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3EuropeanPowersSayTheyWillJoinChinaLedBankNYTimes.com

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BUSINESSDAY

3EuropeanPowersSayTheyWillJoin
ChinaLedBank
ByANDREWHIGGINSandDAVIDE.SANGER

MARCH17,2015

BRUSSELSIgnoringdirectpleasfromtheObamaadministration,Europes
biggesteconomieshavedeclaredtheirdesiretobecomefoundingmembersof
anewChineseledAsianinvestmentbankthattheUnitedStatesviewsasa
rivaltotheWorldBankandotherinstitutionssetupattheheightofAmerican
powerafterWorldWarII.
TheannouncementonTuesdaybyGermany,FranceandItalythatthey
wouldfollowBritainandjointheChineseledventuredeliveredastinging
rebuketoWashingtonfromsomeofitsclosestallies.Italsocalledinto
questionwhethertheWorldBankandtheInternationalMonetaryFund,
whichgrewoutofamultinationconferenceinBrettonWoods,N.H.,in1944
andestablishedaneconomicpeckingorderthatlasted70years,willfindtheir
influencediminished.
TheannouncementbyGermany,Europeslargesteconomy,cameonlysix
daysafterSecretaryofStateJohnKerryaskedhisGermancounterpart,Frank
WalterSteinmeier,toresisttheChineseoverturesuntiltheChineseagreedto
anumberofconditionsabouttransparencyandgoverningofthenewentity.
ButGermanycametothesameconclusionthatBritaindid:Chinaissucha
largeexportandinvestmentmarketforitthatitcannotaffordtostayonthe
sidelines.
AmericanofficialshavefumedthatChinaneverapproachedtheGroupof

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7theconsortiumofeconomicpowersthattheUnitedStateshasledbut
ratherdecidedtopickoffindividualmembers,settingadeadlineoftheendof
Marchforthemtodecidewhethertojointheneworganization,theAsian
InfrastructureInvestmentBank,whichmanyrefertobyitsinitials,theA.I.I.B.
China,inturn,haslongchafedattheideathattheWorldBankspresident
istraditionallyanAmerican,andthatFranceappointstheheadoftheI.M.F.
Thishasbeenapowerstruggle,oneseniorEuropeanofficialsaid.And
wehavemovedfromtheworldof1945.
InWashington,JenPsaki,theStateDepartmentspokeswoman,declined
tocriticizethecountriesthatannouncedtheywouldseektoparticipate,but
expressedreservations.Itwillbeimportantforprospectivemembersofthe
A.I.I.B.topushfortheadoptionofthosesamehighstandardsthatother
internationalinstitutionsabideby,includingstrongboardoversightand
safeguards,shesaid.
TheEuropeandecisionisboundtohelpeffortsbyXiJinping,Chinas
presidentandCommunistPartychief,toreshapetheglobalbalanceofpower,
startingwiththeinstitutionsthatunderpinit.
Mr.Xispredecessorschosetojoinsomeofthoseinstitutions,including
theWorldTradeOrganization,andworkfromwithintoamendsomeoftheir
rulesmoretoChinasliking.Butwiththenewbank,Chinaappearstobe
steppinguppreviouslyhaltingeffortstoalsobuildnew,Sinocentric
institutionsfromscratch.Chinascontrolofthebank,however,willface
constraints.Britainhasinsistedonaseniorpostonitsboard,andGermany
willdothesame.
Chinahasworkedforyearstobreakwhatitregardsasanunfairgripby
theUnitedStatesonglobalpoliticalandfinancialinstitutionsandtosetup
rivalstructuresmoreresponsivetoChinesedemandsforavoicein
internationalaffairscommensuratewithitsstatusastheworldssecond
biggesteconomy.
ChinaisshapinganalternativeuniverseandgettingAmericasEuropean
alliestosupportit,saidTheresaFallon,aChinaexpertattheEuropean
InstituteforAsianStudies,aBrusselsresearchgroup.

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TheUnitedStateslobbieditsalliesnottojointhenewChinabasedbank.
TheUnitedStateshasarguedthatthebankatbestduplicates,andatworst
undermines,theroleoftheWashingtonbasedWorldBankandtheAsian
DevelopmentBank,whichhasitsheadquartersinthePhilippines,aclose
AmericanallyatoddswithBeijingovertheSouthChinaSea.TheI.M.F.,which
managesfinancialcrises,islessdirectlyaffected.
Ms.FallonsaidsheexpectedthatSouthKorea,anothercloseAmerican
ally,wouldalsosignupforthenewbankandthatintheend,onlyJapan
wontsayyes.China,shesaid,isofferingawholeeconomicandpolitical
packagethatprovidesanalternativetothecreakinginternationalstructures
shapedbytheU.S.inthepostwarperiod.
WesternofficialsandanticorruptiongroupshavelongcriticizedChinas
lendingpractices,particularlyforinfrastructureprojectsinAfricainvolving
Chinesecompanies,sayingtheyfostercorruptionandundercuteffortsbythe
WorldBankandI.M.F.tolinkloanstodemandsforgoodgoverning.China
rejectssuchcomplaints,pointingtoitssuccessinbuildingroadsandrailway
linesquicklyincountriesbereftofWesterncapital.
Inanapparentreferencetosuchconcerns,France,GermanyandItaly,in
astatementdeclaringtheireagernesstojointheAsianInfrastructure
InvestmentBank,saidtheywerekeentoworkwiththeA.I.I.B.founding
memberstoestablishaninstitutionthatfollowsthebeststandardsand
practicesintermsofgovernance,safeguards,debtandprocurementpolicies.
SnubbingthebankwouldhaveangeredBeijing,butasidefromearning
Chinesegoodwill,itwasnotimmediatelyclearwhatEuropeancountries
wouldgainbyjoiningotherthantherighttoendorseandhelpfinance
infrastructureprojectsthat,inmanycase,arelikelytobedominatedby
Chinese,notEuropean,constructioncompanies.
EuropesdefianceofpressurefromWashingtonoverthebankdoesnot
signalamajorrupture,analystssaid.But,theysay,itdoesaddfrictionata
timewhenthemarqueeprojectoftransAtlanticsolidarity,aproposedfree
tradedeal,haslostmuchofitsmomentuminthefaceoffiercehostilityfrom
EuropeanpoliticiansandactivistsopposedtoAmericanstylecapitalism.

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WhileheavilydependentontheUnitedStatesforsecurity,especiallysince
thecrisisinUkraineeruptedlastyear,Europeancountries,Ms.Fallonsaid,
tendtotaketheU.S.forgranted,whileChinaisverygoodatlobbyingthem
andpromisingthemthings.ButshesaidWashingtonhadbeenunwiseto
expenddiplomaticandpoliticalcapitaloverthebankwhenitwasclearthat
evenstaunchallieslikeBritainwantedtojoinit.
ThebankwasfirstproposedbyMr.Xitohelpfundinfrastructureprojects
inpoorAsiancountries,somethingtheWorldBankandtheAsian
DevelopmentBankalreadydo.Chinahaspledgedalargepartoftheinitial$50
billionofcapital,andBeijinghopestheinstitutionwillcontributetothe
expansionofitsAsianpowerbase,evenasitsgrowingmight,economicand
military,reshapesthepoliticaldynamicsoftheregionandbeyond.
SincetakingoverleadershipoftheChineseCommunistPartyin2012,Mr.
XihassteadilyexpandedalongstandingChinesepolicyofseekingpolitical
influencethroughlendingandinvestment,puttinghisweightbehindan
ambitiousplantobuildmaritimeandlandlinksbetweenChinaandEurope
thatspantheEurasiancontinent.Chinabegantheplanaftera2011callby
HillaryRodhamClinton,whowasthensecretaryofstate,foranewsilkroad
tohelpAfghanistanseconomy.
MiffedthatWashingtonhadappropriatedatermChinaconsidersan
inseparablepartofitsownheritage,Mr.Xiin2013putforwardhisownsilk
roadplan.ThiswasinitiallycalledtheSilkRoadEconomicBeltbut,since
expandedandshornofanyechoesoftheAmericanproposal,isnowknownin
ChinaastheBeltandRoadscheme,saidMs.Fallon,whohasstudiedthe
evolutionofChinasminutelycalibratednomenclature.
Chinafirstsignaleditsdesiretosetupitsownalternativestructuresasits
economytookoffinthe1990s.In1996,inShanghai,itestablishedasecurity
groupingcomprisingChina,Russia,Kazakhstan,KyrgyzstanandTajikistan.
Thebody,sincejoinedbyUzbekistanandknownastheShanghai
CooperationCouncil,hasChineseandRussianasitsworkinglanguages
insteadofEnglish,thelinguafrancaofmostinternationalorganizationssetup
undertheauspicesoftheUnitedStates.

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UnderMr.Xi,Beijinghasalsoputitselfatthecenterofafouryearold
groupingof16EasternandCentralEuropeancountries,promisinginvestment
totheregioninapushforeconomicandpoliticalinfluencethathasraised
eyebrowsinBrussels,theheadquartersoftheEuropeanUnion.
SomeseetheventureasanattempttodividetheEuropeanUnionand
circumventtheblocsrigidrulesandstandards.Elevenofthenationscourted
byChinainEasternandCentralEuropebelongtotheunion.
ButChinahasvoicedannoyanceatwhatitderidesasColdWarthinking
thatdividestheworldintofixedcamps,promotingitseffortstowinfriends
andalsocontractsinformerlyCommunistEasternEuropeandelsewhereas
partofawinwinstrategybeneficialtoall.
CommentinginBeijingonthedecisionbyEuropeancountriestojointhe
newinvestmentbank,aForeignMinistryspokesman,HongLei,saidChina
wantstoworktogetherwithallpartiestosetupamutuallybeneficial,
professionalinfrastructureinvestmentandfinancingplatformtocontributeto
regionalinfrastructureandeconomicdevelopment.
WhileChinahasrisenoverthelastdecadestobecomethesecondlargest
economyoreventhelargest,bysomemeasuresitisstillsidelinedatthe
internationallevelbythereluctanceofdevelopednationstorelinquishtheir
privilegedplaces.
Inonesuchcase,theUnitedStatesanditspartnersattheInternational
MonetaryFundagreedin2010togiveemergingnationsanexpandedrolein
theinstitution.Congresshassofarrefusedtosignon.
SpeakingonTuesdayinWashington,TreasurySecretaryJacobJ.Lew
saiditwasurgentthatweaddresspriorunmetcommitments,whichhave
growntolevelsthatraisesignificantquestionsaboutU.S.credibilityand
leadershipinthemultilateralsystem.
Failuretodoso,headded,couldresultinalossofU.S.shareholdingata
timewhennewplayersarechallengingU.S.leadershipinthemultilateral
system.
AndrewHigginsreportedfromBrussels,andDavidE.SangerfromWashington.
DavidJollycontributedreportingfromParis,andMichaelForsythefromHong

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Kong.
AversionofthisarticleappearsinprintonMarch18,2015,onpageA4oftheNewYorkedition
withtheheadline:3EuropeanPowersSayTheyWillJoinChinaLedBank.

2015TheNewYorkTimesCompany

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