Wednesday, June 23 2021 | ASIA TODAY INTERNATIONAL - Reporting the Business that Matters in Asia
CHARMING: XI BEARS GOODWILL AT BALI
OBAMA’s absence from Bali has been a gift to Xi Jinping as he embarks on a charm offensive with APEC Leaders in a bid to reshape China’s love-hate relationship with the region . . .
CHINESE President Xi Jinping is making hay while the sun shines on his first trip to APEC at the Leaders’ Summit in Bali, proposing an Asian Infrastructure Investment Bank.
Scant details have yet emerged, but Xi has picked the right country in which to make such an announcement. Of all nations in Southeast Asia, Indonesia is in most dire need of money to rebuild its crumbling infrastructure.
Xi made the announcement during his address to the Indonesian Parliament before leaving for Bali to attend the Leaders’ meeting. His Indonesian trip will be followed by attendance at the East Asian Summit in Brunei.
China understands infrastructure well, having itself spent trillions building world-class railways, highways and other major facilities.
The Asian Development Bank estimates that Asia needs to invest US$8 trillion in infrastructure to drive growth. A good part of that funding could go into projects like power generation and transportation.
As a latecomer to the multilateral lending scene, China would make a real statement for itself if it could kickstart establishment of an Asian Infrastructure Investment Bank.
And why not? China’s sometime nemesis, Japan, is the key player in the Asian Development Bank. China could set itself up as the lead player in an Asian infrastructure bank.
The Chinese think-tank credited for putting the idea to Xi — the China Centre for International Economic Exchanges — says the first step is to find like-minded partners to come on board as founding members.
The investment bank should be open to any Asian government that is keen to participate. They would be welcome, says the think-tank.
The ADB itself has an Asian Infrastructure Fund, for which it is exploring new approaches to raise much-needed cash for Asia's huge infrastructure needs.
China has until very recently been one of the largest borrowers from multilateral development banks. It would be seen as a suitable gesture of goodwill if it is able to reach deep into its pockets to come up with seed capital for an infrastructure bank.
China is already throwing lots of money at some under-developed countries, so it could adequately fund such an institution, which could offer long-dated loans and concessional interest rates. The least-developed countries could be offered grants.
And, of course, there could be no strings attached to loans — although they would need to be made on the grounds of highest governance to avoid corruption.
China is in an awkward position in Asia, and in particular in Southeast Asia.
There is a love-hate relationship. On the one hand, its Asian neighbours are mindful of what a big trading partner it has become. On the other, it is distrusted for its attitude involving a spate of territorial claims in the South and East China Sea.
As Asian media has noted, Xi and his retinue are on a massive charm offensive to woo sceptical leaders in the region. Xi has stepped into the Chinese leadership at a time when relations with China’s neighbours — Japan, Vietnam the Philippines – are starting to go badly.
At APEC, Xi had centre stage to himself, with US leader Barack Obama caught up in domestic politics at home. It has been noted by Asians and commentators that this was the third time Obama had been forced to curtail an Asian trip.
Regional leaders could give their undivided attention to Xi.
Hopefully, Xi and the APEC leaders he met in Bali held frank and open discussions, clearing some of the bad air and starting to cement relations. But the reality is that it will take a long time time before Beijing is able to forge a relationship with other countries, especially in Asia, which replicates their existing relationships with Washington.
There is much unspoken disappointment that Obama was unable to make this trip. To some, it signals the beginning of a waning of US predominance in the region, and, with it, the region's security blanket.
Asia has had what some Americans now call ‘a free ride’ all these years, prospering under its security protection. This could be a wake-up call for Asian leaders — that they will have to start making "other arrangements" for their security.
And those other arrangements may have to include China, in one form or another.