An Imagined Threat from China

Posted: September 7th, 2016

By Jan Zilinsky

Jan Zilinsky was a research analyst at the Peterson Institute for International Economics where he focused on the Chinese economy and the euro area political and economic challenges. Zilinsky was also a research affiliate at the Massachusetts Institute of Technology, and holds a BA in economics from Harvard University, and an MBA from the University of Chicago. His latest paper about the consequences of economic transformation in Eastern Europe was published in the Journal of Comparative Economics.

When a multilateral bank, based in China, finances an upgrade of slums in 154 cities in Indonesia, do Americans need to be concerned about a new security threat? What if the project is co-financed by the World Bank? And what if China doesn’t even hold veto power in the institution that was established to support construction of dams, ports, and sanitation and road networks?

If such questions sound preposterous, then US policy toward China in recent years has been less than wise. The Asian Infrastructure Investment Bank (AIIB) was depicted by some US officials as a project to subvert existing international institutions, with US messengers discouraging US allies from joining (the UK was an early defector; Germany, France and Italy followed). While Japan has not joined the AIIB, and said last year that it would raise its contributions to the Asian Development Bank, Canada announced just a few days ago that it is applying to join to the AIIB. Assuming that its application is approved, the AIIB will have a regular (non-founding) member from North America in 2017.

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