Sixty-four countries are members of the AIIB, including Nepal. Chinese officials indicated they may develop a free trade agreement that includes Nepal during a recent visit to China from Nepalese Prime Minister. Unlike Nepal, India has been less supportive of new Chinese initiatives. The Indian Government has proposed the Spice Route and the Mausam Project as alternative projects to China's Silk Road initiative, despite recommendations from Indian Think Tanks to become involved in the Silk Road Initiative instead.
Chinese and American Financial War Escalates
The US and China are currently in a financial power struggle, known as a Thucydides Trap. This power struggle is escalating into a major financial war between the countries. Officials in Washington have recently claimed legal jurisdiction over one of China's largest banks, the Bank of China. Additionally, the US has forbade American businesses from working with one of the largest Chinese telecom companies, ZTE. In response to these types of economic threats from Washington, China has developed their competing development bank, the AIIB, and could dump more than trillions of dollars of US debt it owns, which would devastate the value of the US dollar.
"Beijing turns on the charm for Mekong countries" - Nikkei, Shuhei Yamada
China and 5 other countries along the Mekong River are forming an alliance to develop the region. The countries agreed to use excess materials from Chinese industrial production to support infrastructure. Yamada reports that China hopes to ally with Mekong nations, as China’s artificial islands have created conflict with other South Asian countries. China leads the Mekong Alliance, having offered support from its AIIB, a $10 billion line of credit for Chinese imports, and export production facilities. The 6 Mekong countries include China, Laos, Thailand, Vietnam, Cambodia, and Myanmar. The Asian Development Bank traditionally facilitates meetings of the Mekong Alliance, however, China hosted this meeting in efforts to more closely ally with the other 5 Mekong nations.
"Asia’s impending anti-pivot" - Duke Chronicle, Sabriyya Pate
Pate discusses the “Asia Pivot,” which is the U.S. desire to address policies in the Asian region. Pate cites the Trans-Pacific Partnership (TPP) as an example of the Asia Pivot. The TPP is a trade deal, which has motivated American involvement with Pacific Rim nations. Pate noted that the TPP excludes China. Furthermore, Pate asserts that there is a current imbalance between China and the U.S. For instance, Pate remarked that just as the U.S. has increased involvement in Asia, China has established relationships with European Nations through its AIIB. As Pate concludes, the imbalance in global relations seems to create an Asian “anti-pivot” towards the U.S.
"China-led AIIB eyes first loans to India" - Reuters, Manoj Kumar
Kumar reports that India will receive some $500 million from the Chinese AIIB. The loan would support India’s solar energy projects. Kumar notes that by issuing loans related to clean energy, the AIIB dismisses fears that it will not meet standards set by other multilateral development banks. India seeks roughly $100 billion over the next 6-7 years, in order to meets its ‘ambitious target of boosting solar capacity.’ The country pursues funding from the China-led AIIB, World Bank, Asian Development Bank, New Development Bank, and USAID. Kumar concludes that the AIIB intends to issue between $10 and $15 billion per year for its first five years in operation.
"Canada having more free-trade dialogue with China-minister" - Daily Mail
Reuters reported on negotiations between China and Canada. Xue Bing, China’s consul general in Toronto stated that the two countries will work on creating a bilateral free trade agreement. Officials have said that more discussions will take place in November 2016. Canadian officials anticipate signing on to the 12 members Trans-Pacific Partnership. Some have also expressed disappointment that Canada did not sign on to the China-led AIIB.
Russia Counts on Chinese Money to Improve Its Infrastructure
Russia is currently seeking investment from East-Asian funds for portfolio of infrastructure projects they have landed. The value of the portfolio is about $9 billion dollars, of which Moscow has put up $700 million and hopes that the rest of the investment needed can be realized in China. This shift in Russian focus to Asia could be attributed to the economic sanctions imposed by Western powers, which has caused strain on the Russian economy and made less capital available.
China Eager to Potentially Improve Trade Relations with Japan
The article portrays China as eager to establish better trade and working relationships with Japan. The Japanese are portrayed as being "China-averse", especially in light of anti-Japan protests, impending changes in the Chinese leadership, and signs of a slowdown in the Chinese economy. China would like Japan to join its One Belt, One Road initiative and support the AIIB's expansionary and infrastructure development efforts. Japan, however, remains wary.
Check back with our blog next week for another weekly update.
Interested in other IPD updates? Check out our all-team IPD BLOG!