In a stroke of good fortune for the developing world, the world’s second and third largest economies, China and Japan, appear to be in a bidding war for the title of biggest foreign infrastructure investor in Asia.
China’s AIIB, a competitor of sorts to the Western institutions like the World Bank, grabbed headlines recently when nearly the whole world signed up to be founding members despite Washington’s clumsy public demands that they stay out. It’s now expected to operate with roughly $100 billion in capital.
At the time of the AIIB’s establishment, one of the few countries that heeded America’s request for friends to stay out of was Japan. Now Japanese PM Shinzo Abe is taking things a step farther by announcing that Tokyo will be putting a conspicuously larger sum, $110 billion, into its Asian Development Bank. The Times of India reports:
Abe said in a speech in Tokyo that Japan and the Asian Development Bank (ADB) will boost their assistance by 30 per cent to offer the massive investment aid under a five-year public-private partnership vision.
“By attracting diverse funds, we hope to bring changes to Asia,” Abe said in prepared remarks, in the latest twist in the tussle for influence in the fast-growing region.
“In the long run, we’d like to spread quality infrastructure and innovative infrastructure in Asia,” Abe said, according to Kyodo News.
Lots of Western observers were quick to fret that the AIIB is going to be a bad thing for the world, because the Chinese will use it to nefariously or because it will grant Beijing more sway. As we pointed out at the time, that isn’t necessarily true, since economic interdependence is one of the things that makes the U.S.-led global system advance. The smart play may even have been to get in on the action ourselves.
Nonetheless, Washington will be pleased by Abe’s announcement, and by the optics of Japan outdoing China’s rising influence. The message from Tokyo to Beijing is clear: “I see your recent success with an infrastructure bank and raise you ten billion dollars.”