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Saturday, April 11, 2015

US caught flat-footed over Chinese bank plan - FT.com

US caught flat-footed over Chinese bank plan - FT.com

April 7, 2015 1:55 pm
US caught flat-footed over Chinese bank plan
Congress should back the TPP trade
pact as way to engage with Asia

http://www.ft.com/intl/cms/s/2/0d9a619a-dc53-11e4-a6f7-00144feab7de.html

Washington’s response to China’s creation of an Asia Infrastructure
Investment Bank has been nothing short of lamentable. Its attempt to stymie the
initiative by persuading other western nations to boycott the bank has
backfired. Britain rightly decided it was better to try to influence the AIIB from the inside.
Other countries, from Germany to South Korea, have followed suit.

"http://www.ft.com/cms/s/0/d33fed8a-d3a1-11e4-a9d3-00144feab7de.html"
title="UK move to join China-led bank a surprise even to Beijing - ft.com" reaction
in Beijing has been happy, if mildly surprised. The AIIB is about much
more than a bank. At stake is nothing less than the future of the global
economic system embodied in the Bretton Woods institutions that took shape
after 1945. Emerging countries, including China, are woefully
under-represented in these bodies. In a world far a
href="http://www.ft.com/cms/s/0/b168815c-d934-11e4-b907-00144feab7de.html"
title="UK’s risky obsession with US decline - ft.com" less dominated by the US and Europe, the postwar financial order is no longer fit for purpose.If Washington has been caught flat-footed over the AIIB,
it has a <a
href="http://www.ft.com/cms/s/0/fabfd8ac-d6c1-11e4-97c3-00144feab7de.html"
title="Round two in America’s battle for Asian influence - ft.com" chance to
make amends. Concluding the Trans-Pacific Partnership, a 12-nation “next
generation” trade pact, would be a good start. That would show that the US
remains committed to Asia and is willing to give better access to its market
to countries prepared to sign up to higher standards in areas from state
tendering to intellectual property protection. The TPP is not perfect. In too
many aspects it looks like a charter for corporate America rather than the
high-level trade agreement it purports to be. Still, the pact is better than
nothing.There is one caveat. It must be made clear to Beijing that China is welcome
to join so long as it can meet TPP obligations. If the impression is given
that the TPP is an “anyone-but-China club” it will exacerbate Sino-US
tensions. China’s membership would draw it further into the international
system on terms acceptable to Washington. For these reasons, Congress should
grant Barack Obama the fast-track authority he needs to conclude a deal.</p>
<p>There are other things the US can do. First, Congress should pass
long-stalled reforms of the International Monetary Fund. These would give
China and other emerging countries a bigger say. Inability to reform existing
institutions is one of the reasons China felt obliged to set up the AIIB and
other proto-institutions, including the Brics bank. Second, the IMF should agree
to add the renminbi to the basket of four currencies in the Special Drawing
Rights, its international reserve asset. Strictly speaking, China’s currency
could be excluded on the grounds that it is not fully convertible. Yet to keep
it out of the SDR would be a further, unnecessary, slap in the face for
Beijing.The onus is not entirely on Washington. China too must take steps to assure
sceptics it wants to complement, not overturn, the existing order. It can
start by ensuring good governance of the AIIB. That does not mean aping the
Bretton Woods institutions, which have rightly been criticised for tying up
lending decisions in too much red tape. China must rather convince doubters
its new bank is not a vehicle for brute power that will run roughshod over
concerns about the environment, corruption or human rights. Instead, Beijing
should establish a governance structure that takes the best of existing
institutions but enables lending to be nimble and proactive. It should give
genuine oversight to other members. </p>
<p>There are huge infrastructure financing needs in Asia. If China can
establish a bank that begins to meet those needs in a transparent manner it
will have taken an important step towards becoming the responsible stakeholder
the world claims to want. For Beijing, it would also be by far the shrewdest
way to further its own regional interests.


COMMENT:

Having gone through the article it is found the article has been written
suggesting few but very vital points to be taken by WEST in time to mitigate
the time lost and make up the deficiency needed to be corrected to confront
the CHINA'S A I I B. However drawing the attention of the readers to
the salient point ,please the quotes placed below which are self explanatory.

“If Washington has
been caught flat-footed over the AIIB, it has a chance to
make amends. Concluding the Trans-Pacific Partnership, a 12-nation “next
generation” trade pact, would be a good start. That would show that the US
remains committed to Asia and is willing to give better access to its market
to countries prepared to sign up to higher standards in areas from state
tendering to intellectual property protection. The TPP is not perfect. In too
many aspects it looks like a charter for corporate America rather than the
high-level trade agreement it purports to be. Still, the pact is better than
nothing.”

 The point raised
would serve a very good counter to China’s AIIB. And with some attractive
dressing the trade pact would like to give a good dividend at this
moment.

Secondly drawing the
attention of the readers to the Quote placed below:

“First, Congress should pass long-stalled reforms of the
International Monetary Fund. These would give China and other emerging
countries a bigger say. Inability to reform existing institutions is one of
the reasons China felt obliged to set up the AIIB and other
proto-institutions, including the Brics bank".  Second, the IMF should agree to
add the renminbi to the basket of four currencies in the Special Drawing
Rights, its international reserve asset. Strictly speaking, China’s currency
could be excluded on the grounds that it is not fully convertible. Yet to keep
it out of the SDR would be a further, unnecessary, slap in the face for
Beijing.

It would be very
unfortunate if the republican congress in power acts like an anti state element
and do not pass the long stalled reforms then it would be catastrophic mistake
for which the country would severely suffer in the very near future. The
Republican Congress should desist from treacherous works on such national issues.
Americans if need be must be taken into confidence and apprised of the
congress’s aversive attitude and activities in matters of national most important Issue if situation demands.

Before concluding my
comment like to mention that RUSSIA and CHINA is working on a very meticulously
planned long term objectives countering first IMF, Investing Banking system, sometime
next would be UN.

 A note of caution the interference by superpower using veto
supporting to protect wrongdoers would be a major point of decent against the
present UN system and many more issues that WEST and EU dominate the UN
administration particularly to protect the terrorist state of Israel.

It is strongly
advised that this is the time to start the reforms of UN from now or never.
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