By Chunjuan Nancy Wei
“Start your new stove!” Mao’s paradigm shift may be behind China’s recent bank initiatives.
Last year, new institutions popped up in both the global finance and security arenas, courtesy of China. First, driven by Beijing, the $100 billion New Development Bank (NDB), a mini-World Bank sponsored by the five BRICS economies – Brazil, Russia, India, China, and South Africa – was formed during July 2014. Then, at the APEC meeting in Beijing, that October, Chinese President Xi Jinping unveiled the regional Asian Infrastructural Investment Bank (AIIB), a body comprising more than 20 founding members. Finally, just one month later, a $40 billion Silk Road Fund (SRF) was announced to restore the centuries-old Silk Road trading route and to promote economic integration from Asia to the Mediterranean. These ambitious projects, widely interpreted as rivaling the U.S.-dominated global financial institutions, including the regional Asian Development Bank, will undoubtedly bolster Chinese influence in the region.
On the security front, China revived an existing inter-governmental forum, proposed first by Kazakhstan’s president in 1992. The Conference on Interaction and Confidence-Building Measures in Asia (CICA), as it is called, held its fourth meeting during May 2014. With China holding the Chair through 2016, a regional security cooperation architecture emerged. CICA promotes a new concept, calling for a “common, comprehensive, cooperative and sustainable security.” The new CICA, along with the Shanghai Cooperation Organization (SCO), represent China-led security organizations. Most recently, Beijing announced that a Cross-border Interbank Payment System (CIPS) would be instituted late this year. First proclaimed by the People’s Bank of China (PBOC) in April 2012, this initiative would provide a mechanism for transferring funds without having to use the U.S. banking system, or the U.S. dollar. This is a potential game change for international finance. Some observers believe the scheme has economic security implications as well.
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