Washington wanted to isolate Beijing in its banking development plans. A serious mistake.
It’s a solid thrashing for the United States. To believe that Barack Obama, who swears by the Pacific, has not yet well understood what has happened there, completely underestimates the Chinese economic magnet’s power of attraction.
Let’s go back. At the beginning of the week, London in front, followed by Paris, Berlin, and Rome, announces the intention to participate in the launch of a new Asian bank piloted by Beijing for the financing of infrastructures. Washington digs in its heels, accusing its British ally of “adapting to” the Chinese game of seduction a little too quickly. Regardless, Luxembourg and then Switzerland in turn jump on the bandwagon. In all, Beijing can already count on around 30 countries ready to support its plan. A brilliant success.
When the idea was launched during a 2013 BRICS (Brazil, Russia, India, China, South Africa) summit, it was, indeed, politely received in the Western world. Washington welcomed it; other capital cities advised that they would consider the subject matter prudently. Last fall, nevertheless, the United States sent a message to its allies that it would not look favorably on an involvement which they perceived in reality as a challenge to the order inherited from Bretton Woods.* For no one is a sucker. The Chinese initiative, no sooner adopted by emerging countries, is well and good an attack against the World Bank, the Asian Development Bank, and the International Monetary Fund, organizations in which the United States, European countries, and Japan continue to participate in the decision-making.
But, for the Europeans, the facts are settled: Washington’s injunctions weigh little in facing the necessity of developing connections with the second global economy. The Europeans do so all the more voluntarily as in this case, the United States is in a position that is difficult to defend. For some years now, the U.S. Congress has blocked all votes on quota reforms within the World Bank and the IMF, even though China has perceptibly increased its contributions to these institutions. One can no longer ask Beijing to show itself to be a responsible partner in the international community by further opening its wallet without granting them more say in how that money is spent.
In trying to isolate Beijing, Washington shot itself in the foot. This error is all the more incomprehensible as Barack Obama demonstrated that another policy, that of Chinese involvement, is both possible and profitable. The best proof is in the climate agreement ratified last fall during an Asia-Pacific Economic Cooperation (APEC) summit in Beijing.
The incident involving the Asian Infrastructure Investment Bank (AIIB), as it’s called, will leave its mark. The lesson is simple: the United States has no other possibility of opening the playing field in the reconfiguration of the global order shaken up by China’s momentum. It’s particularly true for economic regulations, especially as Beijing does not directly contest the free market logic of globalization. On the contrary, it has been the primary beneficiary. If it’s justified in pondering the governance of this future bank meant to finance poor countries, the best way to rectify this is still to be one. Beijing invites Washington to take the step. The Europeans, and Switzerland, already have. Rightly so.
*Editor’s note: The Bretton Woods system of monetary management set the rules for commercial and financial relations among the world’s major industrial states in the mid-20th century.