Looking Up Boost

Leaving two major customers, Japan and United States, flight AIIB took off the airport with fifty-seven passengers from all over the world. “The captain has turned off the fasten seat belt sign. However, we recommend to keep your seat belt fastened while you’re seated” was the figurative announcement from Chinese Ministry of Finance. On the ground, the Japanese are discussing whether the decision of not boarding was right, waiting for next flight.

Adding seven countries, including Sweden, South Africa or Israel, at the last moment, Chinese MoF proudly emphasized the popularity of new international financial framework, Asian Infrastructure Investment Bank. Initial capital will amount to $100 billion. China will be the biggest donor for it. Former Alternative of Executive Director for China at World Bank, Jin Liqun, is expected to be the first governor of AIIB. It is undoubtedly China-led financial system.

Japanese government recognizes the move of Chinese government as a challenge against existing order led by U.S. The volume of founding members, which looked like catching up Asian Development Bank with sixty-seven members, amazed everyone in Japanese financial community. Newspapers followed China’s motivation for the bank, focusing on Silk Road Economic Belt. With the initiative, China is expecting to enhance communication between east and west end of Eurasian Continent.

Nikkei Newspaper reported the process how Japan abandoned being initial member of the bank. According its series of stories, China approached Japan urging participation to the bank. Top leaders of other nations, such as India or Germany, also recommended Japan to be involved in. Leaders of Japanese government, including Prime Minister Shinzo Abe, firmly believed that major European countries would not join, which was later proved to be a crucial misunderstanding. The paper unequivocally described the reason of Japan as consideration for American unwillingness.

Japan will keep on watching how the governance of AIIB will be determined. Discussion for agreement of establishment will be lasting until the end of June. Quota of initial capital, voting right in board of governors or policy for investment will be the focal points for Japan and U.S. While it is unlikely that current financial order topped by United States will immediately be overturned, relative decline of U.S. power in world order will become clearer than ever, if AIIB is working as an alternative of existing order. Japan cannot making its mind between old boss and new leader.