Facing China's diplomatic offensives to establish the Asian Infrastructure Investment Bank (AIIB), 56 Asia-Pacific and Western European countries, including major U.S. allies, have chosen to get in on the ground floor. The United States has exhibited displeasure with the initiatives as a challenge to its global economic leadership. Not only the U.S. but also Japan has decided to not jump on board as a founding member.

Has Japan alone swum against the tide toward a multipolar world in which China and other major developing countries rise? Or is Japan too loyal to the U.S., its security guarantor, particularly when China's potential military threat is growing? A close look at the evolving design of the bank's governance structure and China's internal economic conditions will demonstrate that Japan's prudence is warranted.

With its commitment to contributing a large portion of the bank's initial capital investment, China will exercise significant influence over its governance. It will be headquartered in Beijing and ruled by Chinese Communist elites. Reportedly, the bank will have no standing board of directors, and board decisions will be made after draft proposals have been circulated via the Internet. Given the top-down decision-making of the one-party dictatorship, the bank may be nothing more than a policy instrument of the Communist regime.