Page 66 - 2017 White Paper
P. 66
7 White Paper on the Business Environment in China
under OBOR would benefit China’s poor inland regions, The good news is that with some legislative actions,
integrating them with the global economy and helping increased U.S. leadership within existing multilateral
to mitigate China’s rapidly growing wealth gap. They development banks (MDBs), and relatively small
will also contribute to more balanced and sustainable amounts of money, the United States could respond in a
development and allow China to relocate its labor- serious and constructive way to the AIIB.
intensive and low value-added manufacturing facilities
overseas, helping solve the severe environmental The AIIB was just an idea two years ago. Its rapid
problem facing China today. success is a result of major gaps in what the established
international architecture is offering in terms of global
Challenges progress, China’s new status as one of the top trading
partners to dozens of countries, and unmet development
China faces many challenges in implementing needs around the world. Daniel Runde at Forbes argues
the AIIB and OBOR. First, the United States and Japan that there are specific U.S.-centric factors leading to
remain non-committal to the AIIB, although that is an practical demand for the new institution (Runde 2015).
improvement from their previous firm opposition. The
AIIB will probably function well without the participation One is that energy and power policy decisions have
of the United States and Japan. But, The Diplomat argues, curtailed U.S. ability to meet global infrastructure and
the participation of these two countries is important for energy demand. Exceptionally rigorous standards have
China since it will help improve the new bank’s credit prevented the World Bank, Asian Development Bank
rating and give it added legitimacy (Zhu 2015). and IFC from providing energy needs that developing
countries are demanding right now (Runde 2015).
Many recipient countries in Asia have poor credit,
which means many projects may be promising at the Some have suggested that the AIIB and the U.S.-led
beginning but will be difficult to pursue, observes The Trans-Pacific Partnership (TPP) could be complementary.
Diplomat. Agreement and consensus are reached at the The recently agreed TPP will establish the next
top levels of government, but implementation is at the generation of rules of commerce, or “software” for
local level (Zhu 2015). deeper economic integration. The AIIB, working as a
complement to the World Bank and Asian Development
While the AIIB’s membership has been unequivocally Bank, could help finance the “hardware” or infrastructure,
hailed as a success for Chinese global influence, it also in Asia’s emerging economies (Runde 2015).
means that China may face increased internal constraints
at the new institution. With countries like Germany, the While the US Congress voted for the reauthorization
United Kingdom, and Australia now involved, China of the US Export-Import Bank last October 2015 (Timiraos
may face real pressure to ensure that the AIIB maintains 2015) and in mid-December 2015, finally approved
a variety of standards and practices similar (but not reforms to the IMF shareholder quota, increasing shares
the same) to those at existing MDBs. Forbes notes that by emerging markets such as China and India (Mayeda
China’s turn towards multilateral economic engagement 2015a), Forbes has outlined that the U.S. will still have
through the AIIB is recognition of the value in partnering to offer those things that are important to developing
with established economies whose investments bear the countries, not just important to U.S. (called “demand
“good housekeeping seal of approval” (Runde 2015). driven” development) (Runde 2015):
Implications • Reauthorize OPIC on a long-term basis, remove
or further loosen OPIC’s carbon cap, triple OPIC’s
The AIIB, however, will undoubtedly face challenges financing limit and increase its staff to 400. The ensuing
and growing pains. There is an opportunity for the increases in financial capital and staff should be focused
United States and its partners to help the new institution on Africa and Asia.
face these implementation challenges, and establish
the fledgling infrastructure fund as a positive player in • Double U.S. Trade and Development Agency’s
global development. An effective approach will require budget and staff. This relatively small agency is charged
coordinated action with Japan and other allies. with increasing U.S. exports while also supporting
economic growth in developing markets.
66
under OBOR would benefit China’s poor inland regions, The good news is that with some legislative actions,
integrating them with the global economy and helping increased U.S. leadership within existing multilateral
to mitigate China’s rapidly growing wealth gap. They development banks (MDBs), and relatively small
will also contribute to more balanced and sustainable amounts of money, the United States could respond in a
development and allow China to relocate its labor- serious and constructive way to the AIIB.
intensive and low value-added manufacturing facilities
overseas, helping solve the severe environmental The AIIB was just an idea two years ago. Its rapid
problem facing China today. success is a result of major gaps in what the established
international architecture is offering in terms of global
Challenges progress, China’s new status as one of the top trading
partners to dozens of countries, and unmet development
China faces many challenges in implementing needs around the world. Daniel Runde at Forbes argues
the AIIB and OBOR. First, the United States and Japan that there are specific U.S.-centric factors leading to
remain non-committal to the AIIB, although that is an practical demand for the new institution (Runde 2015).
improvement from their previous firm opposition. The
AIIB will probably function well without the participation One is that energy and power policy decisions have
of the United States and Japan. But, The Diplomat argues, curtailed U.S. ability to meet global infrastructure and
the participation of these two countries is important for energy demand. Exceptionally rigorous standards have
China since it will help improve the new bank’s credit prevented the World Bank, Asian Development Bank
rating and give it added legitimacy (Zhu 2015). and IFC from providing energy needs that developing
countries are demanding right now (Runde 2015).
Many recipient countries in Asia have poor credit,
which means many projects may be promising at the Some have suggested that the AIIB and the U.S.-led
beginning but will be difficult to pursue, observes The Trans-Pacific Partnership (TPP) could be complementary.
Diplomat. Agreement and consensus are reached at the The recently agreed TPP will establish the next
top levels of government, but implementation is at the generation of rules of commerce, or “software” for
local level (Zhu 2015). deeper economic integration. The AIIB, working as a
complement to the World Bank and Asian Development
While the AIIB’s membership has been unequivocally Bank, could help finance the “hardware” or infrastructure,
hailed as a success for Chinese global influence, it also in Asia’s emerging economies (Runde 2015).
means that China may face increased internal constraints
at the new institution. With countries like Germany, the While the US Congress voted for the reauthorization
United Kingdom, and Australia now involved, China of the US Export-Import Bank last October 2015 (Timiraos
may face real pressure to ensure that the AIIB maintains 2015) and in mid-December 2015, finally approved
a variety of standards and practices similar (but not reforms to the IMF shareholder quota, increasing shares
the same) to those at existing MDBs. Forbes notes that by emerging markets such as China and India (Mayeda
China’s turn towards multilateral economic engagement 2015a), Forbes has outlined that the U.S. will still have
through the AIIB is recognition of the value in partnering to offer those things that are important to developing
with established economies whose investments bear the countries, not just important to U.S. (called “demand
“good housekeeping seal of approval” (Runde 2015). driven” development) (Runde 2015):
Implications • Reauthorize OPIC on a long-term basis, remove
or further loosen OPIC’s carbon cap, triple OPIC’s
The AIIB, however, will undoubtedly face challenges financing limit and increase its staff to 400. The ensuing
and growing pains. There is an opportunity for the increases in financial capital and staff should be focused
United States and its partners to help the new institution on Africa and Asia.
face these implementation challenges, and establish
the fledgling infrastructure fund as a positive player in • Double U.S. Trade and Development Agency’s
global development. An effective approach will require budget and staff. This relatively small agency is charged
coordinated action with Japan and other allies. with increasing U.S. exports while also supporting
economic growth in developing markets.
66
