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October 7, 2016

Responding To: Opportunities and Challenges for U.S.-China Collaboration

Sino-U.S. Cooperation: Benefiting the Global Community through Infrastructure Development

Christian Conroy

On October 24th, 2014, representatives of 21 Asian nations signed an agreement to establish the Asian Infrastructure Investment Bank (AIIB), subsequently recruiting a total of 57 countries to comprise the new organization’s founding membership. On the surface, the stated aims of the AIIB – to invest into infrastructure projects in developing countries across Asia – aligns perfectly with the goals of Western development institutions like the IMF and World Bank. However, the United States has lobbied vigorously to persuade allies against joining the AIIB, citing concerns over human rights, environmental, and corruption issues. U.S. officials and academics have also criticized the newly created bank for being the economic version of the Shanghai Cooperation Organization, disproportionately favoring the expansionist goals of China given the larger voting share China will hold in the not fully transparent AIIB.


By refusing to support the AIIB, however, the United States is hurting its own economic interests and missing an opportunity to work together with China to benefit the global community. Not only will U.S. support for the AIIB better position American companies to bid on lucrative infrastructure contracts, but it will also allow the United States to ensure from the inside that AIIB projects are conforming to universal standards of governance, environmentalism, and human rights. More importantly, the AIIB represents a concrete way that China and the United States can jointly fill the investment gaps of a region facing an infrastructure financing shortfall of $800 billion a year.

Significant demand for the private and public benefits of infrastructure development exists across the developing world, but poor countries face a significant shortage in both construction funds and human and technological capital. Unlike previous foreign investment policies focusing on raw material extraction or government-to-government foreign aid, cooperating to plan, fund, and implement the building of roads, ports, railways, energy installations, and airports in poor countries can stimulate economic development and unlock the entrepreneurial potential of a massive portion of the global population. Furthermore, by opening up investment channels and new markets for products in poor countries across Asia, these infrastructure projects will create a long-term return on investment for the entire world.

Although the organization only began operating in January 2016, the AIIB plans to spend more than the World Bank and Asian Development Bank spent on infrastructural development in 2014 combined. By not spending months deliberating over privatization or deregulation schemes emphasized by existing institutions like the IMF and World Bank, the AIIB has already been able to approve four projects costing $509 million designed to enhance transportation infrastructure, electricity distribution systems, and slum redevelopment in Tajikistan, Pakistan, Indonesia, and Uzbekistan. What’s more, all of these projects include cooperation with existing development institutions like the World Bank, Asian Development Bank, and European Bank for Reconstruction and Development.

The 12 projects expected to be approved by the AIIB this year represent a tangible opportunity for the United States and China to work together to address the $57 trillion in global infrastructure investment needs through 2030. While the current focus of Western development institutions on areas such as universal education and public health clearly bring benefits for global society, there can be little success in these initiatives when there are no roads or transportation routes leading to schools and hospitals. Investing in basic infrastructure in these countries will provide the United States and other countries the foundation necessary to focus on civil society projects designed to widen access to education, strengthen public health, and combat climate change.

Working together with China and other countries to co-finance infrastructure projects across the developing world will also allow the United States to play a role in ensuring that all joint projects follow important standards on governance, environmental protection, labor rights, and other norms of social development. Indeed, there has been proof that this is already occurring, with collective bargaining allowing other founding members to shape the AIIB MOU and gain a larger share of voting power on each planned project. The ability of U.S. and Chinese officials to work together to shape the norms of infrastructure development demonstrates that both countries can shoulder global responsibility, alleviating a common source of tension between the major powers and paving the way for future cooperation on development projects.

The AIIB is an institutional representation of the opportunity the United States. and China have to combine fragmented approaches to global development based respectively on strings-attached aid programs and high-speed infrastructure building. By lowering the insurmountable construction costs governments in developing countries face in funding major infrastructure projects, the United States and China can open new markets and investment channels and enhance global trade. What’s more, such an approach will further benefit the global community by creating the fundamental capacity in poor countries to focus on the challenges facing global civil society – from gender equality to public health to universal education – thus spreading the benefits beyond the Asian region.

Christian Conroy is a Master of Public Policy (MPP) and Master of Science in Foreign Service (MSFS) candidate at Georgetown University.


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