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Australia to Join China-led Bank

On Sunday, Australia announced it would join the Asian Infrastructure Investment Bank (AIIB), reversing a previous decision to not participate.  Earlier this month, the UK, France, Germany, Italy, and South Korea have decided to join the AIIB despite American cautions against joining the bank.  Privately, US officials have cautioned allies to refrain from joining the bank due to concerns over bank standards pertaining to governance and transparency, specifically concerning the role of the board of governors and government control over the bank.  Some see China’s launch of the AIIB as a direct threat to undermine the influence of the World Bank.

“This marks a very sobering moment for Australia as until now we have subcontracted to the US our policy in relation to how to respond to China’s rise,” said professor Hugh White of strategic studies at Australian National University said. “This gives real for pause for thought in how Australia positions itself for the future.”




  1. wintera15 wintera15

    Seems like America will have to follow suit anyway so it will be interesting to see how long that takes.

  2. sandersm15 sandersm15

    I agree with Andrew that some signs point to the chance that America may have to follow suit. But at the same time, the article notes American caution in the situation. What are some of the key characteristics of the U.S. that make it more cautious to join the AIIB than similar developed nations (i.e. UK, France, Germany etc.)?

  3. The US (Congress, the administration, the denizens of think tanks, the talking heads of cable TV) would like to be able to dominate international financial institutions. Unfortunately for that intent, Congress has been unwilling to approve increases in capitalization for the World Bank, the IMF and the Asian Development Bank (among others) because … well, just because. (Capital contributions don’t add to expenditures, they’re a loan, and to date the loans to these international development finance institutions have earned good returns.)

    Given the structure of these institutions, if the US doesn’t approve a greater capital contribution from our end, no one else will step up to fill the void, because they’d have to give up the voting rights that would normally attach to their share of the total capital base of each institution. (Oh, we’re not willing to authorize more capital, but neither are we willing to give up our share of the votes to enable others to take our place.)

    Now the needs for development finance are also great. There’s room for AIIB and the World Bank and the ADB and …. there’d still be lots of unmet needs. We’re being really spiteful, and the rest of Asia sees it that way, too.

  4. Christian von Hassell Christian von Hassell

    I wonder how much Australia can benefit from better Chinese infrastructure in comparison to China’s land neighbors. Are the benefits tempered by the inability to really improve sea routes?

  5. Stephen Moore Stephen Moore

    Similar to my classmates, I am also interested to see if America will follow suit. I would definitely expect backlash from the American media if that were the case.

    • Christian von Hassell Christian von Hassell

      I see it as frankly very unlikely that the US would join in. Besides the media backlash, it would likely offer fairly asymmetric benefits.

      • Zero costs, so isn’t it moot whether benefits are asymmetric? I see no downside!

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