Major Victory for China’s finance diplomacy

Britain got itself involved as one of the 27 founding members of China-led Asian Infrastructure Bank. This is a big win for China due to the fact that i)Britain is the first G7 country and symbol of past Western power, lending much political legitimacy to a project (that includes the likes of Brics bank, Development Bank of Shanghai Cooperation Organisation, Silk Road Fund) aimed to rival Western-dominated institutions like the IMF and the World Bank; ii)It has of course been a key U.S. ally, ever since the world wars, the Cold War, Iraq, etc.

Xinhua has triumphantly released a commentary, “In face of interest, alliance sometimes fragile”

The Obama administration has furiously attacked the UK government–a rare sight–for what it sees as a “constant accomodation”, which one of the U.S. officials said wasn’t the proper way to engage a rising power.
Britain wooes China more: economics

Its criticism of China over protests in Hong Kong were restrained.. Cameron is not meeting with the Dalai Lama. And clearly, joining the Asian Infrastructre Bank has been in the UK’s national interests”. This reflects Britain’s need to pursue economic relations with China “more aggressively, even at the expense of antagonising Washington” as the FT said.
Australia and South Korea, which have resisted from joining under US pressure, may just follow Britain’s lead; indeed both countries have much more integrated economic ties with China and therefore more reasons to participate.

Britain and US fallout:
Some say their relations are under strain. FT mentions how US officials have criticised the UK for small defense budget that could go below NATO’s target 2% GDP. Obviously the post-world war alliance, Britain’s participation in NATO at least in European affairs are not likely to go away any time soon. But Britain has shown it can depart from America’s China policy.

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