US leadership woke up to new economic era
April 5, 2015
This past month may be remembered as the moment the United States lost its role as the underwriter of the global economic system. True, there have been any number of periods of frustration for the US before, and times when American behaviour was hardly multilateralist, such as the 1971 Nixon shock, ending the convertibility of the dollar into gold. But I can think of no event since Bretton Woods comparable to the combination of China’s effort to establish a major new institution and the failure of the US to persuade dozens of its traditional allies, starting with Britain, to stay out of it.
This failure of strategy and tactics was a long time coming, and it should lead to a comprehensive review of the US approach to global economics. With China’s economic size rivalling America’s and emerging markets accounting for at least half of world output, the global economic architecture needs substantial adjustment. Political pressures from all sides in the US have rendered it increasingly dysfunctional.
Largely because of resistance from the right, the US stands alone in the world in failing to approve the International Monetary Fund governance reforms that Washington itself pushed for in 2009. By supplementing IMF resources, this change would have bolstered confidence in the global economy. More important, it would come closer to giving countries such as China and India a share of IMF votes commensurate with their new economic heft.
Meanwhile, pressures from the left have led to pervasive restrictions on infrastructure projects financed through existing development banks, which consequently have receded as funders, even as many developing countries now see infrastructure finance as their principle external funding need.
With US commitments unhonoured and US-backed policies blocking the kinds of finance other countries want to provide or receive through the existing institutions, the way was clear for China to establish the Asian Infrastructure Investment Bank. There is room for argument about the tactical approach that should have been taken once the initiative was put forward. But the larger question now is one of strategy. Here are three precepts that US leaders should keep in mind.
First, American leadership must have a bipartisan foundation at home, be free from gross hypocrisy and be restrained in the pursuit of self-interest. As long as one of our major parties is opposed to essentially all trade agreements, and the other is resistant to funding international organisations, the US will not be in a position to shape the global economic system.
Other countries are legitimately frustrated when US officials ask them to adjust their policies — then insist that American state regulators, independent agencies and far-reaching judicial actions are beyond their control. This is especially true when many foreign businesses assert that US actions raise real rule of law problems.
The legitimacy of US leadership depends on our resisting the temptation to abuse it in pursuit of parochial interest, even when that interest appears compelling. We cannot expect to maintain the dollar’s primary role in the international system if we are too aggressive about limiting its use in pursuit of particular security objectives.
Second, in global as well as domestic politics, the middle class counts the most. It sometimes seems that the prevailing global agenda combines elite concerns about matters such as intellectual property, investment protection and regulatory harmonisation with moral concerns about global poverty and posterity, while offering little to those in the middle. Approaches that do not serve the working class in industrial countries (and rising urban populations in developing ones) are unlikely to work out well in the long run.
Third, we may be headed into a world where capital is abundant and deflationary pressures are substantial. Demand could be in short supply for some time. In no big industrialised country do markets expect real interest rates to be much above zero in 2020 or inflation targets to be achieved. In the future, the priority must be promoting investment, not imposing austerity. The present system places the onus of adjustment on “borrowing” countries. The world now requires a symmetric system, with pressure also placed on “surplus” countries.
These precepts are just a beginning, and many questions remain. There are questions about global public goods, about acting with the speed and clarity that the current era requires, about co-operation between governmental and non-governmental actors, and much more. What is crucial is that the events of the past month will be seen by future historians not as the end of an era, but as a salutary wake up call.
The writer is Charles W Eliot university professor at Harvard and a former US Treasury secretary
Lawrence H. Summers is the Charles W. Eliot University Professor and President Emeritus at Harvard University. He served as the 71st Secretary of the Treasury for President Clinton and the Director of the National Economic Council for President Obama.
-----------------------------------------
Larry Summers: The Past Month May Go Down as a Turning Point for U.S. Economic Power - Bloomberg Business
Time US leadership woke up to new economic era | Lawrence H. Summers
Time US leadership woke up to new economic era
April 5, 2015
This past month may be remembered as the moment the United States lost its role as the underwriter of the global economic system. True, there have been any number of periods of frustration for the US before, and times when American behaviour was hardly multilateralist, such as the 1971 Nixon shock, ending the convertibility of the dollar into gold. But I can think of no event since Bretton Woods comparable to the combination of China’s effort to establish a major new institution and the failure of the US to persuade dozens of its traditional allies, starting with Britain, to stay out of it.
This failure of strategy and tactics was a long time coming, and it should lead to a comprehensive review of the US approach to global economics. With China’s economic size rivalling America’s and emerging markets accounting for at least half of world output, the global economic architecture needs substantial adjustment. Political pressures from all sides in the US have rendered it increasingly dysfunctional.
Largely because of resistance from the right, the US stands alone in the world in failing to approve the International Monetary Fund governance reforms that Washington itself pushed for in 2009. By supplementing IMF resources, this change would have bolstered confidence in the global economy. More important, it would come closer to giving countries such as China and India a share of IMF votes commensurate with their new economic heft.
Meanwhile, pressures from the left have led to pervasive restrictions on infrastructure projects financed through existing development banks, which consequently have receded as funders, even as many developing countries now see infrastructure finance as their principle external funding need.
With US commitments unhonoured and US-backed policies blocking the kinds of finance other countries want to provide or receive through the existing institutions, the way was clear for China to establish the Asian Infrastructure Investment Bank. There is room for argument about the tactical approach that should have been taken once the initiative was put forward. But the larger question now is one of strategy. Here are three precepts that US leaders should keep in mind.
First, American leadership must have a bipartisan foundation at home, be free from gross hypocrisy and be restrained in the pursuit of self-interest. As long as one of our major parties is opposed to essentially all trade agreements, and the other is resistant to funding international organisations, the US will not be in a position to shape the global economic system.
Other countries are legitimately frustrated when US officials ask them to adjust their policies — then insist that American state regulators, independent agencies and far-reaching judicial actions are beyond their control. This is especially true when many foreign businesses assert that US actions raise real rule of law problems.
The legitimacy of US leadership depends on our resisting the temptation to abuse it in pursuit of parochial interest, even when that interest appears compelling. We cannot expect to maintain the dollar’s primary role in the international system if we are too aggressive about limiting its use in pursuit of particular security objectives.
Second, in global as well as domestic politics, the middle class counts the most. It sometimes seems that the prevailing global agenda combines elite concerns about matters such as intellectual property, investment protection and regulatory harmonisation with moral concerns about global poverty and posterity, while offering little to those in the middle. Approaches that do not serve the working class in industrial countries (and rising urban populations in developing ones) are unlikely to work out well in the long run.
Third, we may be headed into a world where capital is abundant and deflationary pressures are substantial. Demand could be in short supply for some time. In no big industrialised country do markets expect real interest rates to be much above zero in 2020 or inflation targets to be achieved. In the future, the priority must be promoting investment, not imposing austerity. The present system places the onus of adjustment on “borrowing” countries. The world now requires a symmetric system, with pressure also placed on “surplus” countries.
These precepts are just a beginning, and many questions remain. There are questions about global public goods, about acting with the speed and clarity that the current era requires, about co-operation between governmental and non-governmental actors, and much more. What is crucial is that the events of the past month will be seen by future historians not as the end of an era, but as a salutary wake up call.
The writer is Charles W Eliot university professor at Harvard and a former US Treasury secretary
Lawrence H. Summers is the Charles W. Eliot University Professor and President Emeritus at Harvard University. He served as the 71st Secretary of the Treasury for President Clinton and the Director of the National Economic Council for President Obama.
-----------------------------------------
Al Bhatti
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The red part relates to "先富论", right?
cirr
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As a matter of fact，these people，especially the Vietnameses，should feel thankful to a China that has advanced to the next level of development，thereby leaving opportunities to those on the lower rungs of the commercial and industrial value chain。
Instead of staying silent as a token of gratitude，these ungrateful people get excited by posting news about low-value added、labour intensive and often polluting manufacturers，foreign or Chinese，exiting China to find a greener patch called under-developed country。
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