The Australian Industry Group has urged the federal government to push ahead with joining China’s specialist infrastructure bank declaring this would make the country an active participant in the changing economic landscape of the region rather than just a bystander.
The business group’s chief executive Innes Willox welcomed signs the government was changing its mind on the institution saying this would position Australia as a player in strategic decision making in regional infrastructure investment and further its regional trade activities.
Treasurer Joe Hockey signalled last Friday that Australia was reconsidering its opposition to the US$50 billion Asian Infrastructure Investment Bank (AIIB) after decisions by New Zealand and the United Kingdom to join.
Then Prime Minister Tony Abbott said at the weekend: “We’re looking very carefully at this and we’ll make a decision in the next week or so.”
The government’s expected decision to join before a Chinese March 30 deadline for foundation member status marks a sharp shift from last year when Mr Abbott aligned with Foreign Minister Julie Bishop to oppose membership after lobbying by the US not to allow China to set the terms of regional economic development.
The Australian shift and the surprise UK decision has imposed new pressure on South Korea, which has been torn between its economic relationship with China and its strategic relationship with the US, a tension which is also seen in Australia.
Issue on agenda
Yonhap news agency reports the South Korean government will make a final decision later this month and The Korea Herald reports that the issue is on the agenda of talks on Monday between senior foreign ministry officials from South Korea and China.
And the JoongAng Daily said in an editorial the UK decision showed: “South Korea should no longer dither. Membership in the AIIB would deliver greater access to a region of 60 nations with 4.4 billion people.”
Meanwhile, Mr Abbott’s comments suggesting Australia was close to becoming a founding member were widely reported across China’s media outlets, including the Communist Party’s mouthpiece, The People’s Daily.
But China has hit back at the US over its criticism of the new infrastructure bank, accusing Washington of putting its own interests above that of its allies.
“Despite a multinational presence within the AIIB, the United States somehow believes its efforts in pooling capital – in other words, contribution to job creation and economic growth – are worrying,” the country’s state-owned newsagency Xinhua, which is often used to express government views, said in a commentary over the weekend.
“Viewing the initiative from its own perspective, Washington once again puts its own concern beyond the interests of others – including some of its allies.”
Woo campaign continues
China continued its campaign to woo wavering nations on Friday by emphasising that the AIIB would learn from the pitfalls of other multilateral lenders, a message that appeared aimed at reassuring countries such as Australia that the bank would follow proper governance standards.
“The AIIB will complement existing multilateral development banks and support the infrastructure and economic development in Asia,” spokesman Hong Lei said at a press briefing.
“Britain’s move will further promote the common development of Asian countries.”
Former Reserve Bank of Australia deputy governor Stephen Grenville has warned that if Australia doesn’t sign up, it will risk once again losing regional diplomatic momentum to New Zealand, which beat Australia to a free trade agreement with China.
“Now that the United Kingdom has decided to become a founding member, the pressure is on the hold-outs to sign up,” said Mr Grenville, now a Lowy Institute for International Policy fellow.