US Officially Loses Battle Over China-Led Investment Bank

Tyler Durden's picture

Add the IMF to the (now long) list of those who apparently share the UK’s view that joining the China-led Asian Infrastructure Investment Bank is an “unrivaled opportunity,” as Christine Largarde says her institution not only sees a “massive” opportunity for cooperation with the AIIB but is also “delighted” to explore the possibilities. Here’s more from BBC

International Monetary Fund chief Christine Lagarde has said the IMF would be "delighted" to co-operate with the China-led Asian Infrastructure Investment Bank...

 

Mrs Lagarde said there was "massive" room for IMF co-operation with the AIIB on infrastructure financing.

 

Mrs Lagarde, speaking at the opening of the China Development Forum in Beijing, also said she believed that the World Bank would co-operate with the AIIB.

Meanwhile, Switzerland is now on board and India, Indonesia, and New Zealand are reportedly set to follow. As a reminder, the deadline for applications is the end of this month and it appears that the UK’s move to become a founding member has suddenly made the AIIB the coolest club on the block. Australia is expected to tender a “qualified yes” tomorrow. 

From The Australian Financial Review

The Asian Infrastructure Investment Bank is expected to receive, in principle, endorsement from Federal Cabinet on Monday but the government will continue to make Australia's full participation dependent on the adoption of appropriate governance standards.

 

The government is set to maintain a common front with Japan and South Korea on how the bank will be run despite backing away from its previous opposition to joining last October, amid divisions in Cabinet.

 

"There will be a decision – but with caveats around governance," a government source said emphasising that no one country should dominate the bank.

 

All three countries are under pressure to join the AIIB by the end of the month deadline set by China for foundation membership status that will allow the original countries to decide on future membership.

 

Despite being opposed to the AIIB, the Japanese government appeared to split over joining on Friday when Finance Minister Taro Aso said Japan could join if the conditions were right while other officials said the position had not changed.

The bank’s secretary general Jin Liqun says he expects 35 countries to apply for membership by the deadline but does note that the US has nothing to fear from the institution which he explains is not a competitor the ADB but rather an unassuming “lean, clean, and green” multinational talent scout backed by the support of everyone but Washington. Nothing threatening about that.

From Bloomberg:

  • AIIB is complementary to the Asian Development Bank, Jin says at forum in Beijing today
  • AIIB founding countries to exceed 35 at end of this month, Jin says
  • China will dilute its own share in AIIB as more countries join, Jin says
  • China will act as a multilateral partner in AIIB, Jin says
  • China will respect international standards in setting up AIIB, Jin says
  • AIIB will recruit talented people from all over the world, Jin says
  • AIIB will be lean, clean and green, Jin says

Jin’s conciliatory (and unmistakenly patronizing) remarks notwithstanding, it’s impossible to not see this for exactly what it is: a shift away from US hegemony. Here’s The Economist to explain exactly what we’ve been saying for months: 

The AIIB is but one of a number of new institutions launched by China, apparently in frustration at the failure of the existing international order to accommodate its astonishing rise. Efforts to reform the International Monetary Fund are stalled in the American Congress. America retains its traditional grip on the management of the World Bank. The Manila-based Asian Development Bank (ADB) is always directed by a Japanese official. Partly for that reason—that the AIIB would amount to a diminution of Japanese influence in favour of China at a time when their relations are fraught—Japan is sniffy about the new bank. Its cabinet secretary, Yoshihide Suga, this week repeated that Japan will “carefully study” the AIIB’s governance standards…

 

China, flush with the world’s biggest foreign-exchange reserves and anxious to convert them into “soft power”, is building an alternative architecture. It has proposed not just the AIIB, but a New Development Bank with its “BRICS” partners—Brazil, Russia, India and South Africa—and a Silk Road development fund to boost “connectivity” with its Central Asian neighbours…

 

Despite the obvious need, America has, either by design or ineptitude, turned the AIIB into a test of diplomatic strength. That has proved a disaster. Its officials have, anonymously, rebuked Britain for its “constant accommodation” of China—and many observers would agree that they have a point. But that its closest allies have proved so keen to court China’s favour and so willing to flout American views suggests America picked the wrong fight.

*  *  *

So there you have it. Washington picked a completely unnecessary fight with China over the ostensibly non-contentious topic of infrastructure development because the US can’t stand the fact that traditionally US-dominated multinational institutions are on the verge of being supplanted by sinocentric ambition — and lost. Apparently though, the White House is now out to prove that if it can’t win a war fought with infrastructure development dollars it can still win a war fought with bullets, as evidenced by the “line” of soldiers and armed vehicles in place on or near the Russian border. 

And for any country that’s still on the fence with regard to joining the standardless abomination seeking to undermine the ADB, Jack Lew has a tough question for you: 

"Will it protect the rights of workers, the environment, will it deal with corruption issues appropriately?"

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maxmad's picture

I think I just heard the dollar collapse!

Soul Glow's picture

The dollar and all fiat currency are worthless debt intruments.

smlbizman's picture

if a dollar collapses in the woods....does it still make a sound....

MarketAnarchist's picture

"Will it protect the workers and the environment?"  

 

Great question Jack Lew! and the Answer is no, because no government organization does! Now do everyone a favor and kill yourself.

johngaltfla's picture

Losing the UK hurt the US Dollar dominance. Losing Australia and Japan will be the end of the trans-Pacific hegemony. But losing Switzerland means the bankers are sick and tired of the nonsense our government and the Fed are playing on a daily basis. This divorce will be fugly.

 

De-Dollarization Accelerates as Switzerland Quietly Wields a Big Bank Stick by Joining the Chinese Founded AIIB
Liberal's picture

Really, Zero Hedge? Really? THIS is what passes for news and analysis on this Domestic Extremists' favorite Website these days? This is what's important to you? And you wonder why you're not taken seriously like the great Huffington Post and DailyKos?

This shit doesn't matter, you Domestic Extremists. Do you want to know what matters?

Black lives matter! Hundreds and thousands of brave souls who risk their lives crossing our border everyday hoping not to get caught by a bunch of racial profiling racist agents matter! Millions of undocumented human beings who just want to be left alone and get their free healthcare and free education and free food matter! Millions and millions more Americans and public employees and their families who are fighting day and night for their right to live their lives luxuriously off of your tax dollars matter! Millions of innocent womyn who just want you to pay for their birth control pills so that they can enjoy their God-given right to fuck without getting knocked up matter! Gay lives matter! Transvestites' lives matter! Lesbians' lives matter! Our government and their right to spend your money and run your lives matters!

I weep for you Domestic Extremists. Trayvon Martin didn't die for this. Michael Brown didn't die for this. Do yourself a favor and, as Howard Schultz of Starbucks suggested, go talk to your baristas about racism. You will be enlightened. I can only hope.

Cautiously Pessimistic's picture

Oh whoops!  You forgot the tag!  Here, I will loan you one of mine --->  SARCASM

Latina Lover's picture

Of course the USSA hates the China Led Invesment Bank,  they cannot control it, steal it, extort or threaten it. Criminals hate competition.

Soul Glow's picture

You can have empathy and still understand the current economic and fiscal policy is irrational.  Try not to be such a dick.

The Big Ching-aso's picture

Man who tell someone to blow it out ass need to first make sure that ass not pointed at face.

Neoconfucious

Winston Churchill's picture

MDB should give you some pointers.

He is the master of sarcastic buffoonery.

Renfield's picture

I dunno, bulldog, he made me laugh. And, judging by the downvotes, some of us were successfully trolled!

stacking12321's picture

mdb is funny.

this guy is just annoying.

Max Steel's picture

all those shiny dollaz usa regime used in bribing aka lobbying south korea and australia were wasted .

~ Thug Life

chinoslims's picture

In addition to all the lives and dollars wasted in Afghanistan and Iraq.  The US is worse than a venture capitalist before dot com bust.  Throwing money all over the place.  Its kinda like malinvestment gone wild.  With ZIRP, anything is possible

gmrpeabody's picture

"Will it protect the rights of workers, the environment, will it deal with corruption issues appropriately?"

Jack Lew..., are you shitting us?

Usurious's picture
Usurious (not verified) gmrpeabody Mar 22, 2015 10:41 AM

 

 

somebody page John Perkins...

sun tzu's picture

Jacob Jew is a son of a bitch

COSMOS's picture

Just like all the other slave owning AIPAC members.

TeamDepends's picture

Foward progressive soldier! We can't have a middle class now, can we? Couldn't have done it without you useful idiots. Thanks again!
-Marx from the grave

Never One Roach's picture

I can hardly wait until there's a black market for rubles and yuan in front of our banks ... just like there is for the dollar in Russia and China. I can see it now... some guy coming up to me in the subway asking me if I want to buy RMB's or rubles, and if not, 'How about a genuine APPL wrist watch?" as he slides his sleeve up dispalying his dozen or so 'authentic' APPL igoods for sale.

 

Best of all, he'll only accept gold or silver coins!

chinoslims's picture

what would really really really be scary is if Bitcoin becomes more sought after currency than the USD

stacking12321's picture

why would that be scary at all?

it's a currency that's not printed at will by a central bank.

if the dollar goes away and is replaced by bitcoin, that means no more funding for wars and military aggression, no funding for the nsa, irs, fbi, atf, no funding for the cia (except what they earn from coke and herion smuggling), etc.

sounds pretty nice to me.

ThirteenthFloor's picture

At nearly the same time Russia linked the RUB to RMB which further negates west attack on Ruble, since RMB close peg to dollar. In order to maintain import prices. LOL.

Chinese have saying "easy to break one chopstick, but not easy to break five together".

Bye bye USD

OpenThePodBayDoorHAL's picture

TeamObama really needs a win right about now, it's been 6 years and I can't think of any. Looks like we also really dodged a bullet in 2004 when Kerry lost his presidential bid, I mean that guy is like the George Costanza of diplomacy...just do the opposite, Vandelay Industries territory

lakecity55's picture

No, Team O'Dicktaster is looking for another LOSS right now!

gimme-gimme-gimme's picture

Countries are looking out for their own sovereign interests.

I take the the USSA's argument was threats that if you join they will fuck you up.

The US dollar as unlimited credit card is coming to an end.

nopalito's picture

I think I just heard the dollar collapse!

Thank you. You just answered this question: If the dollar falls and no one is around to hear it, does it make a sound?

stacking12321's picture

nice.

i think the full question is:

if the dollar falls in bretton woods and no one is around to hear it, does it make a sound?

 

orangegeek's picture

which would mean that the Euro would rocket - this in the face of Europe's NIRP move

Renfield's picture

Gold will change everything, including NIRP...

Euro was designed to be gold-backed. There will come some significant changes to the euro community, maybe even some splitting up, but I agree with you that the result will be a stronger euro in the end.

Macon Richardson's picture

Yes! It sounded to me like a toilet flushing.

Tinky's picture

Gold is sure to 'soar' to $1190 on the news.

Winston Churchill's picture

I have no interest in the pog expressed in USD at this point, its transitory.

It has as much relevance as all the gold in Ft.Knox.

The same applies to any notional winning in the 'market' denominated in USD.

Soul Glow's picture

Gold has dominated all other currency for the last six months.  Pitting it against the dollar is like comparing a supermodel to a sorority girl.  The co-ed looks good late night with beer goggles.  The model is always hot.

Winston Churchill's picture

You miss my point.All new hegemons start with sound money while failing ones

resort to money adulteration.

That supermodel is a fifty year old meth addicted hooker with no teeth.Carry on pimping

though.

GMadScientist's picture

Lagarde, for one, completely welcomes her new Asian overlords.

cossack55's picture

What does Boehner have to do with it?

IridiumRebel's picture

Can you imagine the hue of their children? Sunrise could not emit such a tawny, tangerine brilliance!

Cycle's picture

Lagarde is to money as flies are to __________

I am a Man I am Forty's picture

Of course the IMF wants to be involved, they are a fucking vampire, they shouldn't allow the IMF to be a part of it.

JustObserving's picture

Score another major victory for the Nobel Prize Winner:

When Xi Jinping, then the newly minted Chinese leader, first broached the idea of a new Asian development bank in a public speech in 2013, few in Washington paid it much heed.

But as Beijing systematically recruited longtime American allies to help fund and oversee the new bank, it became clear that the push was more than a public relations gesture to China’s Asian neighbors. It was also a direct threat to the post-World War II financial institutions led primarily by the United States, and to President Obama’s pledges to make a “pivot” to Asia in American foreign policy.

Now with Britain, France, Germany and Italy signing up to join the new bank, despite direct pleas from Washington to steer clear, the question is whether the Obama administration mishandled a significant challenge from China, and what it might have done differently.

“The administration made a major mistake in its opposition. It was a very shortsighted,” said Paul Haenle, director of the Carnegie-Tsinghua Center in Beijing. “The bank was going to go ahead whether we supported it or not.”

http://www.nytimes.com/2015/03/20/world/asia/hostility-from-us-as-china-...

sun tzu's picture

Obunghole's delusions of grandeur and messiah complex got in the way of common sense again. 

lakecity55's picture

O'Dictator did NOT make a mistake!

Every.Single.Thing. He does is directed towards the destruction of America!!

NEKO's picture

So if you can't stop it, pretend it was a good idea all along.

Soul Glow's picture

The king is dead, long live fiat hahaha

Renfield's picture

Disagree that new trading block will stick with fiat for long... many of the countries in this new group have been buying up gold, and I bet it wasn't b/c they were short on paperweights...

lakecity55's picture

"I killed some Dollarz!"
--Miss Barrie