Japan Vows $110 Billion For Asian Infrastructure In A One-Upmanship To China Over The AIIB

Tokyo appears to be playing a tit-for-tat game with China over Asian infrastructure funding and the new Chinese-led AIIB.  However China appears to be responding… somewhat.

Japan said on Thursday that it will dedicate around $110 billion in funding for Asian infrastructure development projects in a competitive slap at China’s new Asian Infrastructure Investment Bank (AIIB).

China, in the meantime, however, appears to be counteracting this notion by warming up closer to New Delhi and thus making India the AIIB’s second largest investor, according to Reuters.

The move by Beijing highlights the fact that India will potentially represent the spot that Japan could have had — based on it’s GDP — if Tokyo would have joined the Chinese-backed institution.

According to the report from Reuters, China’s share in the AIIB will be around or less than 30 percent, whereas India’s share would be between 10 and 15 percent.

Tokyo is set to invest $110 billion in cash for Asian infrastructure over the next five years, according to a statement from Japan’s Ministry of Economy, Trade and Industry (METI), a sum which is larger than the $100 billion in funding that is expected to be provided by the Chinese-led AIIB, in a one-upmanship to China.

The investment from Tokyo represents a 30% jump over its past infrastructure funding for the region, according to Japan’s METI.

Approximately half of the funds will come from aid-related Japanese agencies with the remainder said to be raised via the Asian Development Bank (ADB) in addition to corporations, according to the statement.

The Asia Times summarizes such a move as:

Coupled with recent Japanese moves to bolster defense cooperation with the U.S., especially in the disputed South China Sea region, Japanese Prime Minister Shinzo Abe’s government is sending a strong signal that it won’t stand idle as China challenges its leadership in Asian development and plays a game of military sand box in its territorial claims over disputed islets with neighbors. Japan, like the U.S., is also signalling that it’s in no hurry to join the AIIB — which is viewed as a rival of both the World Bank and the ADB.

The Diplomat summarizes such a move as:

“Anything you can do, I can do better.”

The famous line from the Broadway musical, Annie Get Your Gun, might also describe Japan’s response to the Asian Infrastructure Investment Bank (AIIB), after announcing plans to up the ante on the China-led bank’s planned capital of $100 billion.

Reuters added:

But worried that Japan may look less pro-active than Beijing, Tokyo also wants to showcase its support for the region.

“We had thought it was better not to speak up much, but that doesn’t get through,” Koichi Hagiuda, a special aide to Abe in his Liberal Democratic Party, told Reuters.

“So some demonstration seems to be needed.”

Both Tokyo and Washington have steered clear of joining the AIIB, despite grief from European allies joining in masses.

Koichi Hagiuda, a special aide to Japan’s PM Abe in his Liberal Democratic Party said that “if it (AIIB) becomes a proper financial institution for the sake of Asia, there is no reason to be embarrassed about joining later,” according to Reuters.

One can only ponder how this plays out in the future.  Stay tuned.