Page 52 - 2016_WhitePaper_web
P. 52
6 White Paper on the Business Environment in China
While the AIIB’s membership has been unequivocally • Reauthorize OPIC on a long-term basis, remove or
hailed as a success for Chinese global influence, it also means further loosen OPIC’s carbon cap, triple OPIC’s
that China may face increased internal constraints at the new financing limit and increase its staff to 400. The
institution. With countries like Germany, the United Kingdom, ensuing increases in financial capital and staff should
and Australia now involved, China may face real pressure to be focused on Africa and Asia.
ensure that the AIIB maintains a variety of standards and
practices similar (but not the same) to those at existing MDBs. • Double U.S. Trade and Development Agency’s budget
Forbes notes that China’s turn towards multilateral economic and staff. This relatively small agency is charged with
engagement through the AIIB is recognition of the value in increasing U.S. exports while also supporting economic
partnering with established economies whose investments bear growth in developing markets.
the “good housekeeping seal of approval.” 4
• Japan and the U.S. should seek a new capital increase
Implications for the ADB or a special capital increase. The ADB
recently increased its lending by 40 percent, which
The AIIB, however, will undoubtedly face challenges and is a positive development. However, Asia is facing a
growing pains. There is an opportunity for the United States and projected $8 trillion infrastructure gap over the next
its partners to help the new institution face these implementa- decade. The ADB and World Bank together offer less
tion challenges, and establish the fledgling infrastructure fund than $400 billion in capital, and have mandates that
as a positive player in global development. An effective approach encompass a range of initiatives other than infrastruc-
will require coordinated action with Japan and other allies. ture development.
The good news is that with some legislative actions, in- • Review business processes at the ADB, IFC, EXIM,
creased U.S. leadership within existing multilateral develop- OPIC, and the World Bank, including implicit and ex-
ment banks (MDBs), and relatively small amounts of money, plicit policies that constrain support for coal, hydro, oil,
the United States could respond in a serious and constructive gas and nuclear energy investments. The G24 and G20
way to the AIIB. have both expressed frustration with the lack of move-
ment on these issues. 4
The AIIB was just an idea two years ago. Its rapid success
is a result of major gaps in what the established international Recent Developments
architecture is offering in terms of global progress, China’s new
status as one of the top trading partners to dozens of countries, Instead of joining the AIIB, the Obama Administration of-
and unmet development needs around the world. Daniel Runde fered up another option to 11 countries in Asia: the Trans-Pacific
at Forbes argues that there are specific U.S.-centric factors Partnership (TPP), although this “next generation” trade agree-
leading to practical demand for the new institution. 4 ment did not include China – the region’s most important trading
nation. China, in turn, didn’t invite the United States to its version
One is that energy and power policy decisions have curtailed of the TPP – the Regional Comprehensive Economic Partnership
U.S. ability to meet global infrastructure and energy demand. (RCEP), a trade initiative which links 16 nations in Asia.
Exceptionally rigorous standards have prevented the World
Bank, Asian Development Bank and IFC from providing ener- Even U.S. allies, however, such as Australia and Japan, say the
gy needs that developing countries are demanding right now. 4 TPP intrudes too much into their internal affairs. The TPP re-
quires more than tariff reductions and gets involved with intellec-
Some have suggested that the AIIB and the U.S.-led tual property rights, data protection rules, corporate governance,
Trans-Pacific Partnership (TPP) could be complementary. The labor and environmental standards, and financial regulations.
recently agreed TPP will establish the next generation of rules
of commerce, or “software” for deeper economic integration. Many major economies in Asia, such as Australia, Singapore,
The AIIB, working as a complement to the World Bank and South Korea, and Vietnam had stated they want to be part
Asian Development Bank, could help finance the “hardware” of both Chinese initiatives (the AIIB and the ‘One Belt, One
or infrastructure, in Asia’s emerging economies. 4 Road’) and the TPP. 6 While TPP negotiations were completed
and an agreement was reached in early October 2015, it still
While the US Congress voted for the reauthorization faces a tough and lengthy approval process in the U.S.9; the
of the US Export-Import Bank last October 2015 7 and in Obama administration has stated, Reuters reports, that it will
mid-December 2015, finally approved reforms to the IMF work with the U.S. Congress to ensure the most appropriate
shareholder quota, increasing shares by emerging markets such timing in getting a vote in early 2016 . 10
as China and India 8, Forbes has outlined that the U.S. will still
have to offer those things that are important to developing Together with the New Development Bank being founded
countries, not just important to U.S. (called “demand driven” with other BRICs economies, China now has the $50-billion
development): 4 AIIB, the $40-billion Silk Road Fund (or OBOR Fund), and
the $100-billion New Development Bank, founded in cooper-
52
While the AIIB’s membership has been unequivocally • Reauthorize OPIC on a long-term basis, remove or
hailed as a success for Chinese global influence, it also means further loosen OPIC’s carbon cap, triple OPIC’s
that China may face increased internal constraints at the new financing limit and increase its staff to 400. The
institution. With countries like Germany, the United Kingdom, ensuing increases in financial capital and staff should
and Australia now involved, China may face real pressure to be focused on Africa and Asia.
ensure that the AIIB maintains a variety of standards and
practices similar (but not the same) to those at existing MDBs. • Double U.S. Trade and Development Agency’s budget
Forbes notes that China’s turn towards multilateral economic and staff. This relatively small agency is charged with
engagement through the AIIB is recognition of the value in increasing U.S. exports while also supporting economic
partnering with established economies whose investments bear growth in developing markets.
the “good housekeeping seal of approval.” 4
• Japan and the U.S. should seek a new capital increase
Implications for the ADB or a special capital increase. The ADB
recently increased its lending by 40 percent, which
The AIIB, however, will undoubtedly face challenges and is a positive development. However, Asia is facing a
growing pains. There is an opportunity for the United States and projected $8 trillion infrastructure gap over the next
its partners to help the new institution face these implementa- decade. The ADB and World Bank together offer less
tion challenges, and establish the fledgling infrastructure fund than $400 billion in capital, and have mandates that
as a positive player in global development. An effective approach encompass a range of initiatives other than infrastruc-
will require coordinated action with Japan and other allies. ture development.
The good news is that with some legislative actions, in- • Review business processes at the ADB, IFC, EXIM,
creased U.S. leadership within existing multilateral develop- OPIC, and the World Bank, including implicit and ex-
ment banks (MDBs), and relatively small amounts of money, plicit policies that constrain support for coal, hydro, oil,
the United States could respond in a serious and constructive gas and nuclear energy investments. The G24 and G20
way to the AIIB. have both expressed frustration with the lack of move-
ment on these issues. 4
The AIIB was just an idea two years ago. Its rapid success
is a result of major gaps in what the established international Recent Developments
architecture is offering in terms of global progress, China’s new
status as one of the top trading partners to dozens of countries, Instead of joining the AIIB, the Obama Administration of-
and unmet development needs around the world. Daniel Runde fered up another option to 11 countries in Asia: the Trans-Pacific
at Forbes argues that there are specific U.S.-centric factors Partnership (TPP), although this “next generation” trade agree-
leading to practical demand for the new institution. 4 ment did not include China – the region’s most important trading
nation. China, in turn, didn’t invite the United States to its version
One is that energy and power policy decisions have curtailed of the TPP – the Regional Comprehensive Economic Partnership
U.S. ability to meet global infrastructure and energy demand. (RCEP), a trade initiative which links 16 nations in Asia.
Exceptionally rigorous standards have prevented the World
Bank, Asian Development Bank and IFC from providing ener- Even U.S. allies, however, such as Australia and Japan, say the
gy needs that developing countries are demanding right now. 4 TPP intrudes too much into their internal affairs. The TPP re-
quires more than tariff reductions and gets involved with intellec-
Some have suggested that the AIIB and the U.S.-led tual property rights, data protection rules, corporate governance,
Trans-Pacific Partnership (TPP) could be complementary. The labor and environmental standards, and financial regulations.
recently agreed TPP will establish the next generation of rules
of commerce, or “software” for deeper economic integration. Many major economies in Asia, such as Australia, Singapore,
The AIIB, working as a complement to the World Bank and South Korea, and Vietnam had stated they want to be part
Asian Development Bank, could help finance the “hardware” of both Chinese initiatives (the AIIB and the ‘One Belt, One
or infrastructure, in Asia’s emerging economies. 4 Road’) and the TPP. 6 While TPP negotiations were completed
and an agreement was reached in early October 2015, it still
While the US Congress voted for the reauthorization faces a tough and lengthy approval process in the U.S.9; the
of the US Export-Import Bank last October 2015 7 and in Obama administration has stated, Reuters reports, that it will
mid-December 2015, finally approved reforms to the IMF work with the U.S. Congress to ensure the most appropriate
shareholder quota, increasing shares by emerging markets such timing in getting a vote in early 2016 . 10
as China and India 8, Forbes has outlined that the U.S. will still
have to offer those things that are important to developing Together with the New Development Bank being founded
countries, not just important to U.S. (called “demand driven” with other BRICs economies, China now has the $50-billion
development): 4 AIIB, the $40-billion Silk Road Fund (or OBOR Fund), and
the $100-billion New Development Bank, founded in cooper-
52
