A late surge among top European countries, including Germany, France, Britain, and now Russia along with Australia to join the China-led Asian Infrastructure Investment Bank (AIIB), has imparted a new sense of realism to Beijing’s Silk Road plans. If implemented, they are likely to shift the global balance of economic power towards Eurasia.
- The decision of key European powers along with South Korea to join the bank, overriding strong objections from the United States, has split the Atlantic Alliance on this issue.
- The AIIB’s apparent success has now brought into sharper focus China’s ‘One belt One Road’ initiative which requires massive investment, including finance from the $40 billion Silk Road fund, which the Chinese have separately established.
- In order to ensure that there are no funding shortfalls, an action plan released recently by the Chinese government has asked countries along the Belt and Road to ensure that currency swap arrangements for payments are encouraged, and a bond market in Asia is fully developed.
- Analysts point out that the ‘One Belt One Road’ initiative, backed by a solid financial institutional network, once implemented, is expected to accelerate the shift of geo-economic power away from the United States, towards Eurasia. More than 4.4 billion people, or 63% of the global population countries, are expected to
benefit from China’s game-changing plans.About AIIB:
- The Asian Infrastructure Investment Bank (AIIB) is an international financial institution proposed by China.
- The purpose of the multilateral development bank is to provide finance to infrastructure projects in the Asia-Pacific region.
- The AIIB was launched in Beijing last year to spur investment in Asia in transportation, energy, telecommunications and other infrastructure.
- AIIB is regarded by some as a rival for the IMF, the World Bank and the Asian Development Bank (ADB), which the AIIB says are dominated by developed countries like the United States and Japan.
- Presently there are 22 members including China.
- The authorised capital of AIIB will be $100 billion. AIIB’s headquarters is to be located in Beijing.
- India is the second largest shareholder in the Bank after China.
- It is being called as a very positive development in the sense that it opens up more borrowing opportunities.
Sources: The Hindu, Wiki.