Tags: Evans-Pritchard | US | bank | China

Telegraph's Evans-Pritchard: US Policy on Asian Bank 'Misguided at Every Level'

By    |   Friday, 27 March 2015 07:00 AM

The U.S. government's effort to torpedo the Asian Infrastructure Investment Bank (AIIB) is a major mistake, says Ambrose Evans-Pritchard, international business editor of The Daily Telegraph.

"The U.S. Treasury's attempt to cripple the AIIB before it gets off the ground is clearly intended to head off China's ascendancy as a rival financial superpower, whatever the faux-pieties from Washington about standards of governance," he writes.

U.S. officials say the bank must meet the same governance standards as other multilateral lending institutions, such as the World Bank and the Asian Development Bank.

"Such a policy is misguided at every level, evidence of what can go wrong when a lame-duck president defers to posturing amateurs in Congress on delicate matters of global geo-strategy."

The U.S. has forced allies to make a choice between ourselves and China, "and has ended up losing almost everybody. Germany, France and Italy are joining. Australia and South Korea may follow soon. The AIIB is exactly what the world needs," Evans-Pritchard explains

"China must recycle its trade surpluses and its $3.8 trillion reserves by one means or another. It can buy U.S. Treasurys, Bunds or Gilts, perpetuating a global bond bubble. It can make surgical investments abroad to acquire technology for its champions and pursue a narrow national interest," he adds.

"Or it can recycle the money in concert with other members of the AIIB — with a start-up capital of $50 billion — for sewage projects, clean energy, ports, roads and railways in Asia, helping to plug a $700 billion shortfall in infrastructure investment that the World Bank is too small to cover and which is of collective benefit to the world."

Negotiations are ongoing as to how the bank will be run and as to its board structure.

Meanwhile, financial author/commentator L. Todd Wood told Newsmax TV that China is acting through the new AIIB to replace the dollar with the yuan as the world's main reserve currency.

It could happen, he told the network's "MidPoint" show. "They have the strength and the money. The question is whether people will want to put the majority of their assets into the Chinese currency."

There's a downside here. "They [China] still have the lack of a rule of law, they're still in totalitarian society. There's going to be a lot of fraud and corruption and criminal activity going on," Wood noted.

Still, "right now they have more money than we do," Wood said. "They have the resources to do this."

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The U.S. government's effort to torpedo the Asian Infrastructure Investment Bank (AIIB) is a major mistake, says Ambrose Evans-Pritchard, international business editor of The Daily Telegraph.
Evans-Pritchard, US, bank, China
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2015-00-27
Friday, 27 March 2015 07:00 AM
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