Japan and the US founded the Asian Development Bank (ADB) in 1966, and it now holds 67 member countries. Japan is the biggest shareholder (15.67%) in ADB, closely followed by the US (15.56%) at the end of 2013 (China 6.47%).[1] The US on the other hand holds the largest share (17.69%) and voting power (16.75%) in the International Monetary Fund (IMF); Japan holds 6.56% (voting power of 6.23%) and China only 4% (voting power of 3.81%).[2] Likewise, in the World Bank the US holds the largest voting power. The IMF has already decided to reform the current quota system. With the new quota system China and other BRICS countries will increase their shares and voting powers. However, the reform stalls because of US Congress’ resistance. It is therefore quite understandable why China as the most energetically growing nation in the world would like to have a stronger influence on Asian development. China has already stated the policy of the “Silk Road Economic Belt” and the “21st century Maritime Silk Road” (“One Belt One Road”), which enhances China’s connections with the Central Asian and the South East Asian countries.[3] China’s influence and presence could also spread out over the Middle East, Africa and Europe by this policy. To resolve Chinese domestic problems like an excess production capacity, high dependence on investments, and a widening income gap might also be reasons to establish the AIIB.
The US has tried to restrain its allies from joining AIIB; however, Great Britain, Germany and other European countries have already affirmed their wish to become members. It is reported that China is not going to hold the strongest voting power in the AIIB. Nevertheless, China is going to hold 50% of the shares in the AIIB, and 75% of the voting rights will be given to the Asian member countries, while 25% go to the non-Asian members. Additionally, the quota for investments depends on the size of each member country’s GDP.[4] Therefore, it could not be difficult for China to wield the largest veto power. South Korea, Australia and Canada are also showing their interest to participate. Not only economic interests but also the weakening US power can be deduced from this event. For instance, South Korea might get closer to China if the US demands South Korea’s decision. The more the US restrains its allied nations, the more the losing power of the US becomes plain. Furthermore, the EU nations might have exposed their divided policy as the UK singly declared its participation in the AIIB. If Japan joins the AIIB, it could make profits and coordinate ADB and AIIB’s plans and actions. It would also be a better situation for other Asian nations since they have mixed feelings of interest and skepticism towards China. Japan’s participation in the AIIB might be desired by other Asian countries to contain China; however, Japan stated its intention not to join the AIIB by the deadline of March 31, 2015. Japan’s reason for this decision is the lack of transparency. Both Japan and the US have reportedly asked China about the investment guidelines, but they did not receive any answers from China.
Both the US’s and Japan’s economic situation are not quite bright. While the BRICS nations are growing, the US is losing its power. Therefore, the US dollar based economic strategy of Japan might be dangerous in the long run. The growth of China cannot currently be stopped.
Investments for the AIIB could possibly be diverted to helping to accomplish China’s policy of “One Belt One Road”, which in turn could boost China’s String of Pearls strategy as well as the reported nuclear underground base if the investment guidelines and control mechanisms are vaguely defined.
It is very important to Japan that its decision whether to join be really based on the lack of the AIIB’s transparency, not the abidance by the US’s decision because there might be the possibility of the US joining the AIIB at the very end of March, 2015. Japan’s position is quite different from Europe’s because of its geopolitical location. Japan, as an Asian nation, should have a different focus on Asia than Europe or other countries and endeavor to keep balance and promote prosperity in Asia. The AIIB announced its purpose of establishment from the beginning as being only to develop and enhance infrastructure in Asia, not to reduce poverty. Japan should strive for comprehensive Asian development by improving the ADB. Both genuine diplomatic efforts and dignified manners while dealing with its neighbors will make the difference. However; Japan should also learn from this event that its own interests have priority over the interests of alliance. Therefore, Japan should urgently reconsider its security and alliance policies.
[1] The Asian Development Bank: Annual Report 2013 [accessed March 5, 2015] http://www.adb.org/sites/default/files/institutional-document/42741/oi-appendix1.pdf
[2] The International Monetary Fund: About the IMF [accessed March 5, 2015] http://www.imf.org/external/np/sec/memdir/members.aspx
[3] China Daily: ‘One Belt One Road’ headed for critical juncture, March 9, 2015 [accessed March 20, 2015] http://usa.chinadaily.com.cn/2015-03/09/content_19752300.htm
[4] The Wall Street Journal: China Quashes Speculation on Base for Beijing-Led Development Bank, March 25, 2015 [accessed March 27, 2015] http://blogs.wsj.com/chinarealtime/2015/03/25/china-quashes-speculation-on-base-for-beijing-led-development-bank/
