US opposition to AIIB ‘strategic mistake’, says senior Trump adviser

James Woolsey says new administration expected give ‘much warmer’ response to China’s ‘One Road’ initiative

PUBLISHED : Thursday, 10 November, 2016, 5:29pm
UPDATED : Friday, 11 November, 2016, 12:53pm

A top adviser to US president-elect Donald Trump has lashed out at the Obama administration’s opposition to China’s ­economic diplomacy, especially the decision to stay away from

the Beijing-based Asian ­Infrastructure Investment Bank.

In an opinion piece in the South China Morning Post on Friday, James Woolsey, a senior adviser to Trump on national security and intelligence, called Washington’s spurning of the China-led multilateral lender “a strategic mistake” and expected a “much warmer” response from Trump to President Xi Jinping’s “One Belt, One Road” initiative.

The United States and Japan are the only two G7 countries that have not signed up to be AIIB members, a move viewed by Beijing as a sign of Washington’s mistrust of the Chinese government and its ambition to exert bigger ­regional influence.

Analysts said that if Trump backed US membership of the ­AIIB and endorsed China’s efforts to revive trade routes along the ancient Silk Road, it would be a big sign of goodwill from Washington to Beijing to pave the way for ­future agreements.

Wang Huiyao, a director at the Centre for China and Globalisation, a think tank in Beijing, said: “China can invite the United States to join the AIIB after Trump’s inauguration.”

Wang also said a Trump presidency was not necessarily bad for Sino-US economic ties despite his China-bashing rhetoric on the campaign trail.

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Former Chinese vice-commerce minister Wei Jianguo agreed, saying that while Trump labelled China a currency manipulator and threatened trade wars, he might have a more open ­attitude towards China-backed institutions and investment ­programmes.

There is huge potential for ­cooperation between China and the US
Wei Jianguo, China Centre for International Economic Exchanges

Wei, now a deputy director of the China Centre for International Economic Exchanges, said that if Trump embraced the AIIB, more trade and investment deals could flow between the two economies.

“There is huge potential for ­cooperation between China and the US,” Wei said.

Analysts said Beijing would also be relieved if Trump followed through on a vow to scrap the Trans-Pacific Partnership, a Pacific Rim trade agreement that ­includes the US, Japan, Australia and Vietnam but not China.

The TPP is the economic centrepiece of the Obama administration’s “pivot to Asia” and ­Beijing sees it as a push to weaken China’s role in the global trade system.

Zhang Zhexin, from the Shanghai Institutes for International Studies, said the end of the TPP would expand Beijing’s room to advance its own schemes.

“If the US is not committed to regional trade deals, China will find a new chance to push forward its own trade deals, bilateral agreements as well as the ‘One Belt, One Road’ strategy,” Zhang said. “The US’ economic leadership in the world would be questioned, offering additional room for China to deepen its economic ties with Asia-Pacific countries.”

Without the threat from the TPP, China could continue to ­support inefficient state-owned enterprises to strengthen the state control
Kevin Lai and Oliva Xia, Daiwa Capital Markets

Daiwa Capital Markets economists Kevin Lai and Olivia Xia said that if Trump aborted the TPP, China could avoid the risks of “being shut out of a massive trade deal”. But it could also delay much-needed reforms in China.

“Without the threat from the TPP, China could continue to ­support inefficient state-owned enterprises to strengthen the state control and impose local-content requirements on multinational companies to keep jobs in China,” they said.

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Analysts also warned that competition between the US and China for influence would continue on the economic front.

“Even if Trump kills the TPP … it doesn’t mean the US will pull out from Asia,” Liu Weidong, from the Chinese Academy of Social Sciences in Beijing, said.

“The US is giving up a particular trade arrangement, but it will not give up its economic interests in Asia.”

Additional reporting by Frank Tang