America and Britain at odds over how to deal with China

American poodle to Chinese lapdog?

 

America and Britain at odds over how to deal with China

 

Mar 13th 2015

 

The Economist

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IT IS extremely rare for Britain to take a foreign-policy stance at odds with that of its closest and most important ally, America. It is perhaps unprecedented for it to do so by siding, in a contentious issue of global financial governance, with the superpower’s emerging rival, China. Yet that, in effect, is how America seems to interpret Britain’s plans, announced on March 12th, to join China’s new Asian Infrastructure Investment Bank (AIIB) as a founding shareholder. China, naturally, is chuffed. Most other observers are flummoxed.

 

The AIIB is one of a number of new institutions launched by China, apparently in frustration at the failure of the existing international financial order to adapt quickly enough to accommodate its astonishing rise. Efforts to reform the International Monetary Fund are stalled in the United States Congress. America retains its traditional grip on the management of the World Bank. The Asian Development Bank remains based in Manila, but it is mostly run by Japanese bureaucrats.

So it is perhaps understandable that China, flush with the world’s biggest foreign-exchange reserves and anxious to convert them into “soft power”, is building an alternative system. Its plans do not just include the AIIB, but also a New Development Bank launched with its “BRICS” partners—Brazil, Russia, India and South Africa—and a Silk Road development fund to boost “connectivity” with its neighbours. And, in the security sphere, there is the Shanghai Co-operation Organisation that links it with Russia and Central Asia.

America, however, has reacted negatively to the AIIB. Its officials argue that they have not “lobbied against” it. Instead they merely stressed how important it is that such an institution abide by international standards—of transparency, creditworthiness, environmental sustainability, and so on. But officials in Singapore, for example, a close partner to both America and China, say they had some difficult discussions with America when they decided to support China’s initiative. They argue, reasonably enough, that China was going to launch the AIIB anyway; better to be on the inside influencing its governance towards international standards than hand-wringing helplessly on the outside. Other staunch American allies—Australia, Japan and South Korea—have so far stayed out. one, Indonesia, stayed out at first but has since had a change of heart.

 

Britain’s accession, however, is a surprise. The organisation's 22 members so far had been confined to the Asia-Pacific region. And in any case, American resistance would normally be a clinching argument with the British government against joining. That, however, overlooks the craven desperation with which Britain has sought to ingratiate itself with China over the past few months, since David Cameron, its prime minister, visited the country in December 2013. That was a tour of atonement, to make up for the offence Mr Cameron had given China by meeting the Dalai Lama, Tibet’s exiled spiritual leader, the previous year.

 

He was accompanied by the biggest British trade mission ever to go to China; and ever since, the British government seems to have been preoccupied by the commercial potential of the Chinese market to the exclusion of all else. Even an international obligation—its Joint Declaration with China assuring Hong Kong of fifty years of internal autonomy after its reversion to Chinese sovereignty in 1997—has seemed less important. When Hong Kong was rocked by protests late last year, the fundamental issue at stake was that autonomy. But China would not even allow a delegation from Britain’s parliament to visit Hong Kong. The British response was not to make a big fuss, but to send Prince William to China instead earlier this month to bang the drum for British exporters.

 

An anonymous American official quoted by the Financial Times says America is “wary about a trend toward constant accommodation of China, which is not the best way to engage a rising power.” Cynical Britons might point out the strategy worked well enough a century ago when Britain was the incumbent power and America on the rise. But that is not an analogy that will go down well in Washington.