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19 April 2015

China's AIIB Challenge: How Should America Respond?

April 18, 2015

It may be time for America to adopt the attitude: "If you can't beat 'em, join 'em."

The well-worn advice that “if you can’t beat them, join them” may be the right counsel as Washington ponders what to do next about the new China-backed investment bank intended to finance Asian infrastructure needs while also promoting Chinese influence. And as they think about it, U.S. officials might also relax a bit.

Doing so would be much wiser than the Obama Administration’s first reaction—attempting to block the bank’s creation, or failing that, prevent it from becoming an important financial agency with broad membership and significant influence. That effort failed miserably, due either to bad judgment or inattention, so now, the new bank is off and running at high speed. Fifty-seven nations, including most of America’s closest friends and allies, have joined China as founding members of what is officially the Asian Infrastructure Investment Bank (AIIB), with even Taiwan trying to devise what Beijing would consider “an appropriate name” so it too can be a member. Of the world’s major economies, only the United States and Japan remain outside (and Tokyo is considering a plan to join later with a $1.5 billion capital contribution).

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