Britain has become the first G7 country to join a new Chinese-led investment bank, marking a historic step towards a multipolar world order, says DW columnist Frank Sieren.
Whether he's demonstrating political savvy or just has a nose for business, British Chancellor of the Exchequer George Osborne deserves to be congratulated. He risked the wrath of his government's main ally, the US, when he announced this week Britain's decision to become a founding member of the Asian Infrastructure Investment Bank (AIIB) in Beijing. It's a historic decision that attests to Britain's acceptance of the new multipolar world order and its willingness to accept this and work with it - a first among the industrialized nations of the western world.
At the APEC summit last fall, President Xi Jinping made a major bid for support for the venture he himself initiated and for quite a while, his efforts seemed to be falling on deaf ears, even though he'd earmarked subscribed capital of around $50 billion.
The Americans signaled straight away that they disapproved of China's attempt to rival their own Asian Development Bank (ADB), founded in 1966 and controlled primarily by Japan and the US, while the BRICS New Development Bank (NDB), conceived by BRICS as a rival to the IMF and the World Bank, is set to open in 2015.
But in London, despite the pressure from Washington, it seems the belief prevailed that the AIIB represents a unique opportunity to invest together with Asia and boost growth; that it makes more sense to belong to such an organization and help steer its course than to sulk on the sidelines. A wise move, and one that Germany would be well-advised to emulate. At the recent G20 summit in Australia, Angela Merkel rightly ackowledged that with Asian countries developing very dynamically, Europe has to make an effort to keep up. But her conclusion that Germany therefore needs to work more closely with its longstanding western partners and speed up the Transatlantic Trade and Investment Partnership (TTIP) negotiations doesn't go far enough.
DW's China columnist Frank Sieren
There's nothing wrong with consolidating existing friendships. But it's also a good idea to have an open mind about fledgling institutions in the world's emerging economies. Germany too should join the AIIB. Twenty-one Asian nations are founding members. Understandably, the Americans fear that the AIIB will lure investors with more generous loans than those granted by the ADB or the World Bank, with its notoriously strict conditions.
The US also says the AIIB needs to be led by a team that doesn't have a conflict of interest because, like China, it stands to profit from the projects which are financed by it. But this is actually no different in the US. And here too the rule is: competition is good for business. China is also about to set up its own development bank, the BRICS bank, along with Russia, India and South Africa. The ADB's objective is to fight poverty in Asia.
The aim of the AIIB and BRICS development bank is primarily to promote investment in infrastructure - i.e: construction projects - in Asia. For the British, who have hired the Chinese to work on their own infrastructure projects, participation in setting up the AIIB bank offers a way of influencing the steering of future projects. For George Osborne Britain's membership of the AIIB is a "unique chance" for both Britain and Asia to "invest and grow together." In Washington it is seen as a major setback or even a total defeat. Their allies Australia and South Korea aren't founding members even though they are major players in Asia.
What China does not like is the ADB's balance of power. Japan and the US both have a more than 15 percent share and call the tune, while China only has a 5 percent stake. Opponents of the AIIB bank, on the other hand, fear that the new Chinese development bank will not only increase China's standing among its neighbors, but also its influence over projects in the region. But a multipolar world order should mean everyone gets a piece of the pie, including the new kids on the block. No more old boys' clubs. It's remarkable that the Brits are the first to recognize this - and a shame that it wasn't Germany. Germany would have done itself a favor had it been the first western nation to show how open and innovative it was. Especially as no other western country has profited as much as Germany from the rise of China as an export nation. Now Berlin can only follow Britain's lead. Which is doesn't much like doing. And now the move will have much less political value.
DW columnist Frank Sieren has lived in Beijing for 20 years