Thierry Meyssan — China is setting up the menu for Global Financial Order

During the first Annual Summit organized by the Asian Infrastructure Investment Bank (AIIB) in Beijing, China has shown her intention to take over the global leadership in infrastructure investment. By the end of this year, AIIB would have more than 100 members, making it the first lending institution in multilateral loans in history, under the control of the most important emerging countries. Yet, it is expected that she makes the decision of dropping off the Dollar, as it is the only way to break away from US hegemony in international finance.

This is an especially bold move since it is taking on only US hegemony and Western neoliberal dominance, but also "the masters of the universe" that control global finance. Get ready for the fireworks. Some sparks have already begun to fly.

Voltaire Network
China is setting up the menu for Global Financial Order

Thierry Meyssan, founder and chairman of Voltaire Network and the Axis for Peace Conference

Dan Steinbock — The Beginning of the AIIB Epoch

Emergence in a complex adaptive system. Adaptive rate and return on coordination increasing.

The launch of the Asian Infrastructure Investment Bank heralds a new era in which international multilateral institutions are no longer owned, controlled and operated by advanced economies alone.

For years, the G7 nations have pledged substantial governance reforms in international multilateral institutions, such as the International Monetary Fund, the World Bank and the Asian Development Bank. But the promises were left unfulfilled, not least because these organizations are dominated by American, European and Japanese interests, as reflected by their voting quotas, investment allocations and the nationalities of their leaders.

In this context, the China-proposed Asian Infrastructure Investment Bank represents the needs of emerging countries which have been failed by the international multilateral institutions that were created and remain frozen in the mid-1940s...

Over the past few years, the White House has seen the BRICS’ New Development Bank as a potential threat to the existing multilateral organizations. It is pushing for a trans-Pacific trade bloc, which excludes China. And it has opposed the reserve currency status of the Chinese yuan.

As a result, senior US figures have argued that Washington has mishandled its response to China’s efforts to serve as a “responsible stakeholder” in the world economy. Among others, former secretary of Treasury Lawrence Summers has said the US cold-shouldering of the AIIB may be recalled as the moment America “lost its role as the underwriter of the global economic system”....

Economonitor
The Beginning of the AIIB Epoch

Dan Steinbock | research director of international business at the India, China and America Institute (USA) and a visiting fellow at the Shanghai Institutes for International Studies (China) and EU Center (Singapore)

The original version was published by China Daily on June 29, 2015.

See also

Recalibrating the ‘Pivot to Asia’: Behind the 7the Sino-US Strategic & Economic Dialogue

While ratcheting down the military confrontation, it is too little, too late. China is already arming up and the PLA is under no illusions about US objectives as long as its policy is global hegemony.

Michael Pettis — Will the AIIB one day matter?

When Isaac, an editor at Foreign Policy, sent me an email two weeks ago asking if I could write a piece on the new Asian Infrastructure Investment Bank (AIIB), I quickly wrote back promising 1,200 words within a few days. I thought it would be pretty easy to come up with the points I wanted to make, and all I would need was one uninterrupted day to pull them together into a coherent article.

As I see it, the creation of the AIIB is not nearly as important as everyone seems to think, and if Beijing’s decision to create the AIIB, and Washington’s decision to oppose it, was part of the struggle for future geo-political dominance in Asia, let alone the world, they were both going to be wrong. There were only two useful parts to this story, it seemed to me. First, it showed that neither Washington nor Beijing understood very well either the functioning of the global balance of payments or the reasons why the West, and especially the US, dominates the regime that governs global trade and capital flows (but I guess we already knew that). Second, Washington had handled this whole process so ineptly that it had managed to transform a minor initiative by Beijing into a huge symbolic disaster for Washington and a great victory for Xi Jinping.

I thought it would be easy to explain this because the discussion over the AIIB was almost a caricature of the discussion over a number of other finance-related topics during the last decade or two, in which an overwhelming consensus quickly develops around some event concerning both its unprecedented nature and the nature of its transformative impact – the sustainability of China’s astonishing growth miracle, the creation of the euro, the abolishing of credit cycles by Washington, the consequences of the reserve status of the US dollar, the rise of the RMB, and so on. Both assumptions always turn out to be wrong – the event under discussion does have a very deep and very useful historical context, and this context suggests that many of the assumptions underlying the discussion are, in fact, quite implausible.…

According to Pettis, much ado about nothing.

These issues are important politically (geopolitically) but less important economically, if at all.

Some good lessons from history, too.

China Financial Markets
Will the AIIB one day matter?
Michael Pettis | Professor of Finance at Peking University’s Guanghua School of Management

Joseph Joyce — The U.S.: Inept Diplomacy, Indispensable Currency

All this demonstrates the discrepancy between the diplomatic and financial power of the U.S. On the one hand, the U.S. must deal with countries that are eager to claim their places in global governance. The dominance of the U.S. and other G7 nations in international institutions is a relic of a world that came to an end with the global financial crisis. On the other hand, the dollar is still the predominant international currency, and will hold that place for many years to come. The use of the renminbi is slowly growing but it will be a long time before it can serve as an alternative to the dollar. Consequently, the actions of the Federal Reserve may have more international repercussions than those of U.S. policymakers unable to cope with the shifting landscape of financial diplomacy.

Angry Bear
The U.S.: Inept Diplomacy, Indispensable Currency
Joseph Joyce

Xinhua — Urgent: Australia has decided to join Asian Infrastructure Investment Bank: PM

Australia has decided to sign a Memorandum of Understanding on the Asian Infrastructure Investment Bank (AIIB), which would allow Australia to become a founding member of the bank, said a statement released by Prime Minister Tony Abbott Sunday morning.

In the carefully worded statement, Abbott said the signing of the MOU will enable Australia "to participate as a prospective founding member in the negotiation of setting up the bank."

"The Government has discussed the AIIB extensively with China and other key partners inside and outside the region," the statement said.

Xinhua
Urgent: Australia has decided to join Asian Infrastructure Investment Bank: PM

Et tu, Tony?

Zero Hedge
US Attacks "Closest Ally" UK For "Constant Accommodation" With China (3/13/15)

Europe Tilts East Towards China (2/2) — Sharmini Peries interviews Michael Hudson

Video and transcript.

The pivot to Asia that the US was not expecting.

Smackdown.

The United States has turned the finance system, the dollarized system, into a Cold War tool, and other countries are moving as quick as they can, are being driven to move as quick as they can out of the U.S. orbit to protect themselves from being stiffed by the U.S. and to be free of U.S. financial aggression, in which the World Bank, is even more than the IMF, the most aggressive neoliberal, neocon institution.

The Real News Network
Europe Tilts East Towards China (2/2)
Sharmini Peries interviews Michael Hudson

Paul Tayor and William James — How Europe and U.S. stumbled into spat over China-led bank

Historians may record March 2015 as the moment when China's chequebook diplomacy came of age, giving the world's number two economy a greater role in shaping global economic governance at the expense of the United States and the international financial institutions it has dominated since World War Two.

The US view:

Officially, the United States says it is concerned about whether the bank will uphold human rights, environment and labor standards and be open and transparent in its governance. 

In private, senior U.S. officials acknowledge this is about power. One Obama administration member said Congressional foot-dragging on IMF reform had "created an opportunity for China to assert itself".

As usual, follow the money.

Within European governments there were debates about tactics and timing but the prevailing view was that it was better to try to influence the Chinese project from inside, several officials said. 

"The debate mostly pitted national security advisers, who leaned towards hugging the Americans close ... against economic and Asia advisers, who argued that this big train was leaving the station and it was in our interest to jump aboard," a European diplomat involved in some of the discussions said.

Perhaps the biggest surprise is that the UK jumped in first, regardless of the "special relationship." But the UK is chiefly supported by finance.

Business Insider
How Europe and U.S. stumbled into spat over China-led bank

Paul Tayor and William James | Reuters

William Pesek — China Steps In as World's New Bank

Sour grapes, or bitter pill? Looks like a bit of both. Any rate, it's a wake-up call for the West.

The sanctions against Iran and now Russia may turn out to be a bigger geopolitical and geostrategic blunder than the invasion and occupation of Iraq and Afghanistan, along with the Asian pivot and excluding China from the TPP.

Bloomberg View
China Steps In as World's New Bank
William Pesek

Pepe Escobar — China’s Silky Road to Glory

China got what it wanted on all fronts.

1) Beijing had all 21 APEC member-nations endorsing the Free Trade Area of the Asia-Pacific (FTAAP) - the Chinese vision of an "all inclusive, all-win" trade deal capable of advancing Asia-Pacific cooperation - see South China Morning Post (paywall). The loser was the US-driven, corporate-redacted, fiercely opposed (especially by Japan and Malaysia) 12-nation Trans-Pacific Partnership (TPP). [See also here.]

2) Beijing advanced its blueprint for "all-round connectivity" (in Xi's words) across Asia-Pacific - which implies a multi-pronged strategy. One of its key features is the implementation of the Beijing-based US$50 billion Asian Infrastructure Investment Bank. That's China's response to Washington refusing to give it a more representative voice at the International Monetary Fund than the current, paltry 3.8% of votes (a smaller percentage than the 4.5% held by stagnated France).

3) Beijing and Moscow committed to a second gas mega-deal - this one through the Altai pipeline in Western Siberia - after the initial "Power of Siberia" mega-deal clinched last May.

4) Beijing announced the funneling of no less than US$40 billion to start building the Silk Road Economic Belt and the 21st Century Maritime Silk Road.

Predictably, once again, this vertiginous flurry of deals and investment had to converge towards the most spectacular, ambitious, wide-ranging plurinational infrastructure offensive ever attempted: the multiple New Silk Roads - that complex network of high-speed rail, pipelines, ports, fiber optic cables and state of the art telecom that China is already building across the Central Asian stans, linked to Russia, Iran, Turkey and the Indian Ocean, and branching out to Europe all the way to Venice, Rotterdam, Duisburg and Berlin.

Giving the West heartburn.

Now imagine the paralyzed terror of the Washington/Wall Street elites as they stare at Beijing interlinking Xi's "Asia-Pacific Dream"way beyond East Asia towards all-out, pan-Eurasia trade - with the center being, what else, the Middle Kingdom; a near future Eurasia as a massive Chinese Silk Belt with, in selected latitudes, a sort of development condominium with Russia.

Asia Times Online
China’s Silky Road to Glory
Pepe Escobar

Lee Jong-Wha — China’s New World Order

China – already the world’s largest exporter, manufacturer, and international-reserve-asset holder – is poised to overtake the United States as the world’s largest economy (measured according to purchasing power parity) this year. Now, it is using its growing clout to reshape global economic governance. Indeed, the country’s days of following Deng Xiaoping’s injunction to “hide brightness and cherish obscurity” are long gone.

Professor Lee brings up some obstacles China will face in bringing a new world order rebalanced to take account of the emerging world. What he omits is that the face of over whether neoliberalism will continue as the guiding force for globalization or some other ordering principle. Many emerging nations are losing faith in neoliberalism, especially after the GFC revealed the emperor to be less than fully clothed and the heavy-hand of US foreign policy has destabilized the Post WWII order.

Project Syndicate
China’s New World Order
Lee Jong-Wha | Professor of Economics and Director of the Asiatic Research Institute at Korea University, served as Chief Economist and Head of the Office of Regional Economic Integration at the Asian Development Bank and was a senior adviser for international economic affairs to former President Lee Myung-bak of South Korea