Japan has today announced a $110 billion Plan to finance infrastructure projects in Asia.
The decision made by Japanese PM, Shinzo Abe, comes as a rival plan for the Chinese super hit endeavor –the Asian Infrastructure Investment Bank.
Understandably, Japanese decision, invisibly supported by Washington, is a clear effort to counter the rising Chinese effort to create alternatives to the Brettonwoods institutions-the World Bank and the IMF.
Japan remains the only major country that has not joined the AIIB which attracted many of the American allies including the UK.
It is interesting that Japanese fund proposal of $110 bn is set higher than the nearly fifty member AIIB’s proposed amount of $100 bn.
The Japanese effort also includes a fund injection into the ADB (Asian Development Bank) which is largely Japanese controlled. Japan and the US have nearly 25% control in ADB, compared to China’s six percent. In the past, Japanese domination of ADB has consistently annoyed Beijing.
China’s new kid AIIB has surprisingly divided the West, plucking many US fans into the organization as members, and thereby upsetting the US. It has attracted nearly fifty members; many of them are from outside Asia.
A meeting of the member countries of AIIB is to be held in Singapore, to determine the much expected governance structure and articles of agreement.
With the cash rich Japan and newly rich China flexing their muscles on the infrastructure financing front, the environment becomes more politically charged.