On 25th September 2015 In the South Lawn of the White House, The President of the United States, Barack Obama and Xi Jinping, the president of China shake hands at a welcome ball in Washington. The President of the United States Barack Obama greeted the Chinese President in the White House. He was welcomed with military honors. While Barack Obama cited his pleasure on the cooperation between the two countries. While he declared that he would openly discuss the differences between the two nations.
The United States officials announced something of a truce in their efforts against the China’s Infrastructure Bank, claiming they have leveraged commitments from the Chinese government that appease the concerns of the US officials. And also that the Chinese shall have to have a considerable increase in the contributions to the World Bank and other institutions that will rival the potential institution.
The United States of America appeared to be against the new project and refused to join the Asian infrastructure Bank. The US was also believed to be leading other allies away from something they believe to be a failed project.
The reason for this might be that the AIIB poses a great challenge to the Bretton Woods International financial architecure established in 1944.
This latest meeting shows how keen the US government is to put this chapter of negativity in their relationships with China behind them and continue with the same fervor as before with respect to their exonomic trades.
Last week the Chinese President’s visit to the US, Barack Obama backed China’s efforts to include its currency in the International Monetary Fund basket of reserve currencies. The only condition was that the IMF needs to recognize Beijing as worthy of it all.
During Mr. Xi Jinping’s visit to Washington, the senior officials of the administration fortified a promise of sorts from the Chinese government to increase their contributions to the regional development banks. This would also include increasing the financial contributions to the World Bank.
The first step in these pledged commitments by the Chinese was to increase the donations to the World Bank’s main lending facility, The International Development Association that caters to the poorest countries. And to do the same with the regional development banks too.
Another pledge by the Chinese government was that the Asian Infrastructure Bank would adhere to the highest international environmental and governing rules. These rules would also be applied on any other new institutions the Chinese government is involved in. This issue of adhering to the rules is one of the main concerns against the development of the new bank.
One senior official of the administration reflected by saying that the US government now felt positive and considered these pledges a breakthrough.
These pledges about the economic decisions and discussions were noted down in a conjoined “fact sheet” during the President’s two day visit of the American Capital
This fact sheet noted and reconfirmed that the two nations are inherently committed to the existing international financial institutions and that they declared to back the World Bank into a more solid positions. The statement also noted the two countries’ commitment to other such institutions like the regional banks in Asia and Africa. China’s pledge to meaningfully increase its donations to all these international and regional financial institutions.
In this visit, the intentions of both the parties were made clear. Both China and USA understand that for any new financial institution to be effective it must operate under high environmental and governance standards.
It was evident that both the parties were keen to put this argument over the AIIB and any issues over the governance of the existing institutions. Mr. Xi’s public was also testament to this fact.
The Chinese President, in a press conference with Barack Obama reiterated his intentions to increase China’s contributions in areas like the G20, IMF and the World Bank.
”China is the current international system’s builder, contributor and developer and participant, and also beneficiary,” he said. “We are willing to work with all other countries to firmly defend the fruits of victory of the Second World War, and the existing international system.”
The President also spoke about the AIIB and the establishment of the Beijing’s “One Belt One Road” project to create a new avenue towards Europe. This route is seen by many as a rival to the twelve country Trans Pacific led by the US.
The President reaffirmed the transparency of these projects and urged the US and other parties to contribute and participate in the development of these projects.