China has invited India to participate in the Asian Infrastructure Investment Bank (AIIB) — Beijing’s brainchild to steer development along the ancient “silk route” free from the influence of western-backed lenders such as the World Bank and the Asian Development Bank (ADB).
Diplomatic sources, who did not wish to be named, told The Hindu that China had sought India’s participation during the visit to New Delhi by Chinese Foreign Minister Wang Yi soon after the Modi government assumed office. “It is clear that the Chinese will not tie the lending from the investment bank to non-economic issues, such as human rights, which western-backed lenders have often leveraged as instruments of political influence and control,” the sources observed.
India is yet to make up its mind on Beijing’s offer, though partnership in the bank could, eventually, facilitate New Delhi’s access to infrastructural funding. Sources pointed out that there are major geopolitical implications in China’s offer as there is little doubt that Beijing now views India as a potential partner in an interlocking politico-economic network of neighbouring countries.India’s entry into SCO
“If India opens its doors to Chinese investments, especially in the field of infrastructure, after taking care of the sensitivities in the security arena, New Delhi’s entry into the Shanghai Cooperation Organisation (SCO) could become the prize,” the sources said. India, along with Pakistan and Iran, has observer status in the SCO, a China and Russia-led grouping, whose role would be central in defining the balance of economic and political power in Eurasia.
Analysts pointed out that following the events in Libya, Syria and Ukraine, China and Russia have reinforced their geopolitical connections, evident in the signing of a $400-billion gas pipeline deal. But New Delhi, too, could be part of this expanding arrangement, for visiting Russian Deputy Prime Minister Dmitri Rogozin said in New Delhi earlier this month that the extension of this pipeline to India would be “one of the largest infrastructure projects that could be conceived”.
The Financial Times is reporting that 22 countries, including some of the wealthy monarchies of West Asia, have so far shown an interest in China’s bold push to establish the AIIB, with a registered capital of $100 billion. The fund is sizeable enough to compete with the ADB, which runs on a capital of $165 billion and is dominated by Japan and the United States.
An ADB study has projected that Asia would require an annual funding of $800 billion till 2020 for developing infrastructure, offering China enough financial leg room to exercise its soft power in its neighbourhood.