Japan, sticking with US, says it won’t join China-led bank

Hiroshi Higuchi | Getty Images

Japanese leaders indicated on Tuesday that their nation would not become a founding member of a new Chinese-led Asian development bank but instead remain loyal to the United States, which has urged its allies to refrain from joining.

The officials cited concerns about the management of the new lender, the Asian Infrastructure Investment Bank, that echoed objections raised by Washington, which sees the bank as a challenge to American-led institutions like the World Bank.

Local news reports quoted Prime Minister Shinzo Abe as saying it was important for strategic reasons that Japan stick with the United States even when other allies like Britain and Germany have announced they will join the new bank.

"The United States now knows that Japan is trustworthy," Mr. Abe was quoted by Kyodo News as telling a meeting of his governing Liberal Democratic Party.

The finance minister, Taro Aso, told a news conference that Japan would not contemplate joining until the new bank demonstrated that it had strict lending standards, including assessments of the environmental and social impacts of development projects.

"We have no choice but to be very cautious about participation," Mr. Aso said.

Despite American objections, dozens of nations have signed up ahead of the March 31 deadline set by China to become founding members of the new bank, to be based in Beijing. The most recent to join include Australia and South Korea, two of the United States' closest military partners in the region. South Korea's decision reversed earlier expressions of agreement to American requests to stay away from the bank.

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The decisions by so many allies to break with Washington have been seen as a sign of the growing financial clout of China, which has become the largest trading partner of many countries in the region. The new bank will confirm its founding members in April and aims to begin operating by the end of this year.

While there have been calls in Washington for the United States to join, the Obama administration is viewed as unlikely to reverse its opposition. Many American officials appear concerned that the new lender will undermine the World Bank and also the International Monetary Fund, two pillars of the global financial order established by the United States after World War II.

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Although China has become Japan's top trading partner, Tokyo has compelling security-related reasons for siding with the United States. Foremost among these is an intensified confrontation with China over control of uninhabited islands in the East China Sea that are claimed by both nations.

Eager to ensure that his nation has American backing in the standoff, Mr. Abe has tried to bind Japan more closely than ever to the United States, its postwar military protector. He is expected to emphasize Japan's close friendship. and also its growing willingness to assume a larger military role in the region, when he visits the United States next month.

The Asian Infrastructure Investment Bank will start with about $50 billion in capital and a mission to help Asia develop even more quickly by investing in roads, dams, communication networks and other such large-scale projects.