18 November 2018
Prime Minister David Cameron has had a testy relationship with Washington in recent months over his attitude toward China. Photo: Reuters
Prime Minister David Cameron has had a testy relationship with Washington in recent months over his attitude toward China. Photo: Reuters

US blasts Britain for joining China-led Asian bank

The United States is criticizing Britain for joining a new China-led institution that could become a rival to the World Bank.

In a rare rebuke of one of America’s closes allies, the US accused Britain of “constant accommodation of China” after it agreed to become a founding member of the US$50 billion Asian Infrastructure Investment Bank (AIIB) launched by Beijing in October.

The US has been lobbying other allies not to join the AIIB, underlining its concerns over China’s efforts to establish a new generation of international development banks that could challenge Washington-based global institutions, the Financial Times reported Friday.

Relations between Washington and David Cameron’s government have been strained in recent weeks, with senior US officials criticising Britain over slipping defense spending, which could soon fall below the NATO target of 2 per cent of gross domestic product.

A senior administration official told the Financial Times that the British decision was taken after “virtually no consultation with the US” and at a time when the G7 had been discussing how to approach the new bank.

“We are wary about a trend toward constant accommodation of China, which is not the best way to engage a rising power,” the US official said.

British officials were publicly restrained in criticising China over its handling of Hong Kong’s pro-democracy protests while Cameron has made it clear he has no further plans to meet the Dalai Lama, Tibet’s spiritual leader, after a 2012 meeting that prompted a furious response from Beijing.

While Beijing has long been suspicious about US influence over the World Bank and IMF, China also believes that the US and Japan have too much control over the Manila-based Asian Development Bank.

In addition to the AIIB, China is the driving force behind the creation last year of the BRICS development bank and is promoting a US$40bn Silk Road Fund to finance economic integration with Central Asia.

The Obama administration has said it is not opposed to the AIIB but US officials fear it could become an instrument of Chinese foreign policy if Beijing ends up having veto power over the bank’s decisions.

The British Treasury denied that Britain had acted out of the blue, saying there had been “at least a month of extensive consultation” at a G7 level, including with Jack Lew, US Treasury secretary.

George Osborne, chancellor of the exchequer, was unrepentant, saying Britain should be in at the start of the new bank, ensuring that it operates in a transparent way.

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