American trend forecaster Gerald Celente’s quip that “As U.S. wages war, China wages business” is more reality than wit. The New York Times reported on Sunday that Xi Jinping visited Pakistan in preparation of a $46 billion investment in infrastructure projects. Meanwhile, the Obama administration remains mired in the backlash following the deaths of two Western hostages in a U.S. drone strike in Pakistan back in January.
The Chinese-financed infrastructure projects further solidify Chinese relations with Pakistan, one of the prospective founding members of the Chinese-led Asian Infrastructure Investment Bank (AIIB). The AIIB, a five-month-old initiative by the Chinese government to challenge the economic hegemony held by the U.S.-led International Monetary Fund and World Bank.
The AIIB emerged in response to the U.S.’s refusal to reform the Bretton Woods system and amplify China’s voting influence in the IMF. China, with a GDP of $10 trillion, holds less of a stake in the Fund than countries with significantly smaller economies such as France. In response to U.S. arrogance, Beijing decided to take matters into its own hands in the formation of the AIIB. Judging by the international community’s rush to get in on the action, the new China-led bank seems to be off to a good start.
Some of the prospective founding members of the AIIB include some of the U.S.’s staunchest allies, including the British, French, Italians and Germans. Even Australia, Taiwan and the Israelis applied to join the AIIB. The international community has effectively isolated the U.S.; many justifying their actions by claiming that they’d rather be onboard with the Chinese than not have a say at all.
The trend is a major setback for the Obama administration, which failed to persuade its own allies to forgo the Chinese-led initiative. The U.S. also claims that the AIIB cannot be expected to maintain the same ethical and environment protocols characteristic of the IMF and World Banks.
The AIIB’s emergence in the global economic arena symbolizes an enormous shift in power. The Bank threatens U.S. financial credibility and hegemony in the eyes of the international community, and the more influence the AIIB accumulates the more isolated the United States will become from the rest of the world. As the infrastructure at home rots at its foundations, the U.S. dedicates 3.5% of its GDP to military expenditures.
So while the U.S. invests in war, supporting the Saudis in Yemen, and sending troops to the Ukraine under the auspices of Operation “Fearless Guardian”; the Chinese invest in infrastructure. As Washington desperately tries to salvage what is left of its waning political and economic global hegemony, the East seems to be gaining ground. As the sun sets in the West, it begins to rise in the East.
Analysis by Joseph Siess