Not many people reading the continuing coverage of China’s Asian Infrastructure Investment Bank will find New Zealand’s name mentioned in media commentary. A piece in the South China Morning Post is just the latest to mention that the prospective members include ‘staunch US allies in Europe such as Britain, Germany, France and Italy.’ This is a clear play into the US-China geopolitical analysis, which was widely covered once the UK announced its intention to join. The now infamous warning from a US official that “We are wary about a trend toward constant accommodation of China, which is not the best way to engage a rising power” shows an intent by Washington to frame the issue as part of a series of US-China struggles for influence.
In a quiet fashion, New Zealand got its own accommodation of China much earlier. On the 5th of January, New Zealand became the AIIB’s 24th Prospective Founding Member, and the first developed Western nation to sign up. There are now 57 such prospective members. By comparison, the Asian Development Bank had just 31 members when it was set up in 1966.
This means, in theory at least, that New Zealand will play a part in the regional economic integration that China’s growth and growing aspirations is making possible. The AIIB is not an end in itself, but forms just one part of China’s drive to internationalise its economy. Once established, Beijing will seek to use the Bank to support planned infrastructure projects along the new silk roads. These Belt and Road Initiatives (BRI) will form an intercontinental chain of infrastructure projects along two international corridors. One, the silk road economic belt, will head from Northwest China westward through central and western Asia to Europe. The other, the 21st century maritime silk road, will travel from Southwest and Southeast China through Southeast Asia and South Asia, before moving onto the Middle East and Europe. These initiatives feature bilateral projects with countries along the silk roads for the development of seaports, airports, railways, roads, gas and oil pipelines, and industrial parks.
There are precedents for this activitity. In the nineteenth century, Britain internationalized its economy through a global division of labour in a dual structured world economy. From the 1960s, Japan energetically sought economic integration with Southeast Asian countries on the basis of industrial diffusion through production networks. In China’s case, the AIIB will play a crucial role, as so many of the economies it wishes to work with face a significant shortage of capital and manufacturing capacity, and are thus a great match for China’s overcapacity in these areas.
But the BRI will move into uncharted geopolitical spaces. Its activities will generate an economic space which until now has been incoherent and uncontested, and which does not fit the standard Asia-Pacific or East Asian contexts that we have grown to understand. At a recent roundtable discussion one colleague noted that we might wake up one day and find that much of the regional architecture, including APEC, ASEAN+3, the TPP, RCEP, and the East Asian Summit, are not nearly as important to China as we had assumed.
On the 9th floor of the Beehive, this could be some cause for some alarm. After all, New Zealand has invested heavily in Asia-Pacific regional institutions and in being seen as an active regional player. As a more competitive regional political economic environment emerges, NZ could find itself taking on significant opportunity costs when positioning itself in the shifting regional economic structure.
Moreover, it is not entirely clear how New Zealand connects with China’s Belts and Roads Initiative. Some entrepreneurial thinking and hard-headed policy analysis will be required in Wellington to carve out a relevant spot for New Zealand. Having a seat at the AIIB table is one thing, using that seat to envision how the Bank could work for New Zealand is quite another.
Xiaoming Huang is Professor of International Relations at Victoria University of Wellington, he can be emailed at firstname.lastname@example.org.
Photo Credit: Zhang/Wikipedia