Published on : Nov 23, 2015
China has offered a sum of US$10 bn to Southeast Asian nations in infrastructure loans. Mr. Liu Zhenmin, the vice foreign minister of the People's Republic of China stated while addressing a news conference at the annual East Asia Summit, held in Kuala Lumpur, that along with this, the second largest economy of the world has also planned to provide an aid of 3.6 bn Yuan (around US$560 mn) to underdeveloped ASEAN economies in 2016.
Brunei, Indonesia, Cambodia, Laos, Myanmar, Malaysia, the Philippines, Thailand, Singapore, and Vietnam are the countries that come within the Association of Southeast Asian Nations (ASEAN). Mr. Liu, however, did not speak about which bank would be providing the loans.
These pledges are considered as China’s strategy to magnify its influence among developing economies, which also includes Southeast Asia, with loans and various government aid programs. The Asian Infrastructure Investment Bank (AIIB), a China-funded development bank, has won immense support from Asian economies as well as Western European nations in 2015 despite having an indecisive response from the U.S.
The AIIB, which was set up in June this year, has given a strong competition to the World Bank and the Asian Development Bank in Asia. The bank is poised to be officially introduced by the end of 2015. It is trying to avoid the criticism that its rivals are facing, by not declaring various free market economic policies, which have been recommended by the other two, who are said to impose irrational demands on borrowers.
Initially, the U.S. warned economies against joining the AIIB. Now it has expressed concern over the influence China would inflict in the bank. However, China has maintained that it would not have a veto, unlike the World Bank, wherein Washington enjoys a limited veto.