When Canada said in August it would join the Chinese-led Asian Infrastructure Investment Bank, all eyes turned to Japan and the U.S.

Other members of the Group of Seven — Germany, France and Italy — followed suit after Britain ignored U.S. opposition and signed up.

China has been courting Japan and the U.S., but Tokyo, walking in lockstep with Washington, has held out.

“We’ve never thought about joining,” a high-ranking Japanese Foreign Ministry official said after Canada’s decision.

Still, the AIIB’s rising influence has alarmed Japan. The Chinese-led bank currently has 57 founding members, but AIIB President Jin Liqun says more than 30 other countries have applied for membership, which would surpass the Japan-led Asian Development Bank’s 67 members.

The bank launched last December, almost two years after Chinese President Xi Jinping unveiled plans for an institution that meets the growing needs of infrastructure projects in Asia.

Concerns persist over the bank’s governance and transparency, especially when China accounts for slightly more than 30 percent of the bank’s $100 billion capital. This share gives Beijing about 26 percent of the voting rights, or a de facto veto over major decisions.

The world’s second-largest economy has been trying to increase its sway in global banking, which is dominated by institutions in the U.S., EU and Japan.

Last year, the U.S. Senate adopted reforms to give emerging economies, including China, greater voting rights in the management of the International Monetary Fund despite initial opposition.

“The AIIB is China’s challenge to existing international financial institutions,” said Masahiro Kawai, a professor at the University of Tokyo and former head of the ADB’s Office of Regional Economic Integration. Kawai also serves as special adviser to the ADB president in charge of regional economic cooperation and integration.

The AIIB, one pillar of China’s “One Belt, One Road” initiative, concerns Japan and the U.S. in not only economics but also geopolitics. The bigger initiative seeks to create a sprawling economic belt that connects China with Europe through Central Asia, and via Southeast Asian and African sea routes.

Some view the initiative as a counterbalance to the Trans-Pacific Partnership, a Pacific Rim trade framework that aims to promote free trade in the region.

Yet prospects look bleak for the 12-nation TPP, of which China is not a member. It is held up in the U.S. Congress, where lawmakers are reluctant to ratify it during the lame duck session following the presidential election in November. Both democratic presidential nominee Hillary Clinton and GOP nominee Donald Trump say they oppose TPP.

Eisuke Sakakibara, former vice finance minister, is among those who argue Japan should join the AIIB because there is an increasing need for infrastructure projects in Asia.

The ADB says countries in Asia will seek infrastructure projects worth $8 trillion by 2020, far more than the World Bank or the ADB can cover. Last year, the World Bank committed nearly $60 billion, while the ADB approved a record $27 billion for projects, including noninfrastructure projects. And even contributions by the AIIB, which plans to invest $1.2 billion this year, would meet only part of the total.

“There is some concern about its governance, but I think Japan and the U.S. should both join … as the ADB alone cannot cover infrastructure investment in Asia,” said Sakakibara, a professor at Tokyo-based Aoyama Gakuin University. “If Japan and the U.S. seek membership, it will push down China’s voting rights.”

Kawai of the University of Tokyo has estimated that Japan would have the third-largest voting rights, at 8.9 percent, if it joins with the United States. The pair would have more than 20 percent of the voting rights combined.

However, Kawai noted that China could still wield influence.

“China might not be able to exert a veto on its own, but it can seek support from other countries such as Russia,” Kawai said.

Russia will still have about 5 percent of the voting rights even if Japan and the U.S. join.

Infrastructure exports have been a pillar of Prime Minister Shinzo Abe’s economic policy, and Japan has been competing hard against China on this front. Last year, Abe made a $110 billion pledge to finance infrastructure projects in Asia for the next five years, a sum slightly exceeding that of the AIIB.

But many fear that China could undermine Abe’s initiative to export high-quality infrastructure by bidding more cheaply with the AIIB and its Silk Road Fund, a state-owned investment fund to promote investment along the “One Belt, One Road” region.

Japanese companies are not competitive even at the ADB, where Japan and the U.S. have the two highest voting rights, and former Bank of Japan and Finance Ministry officials have served as presidents since the bank’s inception in 1966. In 2013, Japanese businesses bidded for only 0.5 percent of the ADB’s infrastructure projects.

To offset the higher prices, Japan touts the high quality of its infrastructure, underscoring that projects come with high levels of training and excellent ongoing maintenance.

But Yusuke Higaki, director at Asia Infrastructure Cooperation, which consults on and manages infrastructure projects in Asia, said high-quality infrastructure is not given the weighting Tokyo wishes for and Japanese companies lack a system to work with multinational teams that help them to understand local needs.

“Japan lacks experts who can immerse themselves in local needs. They also do not have a system to optimize (such research),” said Higaki. “Most of the trading firms and companies eye … billion-dollar projects, but the projects Asia needs are mostly projects of several hundred million dollars.”

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