Abe administration develops rift over China’s new development bank


Japan is split over joining a new China-led development bank, concerned about missing out on the rapidly coalescing global movement for the institution while also worried about alienating its ally the United States and bolstering rival China, officials said.

Finance Minister Taro Aso signalled for the first time on Friday that Tokyo could be part of the Asian Infrastructure Investment Bank (AIIB) if it can guarantee a credible mechanism for providing loans.

But other top officials took a more skeptical stance, reflecting a split in the government of Prime Minister Shinzo Abe over whether the AIIB would help or hinder Japan’s interests.

“We have a cautious position about participation,” said top government spokesman Yoshihide Suga.

Around 30 countries, including Britain and Germany, have decided to participate in Beijing’s flagship economic outreach project, but Washington, Japan’s main ally, has urged countries to think twice before joining, citing worries about governance and environmental safeguards.

“Views are split within the Japanese government on whether to join the AIIB,” said a person with close knowledge of Japan’s financial policymaking apparatus.

The result of the standoff within the government, said a senior official in the ruling coalition, is that Japan’s participation “is not going to happen under the Abe administration.”

Japan is hesitant to join out of concern about China-led lending practices, over its relations with Washington, and over the AIIB’s potential rivalry with the Asian Development Bank, the Manila-based multilateral institution dominated by Japan and the United States, officials said.

By custom, the ADB is headed by a former senior official from the Bank of Japan or the Finance Ministry.

But the source familiar with Japan’s policymaking said Tokyo should get involved to help ensure best practices and to avoid being left out. “Now it has become awkward as Europe joins but the U.S. and Japan stay out.”

Finance Minister Aso told a news conference that the AIIB needs to have its board of directors screen and approve individual cases when deciding to provide loans.

“We have been asking to ensure debt sustainability, taking into account its impact on environment and society,” he told reporters after a Cabinet meeting.”We could (consider joining) if these issues are guaranteed. We’ll give it careful consideration from diplomatic and economics viewpoints.”

If the bank can address debt sustainability, environmental and societal concerns, “there could be a chance that we would go inside and discuss,” he said. “But so far we have not heard any responses.”

Suga, the chief Cabinet secretary, interpreted Aso’s comments to mean that “unless such issues are resolved, participation would be impossible.”

  • Liars N. Fools

    It would be a huge OMG if Abe Shinzo and Aso Taro make a conditioned move to join the AIIB. Then the Americans really would be all alone. I suspect that in the end, Abe will opt for not pissing off Washington.

  • iwishitweretrue

    This issue shows the world that Japan is actually a very very weak country, and is all but in name, a slave of the US. It would be ideal for Japan to join and be part of the AIIB and rebuilding Asia, but the US is still trying to pretend that it is an important player in Asia rather than yesterday’s power, and is no doubt threatening Japan behind the scenes with some pretty big consequences!! The US has ruined Japan economically in the past and will continue to do so until Japan stands up to the US, as Netanyahu and other wiser heads have done.

  • sdfqef

    Chinese containment policy finally shows itself.

  • Korey D

    For America it is a loss of face to have it’s allies join this bank. China has requested changes to the IMF rules to allow for wider participation in the managerial and decision making processes. America has declined, advising China it should have more engagement in world processes. When China created the AIIB America declines to participate and becomes petulant and sulky, advising Australia and S.Korea to not join and I suspect Japan as well. Now that EU countries are becoming founding members the US chastises China for creating the AIIB as a power grab in S.E.Asia. What hypocracy. China is only doing what the US had advised. All countries should do what is in it’s best interest and not worry too much about US bullying. Japan should stand on it’s own 2 feet. That would be in it’s best interest. Let the Americans pout. It might be good for them

  • timefox

    China is taking the lead in a bank, key currency of the bank is dollar-based. Where is Yuan?