With its huge new infrastructure bank and its ambitions for a globalized renminbi currency, China is leading the upending of a 70-year-old global order built on American economic power.
Beijing's rise was confirmed this week at the Spring meetings of the World Bank and International Monetary Fund in Washington, the two institutions by which the economic vision of the United States has been propagated across the world since their founding in 1944.
The US-selected president of the World Bank, Jim Yong Kim, applauded China's "bold step in the direction of multilateralism" for its new Asia Infrastructure Investment Bank, even as many view it as a rival to the Bank.
Kim stressed though that he expects the World Bank and the AIIB will work "very closely" together.
That appeared to pull the World Bank away from its major shareholder: together with ally Japan, Washington has refused to join the AIIB even as nearly five dozen other countries have applied to Beijing to be part.
Critics fear the new development banks will challenge the World Bank in lending to poorer countries by offering them easier terms and fewer restrictions governing the social and environmental impacts of large projects, undermining standards established to protect vulnerable populations.
The Chinese approach is more pragmatic though, with each institution filling a need, said Christophe Destais of CEPII, the French international economics think tank.
Countries are searching for new opportunities in public works and energy, and also for their banks, he said, the latter possibly explaining why US ally Britain rushed to join the AIIB, he said.
For its part, China is seeking "an outlet for its industrial overcapacity" while at the same time aiming "to weaken US influence," said Destais.
Nobel Prize-winning economist Joseph Stiglitz said the US hostility to the AIIB is a new sign of its insecurity over its global influence.
About time the stranglehold the US Dollar has over global transactions is challenged. I bet Russia made a beeline to sign up.
Australia and UK recently became founding members.
Taiwan was not offered membership. I wonder why?
