China sets out to build economic sphere

MASAHIRO OKOSHI, Nikkei staff writer

Chinese President Xi Jinping

BEIJING -- Rich European countries and tiny developing nations alike have stepped forward to become founding members of the Chinese-led Asian Infrastructure Investment Bank, which is part of Beijing's plans for projecting economic power.

    The list of prospective members grew from 27 at the start of March to 47 by Tuesday's deadline. China succeeded in enlisting the U.K. first among the Group of Seven nations. Facing a general election in May, British Prime Minister David Cameron did not hesitate to play to the corporate sector's eagerness to do more business in Asia. Other G-7 countries followed Britain's lead, although the U.S. and Japan have so far held out.

     China is seeking to use Asia's vast demand for infrastructure to its own advantage. It envisions building its own economic sphere of influence by supporting infrastructure construction along a 21st-century Silk Road stretching across Asia to Europe and Africa, with a complementary maritime route.

     The AIIB will form the vanguard of this effort, gathering information on opportunities for investment in railways, ports, power grids and the like. Little wonder that France, home to nuclear power group Areva and other national champions in these fields, wasted no time getting in after the U.K.

     But Europe's motivation for backing the AIIB goes beyond Asian construction projects. Strengthening ties with China, where politics and business go hand in hand, can yield other benefits -- witness state-owned ChemChina's bid for Pirelli, which would pump needed investment into the Italian tire maker. Economic self-interest sent European countries flocking to join China's new lender. Sweden added its name on the day of the deadline.

     The U.S. is looking forward to cooperating with the AIIB, Treasury Secretary Jacob Lew told Chinese Premier Li Keqiang in Beijing Monday. But pleasantries aside, the U.S. seeks to build its own economic zone in Asia through the Trans-Pacific Partnership -- one that excludes China.

     Beijing is pushing back, and has the world's biggest foreign exchange reserves. To be on its side, all countries have to do is endorse the AIIB. Economically, this is an offer that even U.S. allies South Korea and Australia cannot refuse.