U.S. allies rush to join China’s new bank as deadline looms

U.S. allies rush to join China’s new bank as deadline looms

To date, the U.S. and Japan are the only two major players on the outside as the AIIB comes together.

Treasury Secretary Jacob Lew, in a possible attempt to mend fences, was in Beijing Monday for talks on a range of economic issues with Chinese Premier Li Keqiang and other officials. Mr. Lew gave no sign that Washington was ready to join the AIIB, but said the Obama administration was willing to work with the bank once it was established.

“We very much welcome China’s increased participation in infrastructure investment, and the concerns we’ve raised about the need for standards continue,” Mr. Lew said, according to The Associated Press, saying talks between Washington and Beijing on the AIIB have been “cooperative and collaborative.”

“The initial decisions of what kinds of projects are invested in will obviously be a very important signal as to how they’ll proceed,” Mr. Lew added.

Chinese officials have been careful not to gloat about the spectacle of longtime U.S. allies ignoring Washington in the rush to have a stake at the new bank, in no small part because China’s massive reserve, huge domestic market and global clout are too attractive to ignore.

“The AIIB is expected to increase investment, boost demand and spur economic expansion in the region,” said Zhu Min, a former top official at the People’s Bank of China and now deputy managing director of the IMF.

But outside observers say the episode marks a clear diplomatic defeat of the U.S. and an equally clear sign of a shift in the global economic pecking order. British Prime Minister David Cameron began the rush of top powers to join the AIIB earlier this month, giving little advance warning to the U.S. or to Britain’s European Union partners.

“Confusion is the result, and further friction and conflict inside the EU, in the G7 and across the Atlantic are foreseeable,” wrote Volker Stanzel, a senior adviser at the German Marshall Fund of the United States in a new analysis of the AIIB fight. “‘Divide and rule’ is an art mastered long ago by Beijing.”

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