US Disgruntled as UK Elects To Join the AIIB

On March 12, the U.K. Treasury posted on its website that the United Kingdom had confirmed its intention to become a prospective founding member of the Asian Infrastructure Investment Bank with China and officially applied to join the bank.

China had welcomed the decision, the announcement said. With itself a founding member state and host of the inaugural meeting of bank representatives, China is soliciting the other members’ opinions in a truly multilateral fashion. If all goes smoothly, the United Kingdom will officially be instated as a founding member of the AIIB at the end of March. It will be the first major Western nation to join the AIIB.

In October 2013, China took the initiative in advocating the establishment of the AIIB. One year later, financial chiefs and representatives from the first batch of 21 prospective founding member states that included China, India and Singapore signed an agreement in Beijing as a collective move to establish the AIIB. It was to be an inter-governmental, multilateral developmental institution for the Asian region, with its primary focus upon building infrastructure.

Currently, the list of 27 prospective member states includes Bangladesh, Brunei, Cambodia, China, India, Indonesia, Jordan, Kazakhstan, Kuwait, Laos, the Maldives, Malaysia, Mongolia, Myanmar, Nepal, New Zealand, Oman, Pakistan, the Philippines, Qatar, Saudi Arabia, Singapore, Sri Lanka, Tajikistan, Thailand, Uzbekistan and Vietnam.

At a press conference held for both domestic and foreign journalists on March 6, Chinese Minister of Finance Lou Jiwei hinted that “several European nations have indicated a willingness to join [the bank]. However, we, the first 27 nations, are fairly united in our view that those within the region should come first. As to nations outside the region requesting to join, we will wait a bit and see. We estimate that a considerable number will be amenable to joining, including a few of the larger countries.”

One week later, the news broke of the United Kingdom’s desire to join their ranks. Reuters reported that on March 12 U.K. Chancellor of the Exchequer George Osborne announced that he will attend a meeting of founding member states this month in order to reach a consensus on the AIIB’s standards of governance and accountability arrangements.

The United Kingdom is the first major Western nation to seek AIIB membership. The U.K. chancellor added that joining the bank would help develop the United Kingdom’s business and investment ties with China and other countries in the region.

Li Wei, a researcher at Renmin University’s National Academy of Development and Strategy, told journalists working for the China Business News that the United Kingdom’s participation in the AIIB also holds great significance for China. “If the United Kingdom joins, Germany and other European nations will all be able to join. Thus, the AIIB will truly become a key developmental bank with the participation of global investors.”

As the United Kingdom and China celebrate, however, many a furrowed brow has grown deeper in the United States.

On March 12, U.K. newspaper The Guardian reported that the United States was angered at Britain joining the Chinese-led AIIB.

The U.S. government released a statement saying that the United States was concerned that U.K. participation in the AIIB would invite a “trend toward constant accommodation of China.” The report pointed to the unease felt by the U.S. government at Britain’s application to become an AIIB member, as U.S. officials have long been wary of the AIIB as a competitor to the U.S.-led World Bank, believing that China will use the AIIB as a means to increase its soft power throughout Asia.

According to Li Wei, the United States has had some trouble persuading its Asian allies South Korea, Australia and Japan not to join the AIIB, with South Korea having recently wavered again on that front. That the United Kingdom, the United States’ closest ally, has now made public its participation suggests that the United States is powerless to slow the pace of the Chinese initiative.