The Economist Explains: Why China is creating a new “World Bank” for Asia -The Economist

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“…the AIIB has stoked controversy because Asia already has a multilateral lender, the Asian Development Bank (ADB). Why is China creating a new development bank for Asia?

China’s official answer is that Asia has a massive infrastructure funding gap. The ADB has pegged the hole at some $8 trillion between 2010 and 2020. Existing institutions cannot hope to fill it: the ADB has a capital base (money both paid-in and pledged by member nations) of just over $160 billion and the World Bank has $223 billion. The AIIB will start with $50 billion in capital—hardly enough for what is needed but still a helpful boost. Moreover, while ADB and World Bank loans support everything from environmental protection to gender equality, the AIIB will concentrate its firepower on infrastructure.”
“But the real, unstated tension stems from a deeper shift: China will use the new bank to expand its influence at the expense of America and Japan, Asia’s established powers. China’s decision to fund a new multilateral bank rather than give more to existing ones reflects its exasperation with the glacial pace of global economic governance reform. The same motivation lies behind the New Development Bank established by the BRICS (Brazil, Russia, India, China and South Africa). Although China is the biggest economy in Asia, the ADB is dominated by Japan; Japan’s voting share is more than twice China’s and the bank’s president has always been Japanese. Reforms to give China a little more say at the International Monetary Fund have been delayed for years, and even if they go through America will still retain far more power. China is, understandably, impatient for change. It is therefore taking matters into its own hands.”

http://www.economist.com/blogs/economist-explains/2014/11/economist-explains-6

The Guardian also has a few interesting things to say about the new bank. In addition to echoing the Economist’s comments about competition between China and the US/Japan, it also argues:
“the world suffers from insufficient aggregate demand. Financial markets have proven unequal to the task of recycling savings from places where incomes exceed consumption to places where investment is needed.
When he was chair of the US Federal Reserve, Ben Bernanke mistakenly described the problem as a “global saving glut.” But in a world with such huge infrastructure needs, the problem is not a surplus of savings or a deficiency of good investment opportunities. The problem is a financial system that has excelled at enabling market manipulation, speculation, and insider trading, but has failed at its core task: intermediating savings and investment on a global scale. That is why the AIIB could bring a small but badly needed boost to global aggregate demand.”

In defence of the Asian Infrastructure Investment Bank
http://www.theguardian.com/business/2015/apr/14/in-defence-of-the-asian-infrastructure-investment-bank

India and China’s geopolitics at play amidst Nepal’s ruins -Globe and Mail

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The earthquake in Nepal last week killed at least 5,800 people. As Nepal struggles to recover, it also “finds itself jammed between India and China in the geopolitical sense. Like the Himalayas themselves, Nepal lies between the two hulking giants of Asia that, from the days of Mao and Nehru, have historically had competing ideological visions for how to lead the poorer parts of the continent toward economic and political development.” Not surprisingly, both India and China are using the opportunity to try to extend their influence in the country. Once again, humanitarian aid has a political purpose.

http://www.theglobeandmail.com/news/world/india-and-chinas-geopolitics-at-play-amidst-nepals-ruins/article24201619/

China Can’t Be Contained; It Has to Be Accommodated -The New Yorker

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Interesting take on the rise of China. Also of note: another historical analogy involving Germany. This time however it is Germany pre-WW1 not Pre-WW2, and the argument is not that we must always stand up to tyrants, but that being overly defensive guarantees a hostile response.

What, then, should Obama do? Despite all the uproar about corporate espionage and hacking, the first thing on his to-do list should be reassuring the Chinese government, and the Chinese people, that the United States seeks cooperation rather than confrontation. As Ross wrote: “The right China policy would assuage, not exploit, Beijing’s anxieties, while protecting U.S. interests in the region.” That doesn’t mean ignoring examples of egregious behavior by Chinese, but it means dealing with them in the right setting. For example, complaints about intellectual property theft can be pursued through the World Trade Organization, which China joined more than a decade ago.

http://www.newyorker.com/news/john-cassidy/china-cant-be-contained-it-has-to-be-accommodated

Is China’s economy really the largest in the world? -BBC

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http://www.bbc.com/news/magazine-30483762

“The Chinese economy is now worth $17.6tn, slightly higher than the $17.4tn the International Monetary Fund (IMF) estimates for the US.”

but…

“if you look at per capita spending power – the value of all goods and services produced within a nation in a given year divided by the average population for the same year – then, even adjusted for PPP, China ($11,868) is still lagging a long way behind not only the United States ($53,001) but also the likes of Turkmenistan ($12,863) and Suriname ($16,080).”

and…

“…how easy is it to accurately measure the size of the Chinese economy or even just parts of it?”
“Not very, ….distortions that happen at the village and provincial levels become amplified as they go out the statistical gathering chain.”

Moreover….

“The most important number in the world, for the past 30 years and next five years, is China’s growth rate. For 30 years its economy grew at a mind-boggling rate – roughly 10% a year but that stopped when the global economy hit problems in 2008 and it fell very sharply.”