Experts Consider China's Proposed Development Bank

    14 November, 2014

    From VOA Learning English, this is the Economics Report.

    The United States has expressed concerns about China's plan to create a new development bank for Asia. U.S. officials say they have questions about how the new bank's system of governance. But some experts say opposition to the new organization may not be a good idea.

    China and 20 other countries launched the Asian Infrastructure Investment Bank last month. But some nations, including the United States, wonder whether the bank meets international models for governance and openness. U.S. State Department official Jen Psaki says openness would be important for such an organization.

    "Our view is that it would need to be done in a transparent manner with a high level of - high standards, and that's something that we've conveyed to countries in the region, that we've conveyed as well to the Chinese."

    She added that the United States is concerned about the unclear nature of the bank. Many critics see it as possible competitor to existing institutions like the Asian Development Bank.

    Some observers say the U.S. opposition to the Asian Infrastructure Investment Bank is a mistake. Richard Cronin directs the Southeast Asia Program at the Henry L. Stimson Center, in Washington, DC.

    Experts Consider China's Proposed Development Bank
    Chinese Finance Minister Lou Jiwei, right, toasts with guests at the signing ceremony of the Asian Infrastructure Investment Bank in Beijing, Oct. 24, 2014. (REUTERS/Takaki Yajima/Pool)

    "Safeguards and accountability issues are certainly valid issues, but the other thing is it's the reality. It's happening. So the U.S. can express concerns but, you know, it's not very good international politics to take a stance against the bank. I mean, it's going to happen."

    The United States is not the only nation to have reservations about the new development bank. Australian Prime Minister Tony Abbott recently said his government would like to join. But first, he said, it needs the bank to have the kind of transparency found in organizations such as the World Bank. South Korea has said more consideration is needed on the new bank's governance.

    Richard Cronin also says geopolitical considerations are the biggest reason why the United States and some of its allies have not joined the bank. The U.S. and its traditional allies have heavily influenced the international banking system for many years. They have funded and worked through institutions such as the World Bank and the Asia Development Bank. For a long time, China and other developing economies have said they have little influence at Western-led development banks.

    Some observers say the United States should consider joining the new bank instead of ignoring it. Kenneth Lieberthal works at the Brookings Institution in Washington. He formerly served as a special advisor to the president during the administration of Bill Clinton.

    "I think we actually ought to get engaged with this, becoming a part of it, and try to, through that engagement, both show the Chinese that we are prepared to accept a greater role for them in areas where they are contributing to public goods and we want to work with them to have the standards be standards that are necessary to sustain the way the international system now functions."

    Mr. Lieberthal believes that if the United States does not get involved, it risks appearing unwilling to steps to improve the area.

    And that's the VOA Learning English Economics Report. I'm Mario Ritter.

    *This story was written for VOA by Li Ya Lu. Mario Ritter adapted it for Learning English. George Grow was the editor.


    Words in this Story

    governance - n., the way an organization or government is controlled by the people who direct it

    institutions - n., established and important organizations

    consideration - n., the process of thinking about or giving thought to a subject

    funded - v., to provide money for (the organization funded the effort)

    Now it's your turn to use these Words in This Story. In the comments section, write a sentence using one of these words and we will provide feedback on the use of vocabulary and grammar.