The China-led international financial institution Asian Infrastructure Investment Bank (AIIB) formally launched on 25 December 2015 with thirty-seven regional and twenty non-regional Prospective Founding Members (PFM). The bank had on founding US$100 billion in capital, equivalent to two-thirds of the capital of the Asian Development Bank or nearly half that of the World Bank. It is the first significant multilateral lender dominated by a developing country.
The US, which along with Japan and Canada declined to become a founding member, lobbied European countries, Australia, and South Korea not to join. Its efforts were mostly ignored. The former UK chancellor of the exchequer, George Osborne, announced Britain’s application in early March, in an unusual split from the US line. Despite expressions of frustration from Washington, Australia and South Korea applied to join the bank later that same month.
The Trans-Pacific Partnership (TPP), a trade agreement signed by twelve Pacific Rim countries including the US and Japan on 4 February 2016 in New Zealand, seems like a counter-measure to the AIIB. Despite being the largest economy in the Pacific Rim, China was not involved in the negotiations. In a Washington Post article on the TPP, Obama said ‘The world has changed. The rules are changing with it. The United States, not countries like China, should write them.’
Officially, China is staying neutral. A spokesperson from China’s Commerce Ministry said that China ‘always keeps an open mind toward the construction of systems that are in accordance with World Trade Organisation rules and are helpful for promoting economic integration in the Asia-Pacific region’.
State media Xinhua also said that China has already demonstrated a ‘deep-seated, high-standard, and comprehensive pattern of opening to foreign trade’, citing new free trade agreements with South Korea and Australia and the on-going Regional Comprehensive Economic Partnership (RCEP) negotiations, a free trade agreement that would include all ten ASEAN member states, Australia, India, Japan, South Korea, and New Zealand and encompass the OBOR Initiative as well. Xinhua added that China might seek to join the TPP ‘at an appropriate time’.