NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Friday, May 9, 2014

If you can’t beat them, outspend them. That seems to be the thinking behind a huge new infrastructure investment fund being promoted by China as an alternative to established international lending agencies. It’s a terrible rationale for starting a bank — and a good reason to reform the current international system, which remains dominated by Americans, Europeans and Japanese.

Japan, in particular, seems to be the target of China’s proposed Asian Infrastructure Investment Bank. Until now, Asian nations needing help building up their infrastructure have turned to the Japanese either directly or through the Manila-based Asian Development Bank, which is traditionally run by a Japanese official, much like the World Bank tends to be run by an American and the International Monetary Fund by a European.