U.S. should have joined the AIIB
The main Financial Times editorial today is right:
The Obama administration’s reflexive hostility to the establishment of the AIIB risks giving the impression that the US is less interested in Asian development than in restraining Beijing. The US would be unwise to give China further excuses to claim that it is bent on containment.
... There are reports that China has forsworn its veto power. If this is the case, then it would be more democratic than the approach taken by the US, which retains a final say at both the IMF and World Bank despite having less than 20 per cent of the votes.
It's not easy to be a multilateral institution...
And this week's Economist weighs in on the future path of the African Development Bank:
The AfDB has had a troubled history. Two decades ago it almost went broke because of poor management and dud loans. In 2003 it was forced temporarily to decamp from its headquarters in the Ivory Coast because of civil war there. But the past decade has treated it more kindly. Under the able leadership of Donald Kaberuka, a former finance minister of Rwanda, its finances have improved. So too has its standing. Its shareholders ponied up in 2010 to increase its capital and to support its plans rapidly to step up lending, mainly for infrastructure. And during his two terms as president Mr Kaberuka has chivvied African members to improve governance and lower barriers to trade.
... conservative lending may have made sense when it was trying to restore its credit rating, but the AfDB should now concentrate on filling gaps left by private investors. One way of doing that could be to use its balance-sheet to help take on some of the risks that private markets find difficult to price
... unless China's initiative inspires a large economy to pitch in
Interesting news via the American Interest:
At the time of the AIIB’s establishment, one of the few countries that heeded America’s request for friends to stay out of was Japan. Now Japanese PM Shinzo Abe is taking things a step farther by announcing that Tokyo will be putting a conspicuously larger sum, $110 billion, into its Asian Development Bank.
## The Brazil-China relationship
Premier Li Keqiang visits Brazil, the FT reports:
Both sides will need to be more flexible. China will have to relax conditions that analysts say it routinely attaches to projects, such as the use of Chinese made equipment or even Chinese labour. Brazil will need to reduce bureaucracy and embrace Chinese business, which it still views with suspicion.
A good start for Brazil might be the relaxation of a ban on foreign purchases of tracts of farmland larger than 5,000 hectares that many thought was directed at the Chinese
Here is Monica de Bolle, asking some questions:
What are the implications of having a flood of Chinese investments going into sectors where environmental issues are of great concern? Will Latin American countries with their wobbly institutions and wayward political systems be able to meet the challenges that Chinese money will bring?
## Who needs to trade? (U.S. edition)
On page 2, the Financial Times included a few semi-amusing quotes:
Mr Hensarling and his allies have other objections, among them what they see as its “ideological” mandate to make a portion of loans to renewable energy companies each year. The bank’s opponents have an easy legislative path to achieve their goal. “All Congress has to do is what Congress does best — nothing. And this thing goes away,” says Jim Jordan, an Ohio congressman who chairs the new House Freedom Caucus, a group of 40 or so conservatives which has made shutting down the ExIm Bank its first legislative goal.
Without action by Congress, the ExIm Bank’s mandate will expire June 30
If pollution-reducing technologies are "ideological", then non-innovation and non-adoption of new technologies is what exactly?
Also, here is a final quote, presented here without comment: