Economic Hegemony in Asia

Japan started swinging between two international economic frameworks, one of which had been operated under the leadership of United States and another would be promoted by the initiative of China. New framework of investing developments in Asian region, Asian Infrastructure Investment Bank, surprisingly enjoyed participation of major European economies, Germany, France and Italy, in addition to United Kingdom. This quick movement may not only affect Japan’s behavior in Asian economy, but economic order in Asian region.

With initiative of Chinese President, Xi Jinping, twenty-one nations signed the memorandum of establishment of AIIB last October. China is going to regard the nations stepping forward by the end of this month as founding members of the bank. Negotiation over the establishment will be finished by the end of June and AIIB will begin to work within this year. While the capital of the bank will be $50 billions, it will be doubled eventually. The headquarters will be settled in Beijing.

Receiving the news of participation of Europeans, Japanese government showed negative response, indicating instability in management of AIIB. It was an announcement that Japan would firmly be on the side of United States through Asian Development Bank. But it was changed only three days after. “There is a possibility of having discussion,” told Minister of Finance, Taro Aso, on Friday. Chinese government immediately welcomed Aso’s comment. “Principle of AIIB is openness and tolerance. We welcome any nation preparing for participation,” told Spokesman for Chinese Foreign Ministery, Hong Lei.

While AIIB will basically not distinguish participants from others in investment to Asian nations, Japanese officials believe that AIIJ members will be treated as something different from the states without membership. In terms of exporting products with Japan’s technology, including transportation system, devices for renewable energy or disaster preventing buildings. Japanese companies have crucial interests in competition with China or European countries.

United States and Japan could not predict this quick and broad expansion of AIIJ membership. They have been leading development in Asia through Asian Development Bank. Interest shown on AIIB proved insufficiency of traditional ADB regime. With great amount of reservation of foreign currency, China prospects to grab its hegemony in business in Asia, the growth center of the world. As seen in Africa, it is possible that China is going to sprawl its influence to the region through development.