China's experience benefits cross-border growth
Updated: 2015-04-16 10:41
By HUA SHENGDUN in Washington(China Daily USA)
China's past experimental approach to infrastructure growth applied to the Asian Infrastructure Investment Bank (AIIB) would help economic growth across borders, a German economist said at a think tank in Washington.
"The infrastructure problem has been neglected for decades," Sandra Heep, head of Economic Policy and Financial System program at the Mercator Institute for China Studies in Berlin, said at the Johns Hopkins School of Advanced International Studieson Wednesday. "One prominent feature of China's development experience is its experimental approach to solving these problems."
"From a German perspective, I think we should make such a great deal of China's AIIB initiative, because it is completely a bank with expectations,"Heep said. "China is taking this experimental approach beyond boarders and maybe they would apply the approach within the multilateral institution.AIIB will be the solution to the problem of infrastructure investment money."
AIIB, the China-led multilateral investment bank that will provide financing for roads, railways, airports and other infrastructure projects in Asia, finalized its prospective founding members at 57 on Wednesday, according to China's Ministry of Finance.
Heep said it should be appreciated that "China is willing to exercise part of its influence through multilateral financial institutions" since it would"inevitably come to play a more influential role in the global financial architecture".
"To better integrate China into global financial governance, the West should support China's AIIB initiative and help the country to become a responsible stakeholder," she said.
Daivd Dollar, a senior fellow at the Brookings Institution, said that it's "logical" for China to start creating a competing institution.
"We should welcome the fact that China is creating some new multilateral institutions," said Dollar, who is also a former US Treasury Department economic and financial emissary to China. "It is a largely positive development."
A leading expert on China's economy and China-US economic relations who had worked at the World Bank for more than 20 years, Dollar praisedthe AIIB as a "good opportunity to create a more efficient development bank".
"The current multilateral banks are not perfect," he said. "The Chinese have said for a long time that they would like to see the World Bank focus more on infrastructure growth and lots of developing countries which borrow from the World Bank feel it is very bureaucratic and slow."
"So there is a lot of potential to improve efficiency," he continued. "I predict the AIIB will have a positive effect on the existing model of multilateral banks."
Though the deadline for founding membership application passed on March 31, the bank will continue to accept new ordinary members with voting rights but less say in the rule-making process, according to Xinhua.
Expected to be established by the end of this year, the AIIB has drawnthe attendance of some key US allies such as the UK, France, Germany and Italy.
It is expected to create more capital mobilization channels for countries in Asia, in particular developing countries in the Southeast, Central and Southern Asian regions, according to Xinhua.
Former US Treasury Secretary Henry Paulson said on Monday that the US should have joined the AIIB and there were "two mistakes: not joining, and if we pick a fight, we want to make sure it's one that we're going to win, not one we're destined to lose".
World Bank Group President Jim Yong Kim said earlier this month that the World Bank would collaborate with the AIIB in solving world poverty, as this was"not a competition, but cooperation, and we have already cooperated in many joint projects".
Dan Steinbock, research director of international business at the US-based India, China and America Institute, said the US' absence in AIIB was a "reflection, not the cause, of a deeper challenge - that of adjusting American exceptionalism to the era of a multipolar world economy."
"In one way or another, Washington may well join the AIIB in the future. But the idea that lobbying forcefully against it was a mere miscalculation is na?ve. American exceptionalism will not easily adjust to the multipolar world," he said.
"The aspiration for a global primacy may be irreconcilable with American values of democracy, egalitarianism and freedom, which are better reflected by multi-polarity. But old habits die hard," he said. "Transformative times require executive leadership."
Sheng Yang in Washington contributed to this story.