It’s time for the United States to join China’s new multilateral bank

By Sarah Cleeland Knight

We learned last week that another key US ally, Australia, is poised to join the China-based Asian Infrastructure Investment Bank (AIIB). Australia joins a growing list of countries, including the United Kingdom, Germany, France, and Italy, that have decided to rebuff US concerns about the bank and become members. They have done so in the face of US concerns that the bank represents a clear challenge to the World Bank, an institution over which the United States and Europe have exercised near-hegemonic control.

China’s decision to create the AIIB – first announced in October 2014 – is unsurprising, as is the US’s decision to view the AIIB with suspicion. As realist theorists of international politics such as Robert Gilpin have long explained, countries that grow in power relative to their peers – as China has done so dramatically over the past two decades – will naturally strive for a commensurate increase in influence. Similarly, declining powers will clamor to hold on to the influence they carved out when they were at the apex of their power.

China first sought to boost its influence in the institutions that the United States and United Kingdom established in the aftermath of WWII, including the International Monetary Fund. But the US Congress balked at giving China more authority, so China decided to fashion new institutions that reflect its current great-power status. The AIIB’s core mission, to finance major infrastructure projects in developing Asian economies, cannot be faulted. Instead, the United States voiced concerns instead about the bank’s proposed administrative structure and lending policies. And, at least initially, it appeared the United States had its friends in line, as Australia, the United Kingdom, and other European allies initially turned down the opportunity to become AIIB founding members.

The speed with which U.S. allies have changed course is surprising. When London announced last week that it would become a founding member, the Obama administration couldn’t resist a public rebuke: “We are wary about a trend toward constant accommodation of China, which is not the best way to engage a rising power.” The only possible takeaway from this apparent bandwagoning with China is that key U.S. allies have decided the benefits of joining the AIIB outweigh the costs of angering the United States. Washington would do well to exercise more diplomacy with its allies in advance of any future public showdowns with Beijing.

So what should the United States do now? Standing virtually alone in protest of the AIIB will accomplish nothing. It’s better for the United States to join and hope to exert some influence from the inside. To save face, the Obama administration could send a delegation of Treasury Department and other officials to meet with their Chinese counterparts on the bank’s proposed governance structure and lending policies. But the United States should plan to come away from those meetings satisfied that the AIIB will work transparently and contribute to economic development throughout Asia. And the United States can then do its best, working cooperatively and quietly with China, to ensure that it actually does.

About David Bosco

Assistant Professor at American University's School of International Service. Contributing editor at Foreign Policy magazine. Author of Rough Justice: The International Criminal Court in a World of Power Politics and Five to Rule Them All: The UN Security Council and the Making of the Modern World
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