The United States has handled its economic diplomacy with shocking myopia.
The US Treasury's attempt to cripple the Asian Infrastructure Investment Bank before it gets off the ground is clearly intended to head off China's ascendancy as a rival financial superpower, whatever the faux-pieties from Washington about standards of "governance."
Such a policy is misguided at every level, evidence of what can go wrong when a lame-duck president defers to posturing amateurs in Congress on delicate matters of global geostrategy.
Washington has enraged Britain by trying to browbeat Downing Street into boycotting the project. It has forced allies and friendly countries across the Far East to make a fatal choice between the US and China that none wished to make, and has ended up losing almost everybody. Germany, France, and Italy are joining. Australia and South Korea may follow soon.
The new bank is exactly what the world needs. China must recycle its trade surpluses and its $3.8 trillion reserves by one means or another. It can buy US Treasuries, Bunds, or Gilts, perpetuating a global bond bubble. It can make surgical investments abroad to acquire technology for its champions and pursue a narrow national interest.
Or it can recycle the money in concert with other members of the bank -- with a start-up capital of $50 billion -- for sewage projects, clean energy, ports, roads, and railways in Asia, helping to plug a $700 billion shortfall in infrastructure investment that the World Bank is too small to cover and which is of collective benefit to the world. ...
... For the remainder of the report:
http://www.telegraph.co.uk/finance/economics/...ks-epic-blun...
