1AC

1AC SOUTH CHINA SEA

Advantage 1 is South China Sea

AIIB is Chinas first signature contribution --- failure to engage it fuels

perception of containment
Scott Kennedy 15 --- Deputy Director of the Freeman Chair in China Studies and
Director of the Project on Chinese Business and Political Economy at the Center for
Strategic and International Studies(Scott; What Went Wrong With U.S. Strategy on
Chinas New Bank and What Should Washington Do Now?; March 25th;
https://www.chinafile.com/conversation/what-went-wrong-us-strategy-chinas-new-
bank-and-what-should-washington-do-now)//pk
In 2005, then United States Deputy Secretary of State Robert Zoellick famously called on China to be a
responsible stakeholder. He meant that China needed not only to comply with its
international commitments, but also to provide public goods to the international community. Well, be careful
what you wish for. Since then China has become much more active in global governance.
Chinese occupy leadership positions in a wide range of institutions. In 2013, China helped broker an interim deal in the
World Trade Organizations Doha Round, and in November 2014, China, along with the U.S., made a new pledge to limit
carbon emissions, creating momentum heading into the United Nations meeting in Paris later this year. But the Asian
Infrastructure Investment Bank (AIIB) is Chinas first signature contribution. China certainly
could have done a better job of selling the need for a new development bank. It is still unclear why it would be impossible
to improve the quality and quantity of development assistance in Asia through either the Asian Development Bank (ADB)
or the World Bank. The arguments that those banks were un-fixable and not open to a greater Chinese role or that China
deserves pride of place in a new institution given how much it is contributing leave the impression that the AIIB is a vanity
piece or a disguised cash register for Chinese state-owned enterprises. That said, the U.S. has performed even
worse. Although joining the AIIB was not an option since Congress would not have allocated the funds,
the U.S. could have adopted the posture of a friendly outside voice . Instead, it
discouraged others from joining in the hope the initiative would collapse or leave China
with a small coalition of the willing. They argued that the bank would not follow
international best practices, but in reality it appears the U.S. opposed the AIIB
simply because it was a Chinese initiative, full stop. Such knee-jerk
antagonism gives life to arguments that the U.S. opposes
Chinas rise and is bent on containing it. Even more important, American
bungling fuels the perception that China can drive a wedge between the U.S. and its allies
and that U.S. leadership in Asia is on the wane just when it is needed more than ever. Its a shame that
China did not provide greater reassurances early on that the bank would not be a tool of Chinese industrial policy and geo-
strategic maneuvering, and that the U.S. did not do more to pursue such reassurances and find a way to serve as a
constructive supporter. The best practices of existing multilateral aid institutions too often have not translated into
sustained poverty alleviation and development. There are many other areas of global governance in
need of reform, and we can be sure that the AIIB will not be Chinas last major initiative.
Lets hope China and the U.S. learn from this experience and find ways to identify areas
in need of change where they can collaborate or at least not get in each others way,
instead of being in opposite camps and forcing others in the region and elsewhere to pick
sides. Then both countries will be able to justly claim they are truly acting as responsible stakeholders.

U.S. has to play ball with the AIIB --- engagement on past institutions is no
longer sufficient
Soergel, 6/10/15 --- Economy Reporter at U.S. News (Andrew, Amid U.S. Paralysis,
China Cashing In; While Congress has failed to move forward with IMF reforms, Beijing
is poised to boost its banking power,
http://www.usnews.com/news/articles/2015/06/10/asian-infrastructure-investment-
bank-chinas-answer-to-western-marginalization, article downloaded on 6/7/16, JMP)
***Note --- Rajiv Biswas is Asia-Pacific chief economist at IHS Global Insight,
an economic analysis firm
In the meantime, China a country whose say in the IMF is now almost comically dwarfed by smaller economies like the
U.K., France, Germany and Japan appears to be fed up with being marginalized and waiting for Congress to make a
move. Enter the AIIB. Through it, China gains not only more influence, but more
power through that influence. "The situation within the IMF and the World Bank is limiting the ability
of China to use its increased economic size to put more liquidity into these institutions, which is not good for these
institutions. And it's not good for developing countries because it means the size of the lending capabilities of the world
banks is rather restricted," Biswas says. "I think what it means for developing countries is the true size of the Chinese
economy can come to bear in terms of capital funding and development." How the new bank will be governed has not been
finalized, though a report this week from The Wall Street Journal cited "people close to the institution" as saying China
will have veto power over major decisions in the AIIB, possibly similar to America's veto power in the IMF. "Initial
indications are that China and India will most likely have significant voting rights," Biswas says. "And the total voting
rights of all Asian member countries will be well above 50 percent of the total AIIB voting rights." The U.S. hasn't publicly
attacked the formation of the AIIB or its international partners who intend to be part of it, although an unnamed U.S.
official in March sparked backlash by telling the Financial Times that the U.K. was developing "a trend toward constant
accommodation of China" when the British announced interest in joining the AIIB. "We clearly haven't made the decision
to join," White House spokeswoman Jen Psaki said shortly after the U.K. announced its plan to partner with the new bank.
"We believe that, while there's a need to enhance infrastructure around the world, that multilateral institutions should
have the highest standards that the international community has built." The U.S. has, however, been accused of
unsuccessfully pressuring its Western allies to steer clear of the new investment bank. Officials reportedly have raised
questions about China's ability to govern the union in a noncorrupt manner, though American pleas have largely fallen on
deaf ears as the AIIB is offering something U.S. pressure can't really compete with. "We're offering the world market
access and democracy, and the Chinese are offering the world cash. It's the old story: Does the girl marry for love or for
money?" Morici says. "Nation-states tend to marry for money, unless they feel an existential threat." China will also
command a leading role in the New Development Bank, an institution similar to the IMF that would be spearheaded by
the BRICS countries: Brazil, Russia, India, China and South Africa. Through these new institutions and its investment of
$40 billion into a Silk Road infrastructure project, Beijing will be able to increasingly flex its economic prowess without
the restrictions placed on it by the IMF and World Bank. For other countries, joining the AIIB is as much about funding
development as it is showing a willingness to play ball with Asia's adolescent economic titans. "Many EU nations as well as
several developed countries in the Asia-Pacific have joined the AIIB," Biswas says. "They see this as an important
opportunity to build business opportunities for their firms and financial institutions in the fast-growing Asian markets.
And now, even if Congress spontaneously approves IMF reforms and decides to
finally share its toys, it'll be too little, too late. Beijing went out and got its
own toys to play with, and the U.S. and the Western world will have to come
to terms with China's continued emergence and influence.

U.S. concerns over Chinese governance prevents efforts to positively reform

the AIIB and facilitate multilateral diplomacy and deep cooperation with
China
Edwards & Qahir, 15 --- *Associate Professor of Diplomacy and International
Relations, Seton Hall University, AND **Diplomacy graduate student at Seton Hall
(4/6/15, Martin & Katayon, US should stop blocking Chinas AIIB and join allies in new
club, https://theconversation.com/us-should-stop-blocking-chinas-aiib-and-join-allies-
in-new-club-39406, article downloaded 4/23/16, JMP)
Chinas growing economic clout is complicating US efforts to maintain its grip on the
worlds leading multilateral economic institutions as its done since the end of World War II. The
creation of the Asian Infrastructure Investment Bank (AIIB), established last year by China and many other Asian
countries, has brought this challenge and how to address it front and center. The AIIB is similar
to the Asian Development Bank (ADB) and the World Bank in that its intended to finance infrastructure investments
except that it will serve more as an instrument of Chinese rather than Western influence. Thus far, the US has reacted by
trying to marginalize the banks impact, urging other Western powers to follow its lead and steer clear. As weve seen in
recent weeks, that strategy has failed miserably, with Australia, the United Kingdom, France, Germany and even Taiwan
now interested in becoming founding members. Of the major powers, only Japan has continued to follow its allys lead.
This represents a serious setback for the White Houses ability to lead the international economic order on its own terms.
While the narrative of the day is that of a policy defeat for the Obama administration, some larger points are worth
noting. Manage multilateralism, dont block it First, the very existence of the AIIB is a self-inflicted
problem for the US. It could have been avoided had the US been willing to cede some power at the IMF and ADB. Second,
objections to European and other Western countries joining it are shortsighted because the best way to influence
its actions is by being on the inside. Finally, the AIIB is a good thing for both China
and the US over the long term as it shows the rising powers interest in
taking on more global responsibilities exactly what the White House has sought
so arguments against it are counterproductive. Hoisted on its own petard The AIIB is intended to
solve a problem by providing money to support the trillions of dollars of infrastructure investment that emerging markets
will need in coming years. With a veritable ocean of foreign exchange at its disposal, creating a regional development
bank right now makes perfect sense for China. It is a vehicle for the Chinese government to help aid regional development
as well as a signpost to demonstrate its international prestige. But China would not have been so willing to create its own
international bank had it felt appropriately valued in the ones that already exist. What is frequently omitted in the
discussion of the AIIB is the extent to which this problem was created by dysfunction between Washington and Tokyo over
reforming the Asian Development Bank, as well as within Washington around International Monetary Fund reform. The
Asian Development Bank has been dominated by the US and Japan since its creation in 1966. China is the largest economy
in Asia, while only the third-largest shareholder in the Asian Development Bank. As it has been custom that the president
of the ADB is Japanese, Chinese attempts to gain influence within the bank commensurate with its economys size have
been blocked. Similarly, IMF reform was proposed in 2010 by the G20. Under the proposed reforms, Chinas voting
power was to double, making it the third-largest shareholder at the IMF behind only the US and Japan. Brazil and India
would both become top-ten quota-holders as well, displacing Saudi Arabia and the Netherlands. In this manner, global
economic governance would be reinvigorated, as these emerging economies would receive a voice at the IMF equivalent to
their influence. Though IMF reform has been approved by more than 150 countries, including many that would lose
influence under the proposals, the US Congress has refused to budge. Despite warnings from the rest of the G20
underscoring the urgency of passing the reforms, Congress has sought to squeeze compromises on the IRS and healthcare
from the White House in exchange for its support. While the Obama Administration wants the reforms, it has refused to
sacrifice its signature health care law or link it to other measures. So at this point, IMF reform simply wont happen in the
current Congress. Given Chinas inability to produce reforms of the existing development banks that would address
Chinas concerns, its move to create its own development bank was its only way forward. US objections are shortsighted
Washington has been on the wrong side of this issue by dismissing the AIIB rather than celebrating it. For the past year,
the White House has raised concerns about how the new bank would operate, suggesting
that the AIIB would have insufficient safeguards. The AIIB might undercut the World Bank and the
Asian Development Bank, the argument goes, as countries might prefer the promise of cheap money from Beijing without
the strings the other lenders attach. But questioning Chinese governance of the bank not
only reminds our allies of our shortcomings in IMF reform, it also overlooks
the surest route to reforming the AIIB. Cooperation is always more difficult in large groups with
divergent preferences than smaller ones. The growing list of AIIB members (including South Korea, Norway
and Denmark) means that the Chinese will have to accommodate those countries concerned
about safeguards. Rather than push back on AIIB, the US should welcome the participation of
many countries. It will fall to China to figure out how to reconcile this diverse membership. This will ensure
that fighting climate change and improving environmental standards will not be
sacrificed in favor of growth at any cost. Chinese engagement should be welcomed For years,
Washington has sought to encourage China to be a responsible stakeholder in the
global economy. The AIIB demonstrates that China seeks to embrace this challenge, and
the fact that it is doing so multilaterally rather than bilaterally should not be
overlooked. The US has helped to support regional development banks in Africa and Europe, so a new one in Asia
should not be the threat that it is made out to be. The need for infrastructure in emerging Asian economies is so acute that
the two banks need not be in competition. Embracing AIIB will help keep US-Chinese relations
moving forward by moving beyond the sharp rhetoric of recent weeks. It will also give us a means to
smooth over relations with European allies. More importantly, joining the AIIB gives the US a seat at the
table, and a way to work with allies to moderate Chinese behavior. What will make the difference in
the long term in shaping US relationships with Asia is working with allies to address
common challenges. Multilateral diplomacy is not just a means to an end, but an end in
itself, and enmeshing China in a network of international organizations,
regardless of who created them, provides the best route for deepening
cooperation between the US and the Peoples Republic of China.

Engaging on the AIIB is critical --- its the focal point for Chinas expanded
international role and cooperation will help resolve Myanmar conflict and
spillover to cybersecurity and the South China Sea
Noori, et. al, 15 --- Program Specialist, Middle East & North Africa Programs at United
States Institute of Peace (8/24/15, Maral Noori, Daniel Jasper and Jason Tower,
Overcoming Barriers to U.S.-China Cooperation,
http://www.usip.org/publications/2015/08/24/overcoming-barriers-us-china-
cooperation, downloaded on 4/21/16, JMP)
In 2011, U.S. president Barack Obama announced plans to "pivot" toward Asia. In 2012,
Chinese president Xi Jinping expressed his hope for "a new type of relationship" with the
United States. A lack of strategic trust between the two countries, however,
prevents critically needed productive cooperation. This Peace Brief addresses
the misunderstandings behind this mistrust and a possible way to move beyond them.
Summary The United States has urged China to take on greater international
responsibility and to leverage its rise to power by adhering to international law and
urging its strategic partners to do the same. However, Beijings adherence to its principle
of noninterference has drawn sharp U.S. criticism, as has its tendency to support
incumbent governments in contentious states. Beijing is presenting a more flexible and
proactive foreign diplomacy. At the same time, it is concerned about U.S. military
policies and diplomatic campaigns seemingly targeted at containing China or
undermining Chinese efforts to influence global institutions. Identifying common
ground is more imperative than ever if what Beijing calls a "new type of major country
relations" are to be manifest in cooperative frameworks, policies, and joint initiatives.
Washington and Beijing need to build strategic trust, overcome domestic policy hurdles,
demonstrate their willingness to participate as leaders in the international community,
and better coordinate to fill gaps in global governance and development issues. About
this Brief In April 2015, the American Friends Service Committee (AFSC) and the United
States Institute of Peace (USIP) convened government officials and leading policy
analysts from the United States and China to discuss how both countries can jointly
support peace and development initiatives. These discussions, implemented
collaboratively with the Chinese Peoples association for Peace and Disarmament and the
China Foundation for Peace and Development, informed this Peace Brief. Maral Noori is
a program specialist at USIP. Daniel Jasper is the public education and advocacy
coordinator for Asia at the AFSC. Jason Tower is the East Asia Quaker International
Affairs representative at the AFSC. Introduction In late 2011, the Obama administration
announced plans to "pivot" toward Asia, and in late 2012, shortly after taking office,
Chinese president Xi Jinping expressed his desire for "a new type of relationship
between major countries in the twenty-first century."1 Chinese interpretations of these
relations usually highlight a greater voice in global governance and sharing power with
the United States. Yet many in Washington think that Beijings true intentions are to
challenge the U.S. presence in Asia at a time when Washington intends to consolidate its
regional leadership. Many U.S. analysts point to Chinese initiatives such as the One Belt
One Road or the Asian Infrastructure Investment Bank (AIIB) to argue that China is
pushing to reshape international institutions and responding aggressively to
Washingtons initiatives. Chinese experts point to U.S. diplomatic efforts to
undermine Chinese initiatives and argue that Washington is trying to
contain China in Asia. They also question U.S. policies, which they insist exacerbate
tensions over regional maritime disputes. Both nations directives leave ample room for
interpretation and have added to mounting tensions. Because misunderstandings
abound, identifying common ground is imperative. U.S.-China Relations and Global
Governance Washington has urged Beijing to take on greater international
responsibility. From the U.S. perspective, China should leverage its rise to power by
supporting international law and urging its strategic partners to comply. Response to
chemical warfare in Syria was a key example as Washington urged Beijing to agree to a
UN intervention against the Assad regime. Beijings preference for a softer approach and
strict adherence to noninterference drew sharp criticism from U.S. observers, who
characterized it as irresponsible. From Beijings point of view, China has prioritized
international tradeparticularly with the United Statesand investment mechanisms as
it remakes its diplomacy, emphasizing that security is rooted in development.
Unbalanced governance structures in the International Monetary Fund and World Bank
have left China feeling slighted and unwelcome in global financial discussions. Thus, the
entry of Chinese state-owned enterprises into developing markets created competition in
spaces where formerly the United States and Bretton Woods institutions held
comfortable control. China offered developing nations less restrictive terms for
development aid, investment capital, and trade, which proved a boon to Latin America
and Africa. The creation of the AIIB highlights Beijings understanding of its
new role. Beijing prioritizes economic contributions and investment in its global
engagement in shouldering its fair share of international responsibilities. U.S. efforts to
halt AIIB exemplify Washingtons distrust of Chinese foreign investment and reinforce
Chinas perceptions that the United States does not welcome Chinas
economic rise. For its part, Washington asserts the existence of serious gaps in the
social and environmental safeguards of Chinese-supported effortsconcerns echoed by
civil society representatives across the developing world. On global policy issues, Beijing
tends to focus on economics and Washington on security. Were this to emerge as a
division of labor, however, neither party would benefit. It is critical that a shared security
incorporate both domains. In recent months, bilateral cooperation on global
nontraditional security issues has seen some success. In April, the Chinese Ministry of
Public Security and the U.S. Department of Homeland Security held their first
ministerial meeting, signaling at least a willingness to discuss joint efforts. The two
powers also found grounds for collaboration during the Ebola crisis in West Africaas
evidenced by a Chinese-trained Liberian engineering firm helping establish the U.S.
Ebola Treatment Center. These measures may seem like basic starting points but have
provided camaraderie in the security realm. In more contentious cases, such as
Myanmar, cooperation has proven elusive despite a track 1.5 dialogue. Challenges
include not only lack of mutual trust but also local Myanmar concerns. Since opening
up, Myanmar has moved a little closer to the West. China considers this suspect, even
conspiratorial. Many in Beijing viewed Burmese protests to stop construction of the
Chinese-backed Myitsone Dam as Washingtons doing. Yet Washingtons interest in
Myanmar has largely been economic. Myanmar is a vast, untapped, and resource-rich
market. For Beijing, conflict on the Sino-Myanmar border and the proximity of
Washingtons focus make Myanmar a security issue. This intersection of economic
and security concerns looks like a crisis but could be an opportunity. Chinas
economic involvement could help provide the infrastructure necessary for Myanmar to
become a viable market. In turn, the United States could work more productively
with China to ensure that development is inclusive, safe, and profitable.
Additionally, given the sixty-year civil war and talks for a nationwide cease-fire, U.S.
and Chinese support to help end the conflict is needed now more than ever.
Finding common ground on which to build a more trusting relationship, then, needs to
be a priority in both Chinese and U.S. foreign policy agendas. Strategic Trust Lack of
strategic trust between the United States and China prevents productive cooperation.
Both sides have largely continued to act as if their relationship is a zero-sum game. These
tensions have only intensified over recent security concerns in the East China Sea and
the South China Sea. Moreover, Washington has cited concerns about Beijings steady
increase in military spending, from $10 billion in 1997 to $145 billion in 2015, and sees
China as a direct threat to its allies and interests in the Asia-Pacific.2 Beijing sees the
U.S. military presence in the region and across Asia as its greatest security threat. It is
also keenly aware that Washington maintains the worlds highest military spending, up
from $560 billion in 2015 to a requested $585 billion in 2016.3 Washington also
routinely accuses Beijing of cyber attacks on government agenciesmost recently in
June 2015 when both the Office of Personnel Managements systems and corporate
computer systems were breached. Both sides lack strategic trust in trade, despite China
being Washingtons second largest trade partner ($592 billion in 2014).4 A sense of
competition is constant. As Washington pushes forward with the Trans-Pacific
Partnership, Beijing pursues the Regional Comprehensive Economic Partnership. Each
framework tacitly excludes the other country, underscoring the mistrust. Further, the
two nations continue to compete for influence in Myanmar, a nascent democracy still
threatened by conflict. Points of tension should not prevent the United States and China
from overcoming their challenges, enhancing cooperation, and fostering deeper mutual
understanding and strategic trust. The private sectors and nongovernmental
organizations on both sides could launch this process by enhancing their own
cooperation. Ultimately, Washington and Beijing need to compartmentalize
early on and hope that positivity on some endssuch as cooperation in
Myanmarwill spill over to otherssuch as cyber security and the South
China Sea. Both sides will need to commit to greater transparency so that in
a moment of crisis, chances are minimal for misunderstanding to lead to a
major conflict. Domestic Politics Political interests undermine the bilateral
relationship. U.S. hard-liners fear an increasingly powerful China. The military threat is
used both to rationalize increasing U.S. defense funding and to counter any Obama
administration attempt to constructively engage China. Even the U.S.-China climate
change and clean energy cooperation joint announcement was denounced, with
Republicans complaining that China would not be required to make changes for sixteen
years.5 Similar hard-line Chinese sentiments are a growing trend. Conspiracy theories or
perceived illintentions related to U.S. policies abound, and nearly any negative outcome
in Chinas foreign diplomacy is blamed on Washington. The political transition in
Myanmar is an example. To prevent domestic politics from inhibiting constructive
cooperation, both the Obama and Xi administrations should devise strategies to manage
the impacts of interest groups on the relationship. Such strategies might include more
talks to repair damaged cooperative efforts, such as civilian nuclear cooperation (a
current point of contention on Capitol Hill), or perhaps to explore Chinese mediation in
U.S.-North Korea relations. Another option might be to establish a track II dialogue on
the impact of interest groups on the relationship that could generate stronger awareness
of the dynamics. Willingness Although Washington is intent on spreading liberal
democracy and continuing as a global leader, Beijing demonstrates growing commitment
to what President Xi terms "strive to achieve"a more active involvement in global
governance and international affairs.6 This policy looks to reshape Chinas traditional
approaches to foreign development assistance, trade, and investment. Washington, on
the other hand, is often willing to step within another states boundaries to confront
conflict and fulfill what it sees as its responsibility as a global leader. A willingness gap in
the relationship is clear as both countries struggle to adhere to their foreign policy
principles in a changing global arena. Beijing and Washington need to continue to show
flexibility in their foreign policy. Extreme applications of principles damage each side
and their ability to cooperate constructively. Perhaps it is time for them to change their
political narratives and take on their shared role in the international community. The
AIIB is one arena for such cooperation. Because its rules and
guidelines have yet to be fully defined, the AIIB provides Western states an opportunity
to share experiences with China and China an opportunity to integrate its approach to
development with those that other states have already developed. Capability The final
barriers to cooperation involve capability. China is newer to the field of peace and
development, has yet to fully establish the AIIB, and has only recently become a major
contributor to UN peacekeeping missions. Meanwhile, the United States can no longer
provide the support needed in least developed countries, a gap further handicapped by
congressional emphasis on U.S. defense rather than development and humanitarian
assistance. China and the United States can be complementary. China is strong in
engineering, construction, and infrastructure, and the United States is strong in
developing risk and security guidanceareas where Chinese and Western analysts alike
have pointed out key gaps in Chinese approaches. For optimal impact, the two countries
need to coordinate their development efforts. Conclusion As security tensions
continue to rise in Asia and as China begins launching
global initiatives, it is imperative that Washington and
Beijing find ways to collaborate. As Beijing academic Wang Jisi recently
wrote, both countries risk seeing the emergence of competing global institutions, which
may result at best in wasted resources and at worst in deeper conflict and tensions
across the developing world. The AIIB is a possible starting point.
Fifty-seven countries signed the banks charter in June 2015, and the bank has emerged
as a global initiative promising to remake the face of global finance. Washington
might be well advised to engage with the AIIB. Because the AIIB
will target infrastructure and development projects in least developed countries and
conflict hotspots, its emerging portfolio is an opportunity for Chinese-U.S.
cooperation. Development lending could prove a minimally politically
sensitive testing ground.

South China Sea conflict goes nuclear.

Christensen 6/5/15 Thomas J., Boswell professor of world politics and director of
the China and the World Program at Princeton University, is a former U.S. deputy
assistant secretary of state for East Asian and Pacific affairs, China's Rising Military:
Now for the Hard Part http://www.bloombergview.com/articles/2015-06-05/china-s-
rising-military-now-for-the-hard-part
One reason for this is that no consensus exists in East Asia on the territorial status quo , as there did
between the two Cold War camps in most regions of the world. The Peoples Republic of China, in the center of a
region of great importance, has maritime sovereignty disputes with several of its neighbors,
including two formal U.S. allies (Japan and the Philippines) and one security partner (Taiwan). Laboratory
research on prospect theory, a psychological exploration of risk-based decision-making, demonstrates that
most actors accept much bigger risks and are willing to pay larger costs to defend what
they believe is rightfully theirs than to obtain new gains at others expense. In a world in which
conventional conflict could conceivably escalate to nuclear war, this human tendency is a
force for stability; attacks across recognized boundaries by either side would be risky, and deterrence against such
attacks is relatively credible. But in East Asia today, governments draw competing maps
about the maritime domain. There are significant differences between mainland China
and Taiwan about the sovereign status of the government on the island, and between China and Japan over who
owns the islands known as Senkaku in Japan and Diaoyu in China. There is also disagreement among China,
Taiwan, the Philippines, Vietnam, Brunei and Malaysia over ownership of islands, rocks and reefs
in the South China Sea. We should take no comfort in the apparent sincerity of all the claimants. If all actors truly
feel they are defending rightful claims against the revisionism of others, the chicken game of
international security politics is more likely to lead to a deadly collision. These
disputes are fueled by historical victimhood narratives and postcolonial
nationalism. For the countries involved, defending sovereignty claims and recovering allegedly stolen
territories are
core missions. China is no exception. Since the 2008 financial crisis, China has been
more confident abroad and more afraid at home. The country's elite and its citizens feel that its power
position on the international stage has improved drastically. But the foundations of its export-led and investment-fueled
growth model were shaken at the same time. Top leaders worry about rising social discontent. It
isn't a good time for Chinese leaders to look weak on defense. And China doesn't
have to be the actor that sparks a dispute for tensions to escalate. In 2010, for example, China often reacted sharply to
events initiated by others, such as Japans arrest of a Chinese fishing boat captain and crew near the Senkaku Islands.
Since then we have seen a mix of Chinese assertiveness -- such as its placement and then removal last year of an oil rig in
waters disputed with Vietnam and its continuing land reclamation projects on South China Sea reefs -- and its abrasive
reactions to others actions, such as an upgraded Chinese maritime presence near the Senkakus since the Japanese central
government purchased some of the islands from a private Japanese family in 2012. The Chinese leadership
could use its conventional military power to threaten U.S. partners and to impose high
costs on U.S. forces if they intervened to assist their allies. The ability to conduct such asymmetric
warfare against the U.S. can potentially affect how disputes are managed in peacetime and who
might prevail politically if a fight were to occur. The U.S. has ways to reduce a threat posed by Chinas ability to wage
asymmetric warfare. But a future U.S. president might be reluctant to use some of the more effective methods the
American military has at its disposal -- such as destroying or disabling military targets on the Chinese mainland --
especially early in a conflict when such measures would be most effective. For example, attacking China's potent ballistic
missiles, their launchers and their command-and-control systems before the missiles strike U.S. bases and surface ships
would be an efficient way to reduce the threat. Chinese submarines, which can fire torpedoes and cruise missiles or lay sea
mines, pose another potential threat. The U.S., all things being equal, might be tempted to attack
submarine ports and naval command-and-control systems on Chinese soil. But all things are not
equal. No U.S. president has ever launched robust conventional attacks against the
homeland of a nation with nuclear retaliatory capability. Moreover, the conventional mobile
ballistic missiles and submarines China has developed to counter superior U.S. forces
overlap dangerously with the land-based missiles and submarines that
China is developing to provide a secure nuclear retaliatory capability. If the U.S.
were to attack missile systems and submarines for the purpose of protecting against conventional attack early in a conflict,
Washington could unintentionally compromise portions of Chinas nuclear arsenal as well.
Chinese leaders could mistakenly view this as an attempt to eliminate Chinas nuclear
deterrent, risking escalation. China adheres publicly to a no-first-use doctrine on nuclear
weapons, a position that would seem to mean that no amount of conventional firepower leveled against it would cause it to
resort to a nuclear response. But internal Chinese military writings suggest that no-first-use is
more of a guideline than a rule and doesn't necessarily apply under conditions in which
a technologically superior foe attacks crucial targets with conventional weapons.

The suspicious atmosphere allows military conflict to erupt at any time ---
both sides must manage competition to prevent war and expand
cooperation on global governance issues that represent existential risks
Shambaugh, 15 professor of political science and international affairs at George
Washington University, and a nonresident senior fellow at the Brookings Institution
(David, In a fundamental shift, China and the US are now engaged in all-out
competition, South China Morning Post, 6/11/15,
http://www.scmp.com/comment/insight-opinion/article/1819980/fundamental-shift-
china-and-us-are-now-engaged-all-out?page=all //Red+JMP)
The relationship between the United States and China has rightly been described as the
most important relationship in world affairs. It is also the most complex and
fraught one. These two titans are the world's two leading powers and are interconnected
in numerous ways bilaterally, regionally, and globally. It is therefore of vital importance
to understand the dynamics that underlie and drive this relationship at present, which
are shifting. While Washington and Beijing cooperate where they can, there has also
been steadily rising competition in the relationship. This balance has now shifted,
with competition being the dominant factor. There are several reasons for it - but
one is that security now trumps economics in the relationship. The competition
is not only strategic competition, it is actually comprehensive competition: commercial,
ideological, political, diplomatic, technological, even in the academic world where China
has banned a number of American scholars and is beginning to bring pressure to bear on
university joint ventures in China. Mutual distrust is pervasive in both governments,
and is also evident at the popular level. The last Pew global attitudes data on this, in
2013, found distrust rising in both countries. Roughly two-thirds of both publics view
US-China relations as "competitive" and "untrustworthy" - a significant change since
2010 when a majority of people in both nations still had positive views of the other. One
senses that the sands are fundamentally shifting in the relationship. Viewed from
Washington, it is increasingly difficult to find a positive narrative and trajectory into the
future. The "engagement coalition" is crumbling and a "competition coalition" is rising.
In my view, the relationship has been fundamentally troubled for many years and has
failed to find extensive common ground to forge a real and enduring partnership. The
"glue" that seems to keep it together is the fear of it falling apart. But that is far from a
solid basis for an enduring partnership between the world's two leading powers. The
macro trajectory for the last decade has been steadily downward - punctuated
only by high-level summits between the two presidents, which temporarily arrest the
downward trajectory. This has been the case with the last four presidential summits.
Occasionally, bilateral meetings like the Strategic and Economic Dialogue, which
will convene in Washington in two weeks' time, provide similar stabilisation and
impetus for movement in specific policy sectors. But their effects are short-
lived, with only a matter of months passing before the two countries
encounter new shocks and the deterioration of ties resumes. The most recent
jolts to the relationship, just a few months since Xi Jinping and Barack Obama took their
stroll in the Zhongnanhai (the so-called Yingtai Summit), have been the escalating
rhetoric and tensions around China's island-building in the South China Sea. Behind this
imbroglio lies rising concerns about Chinese military capabilities, US military operations
near China, and the broader balance of power in Asia. But there have been a number of
other lesser, but not unimportant, issues that have recently buffeted the relationship in
different realms - in law enforcement (arrests of Chinese for technology theft and
falsification of applications to US universities), legal (China's draft NGO and national
security laws), human rights (convictions of rights lawyers and the general repression in
China since 2009), cyber-hacking (of the US Office of Personnel Management most
recently) and problems in trade and investment. Hardly a day passes when one does not
open the newspaper to read of more - and serious - friction. This is the "new normal"
and both sides had better get used to it - rather than naively professing a
harmonious relationship that is not achievable. This has given impetus to an
unprecedented outpouring of commentary and reports by Washington think tanks in
recent months. I have lived and worked there a long time, and cannot recall such a
tsunami of publications on US-China relations - and they are all, with one exception
(Kevin Rudd's Asia Society report), negative in nature, calling for a re-evaluation of US
policy towards China, as well as a hardening of policy towards China across the board. A
qualitative shift in American thinking about China is occurring. In essence, the
"engagement" strategy pursued since Nixon across eight administrations, that was
premised on three pillars, is unravelling. The American expectation has been, first, as
China modernised economically, it would liberalise politically; second, as China's role in
the world grew, it would become a "responsible stakeholder" - in Robert Zoellick's words
- in upholding the global liberal order; and third, that China would not challenge the
American-dominant security architecture and order in East Asia. The first premise is
clearly not occurring - quite to the contrary, as China grows stronger economically, it is
becoming more, not less, repressive politically. There are any number of examples, but
political repression in China today is the worst it has been in the 25 years since
Tiananmen. With respect to the other two, we are not witnessing frontal assaults by
China on these regional and global institutional architectures. But we are witnessing
Beijing establishing a range of alternative institutions that clearly signal
China's discomfort with the US-led postwar order. Make no mistake: China is
methodically trying to construct an alternative international order. This disillusion
with China in America probably says much more about America than it does
about China. One pattern has repeated itself over the past two centuries of the
relationship: America's "missionary impulse" to transform China in its image has
repeatedly been disappointed by not understanding the complexities on the ground in
China and by China's unwillingness to conform to American expectations. So, once
again, this seemingly has more to do with the United States and its unrealistic
expectations, than with China. Despite this overall macro climate in the relationship, the
United States and China still have to coexist, and to do so peacefully if at all possible. We
have business to do with each other - both commercial and diplomatic business. Perhaps
the most immediate opportunity - and one that would give an enormous boost to the
relationship - would be the conclusion of a bilateral investment treaty. But negotiating
this treaty is hung up in the queue behind the Trans-Pacific Partnership agreement.
Given the difficulty the White House is having getting that agreement finalised and
through Congress, there may be little appetite in Washington to conclude an investment
treaty with China this year. Also high on the agenda at present is the real need to forge
practical cooperation on a number of so-called "global governance" issues, including
North Korea, Iran, Islamic State, Afghanistan, counterterrorism, anti-
piracy, climate change, maritime security, economic stability, energy
security, sea-lane security, and setting global rules for cyber activity. To date,
China has been extremely reluctant to collaborate openly with the United States on such
global governance issues, but now it possibly seems more feasible. This is because
President Xi has personally endorsed more "proactive diplomacy" by China in
the global governance arena. This won't solve the problems in US-China relations,
but it will help. The upcoming Strategic and Economic Dialogue and Xi's September
state visit to Washington are golden opportunities to discuss these issues, try to forge
tangible cooperation, and arrest the negative dynamic in the relationship. The question
is whether it will be temporary again, or a real "floor" can be put beneath the
relationship. If the past is any indicator, we should not expect too much. What worries
me is that in this increasingly negative and suspicious atmosphere, "tests of
credibility" will increase. The best we can probably hope for over the next two to
three years - as President Obama becomes a lame duck and the election cycle stimulates
more heated rhetoric about China - is tactical management of the relationship, with
sensitivity to each side's "red lines" and "core interests", while hoping that no "wild
card" events occur. This could include another military incident in the air or at sea, or
renewed tension over Taiwan. Even the current situation in the South China Sea has real
potential to haemorrhage, as China is not going to stop its island-building activities and
hence will not meet American demands that it do so. Or if China, having fortified the
islands, proclaims an air defence identification zone over the South China Sea. What is
Washington to do then? The potential for military confrontation is not
insignificant. So, looking to the future, the key responsibility for both countries
is to learn how to manage competition, keep it from edging towards the
conflictual end of the spectrum, while trying to expand the zone of practical
cooperation. Neither country has any playbook to guide such a relationship. Henry
Kissinger envisions what he calls "co-evolution" between the two powers, but even he
concludes that this will require "wisdom and patience". But it is not at all clear to me that
the respective political cultures and existing political systems, national identities, social
values, and world views will afford such a strategic grand bargain today. Thus, these two
great nations are likely to find it increasingly difficult to coexist - yet they must. However
fraught, this is a marriage in which divorce is not an option. Divorce means war.

China will be forced to turn to aggressive military actions if the U.S. doesnt
support its growing role in the global economy via the AIIB
Lipscy, 15 --- Assistant Professor of Political Science and the Thomas Rohlen Center
Fellow, Shorenstein Asia-Pacific Research Center, Freeman Spogli Institute for
International Studies, Stanford University (5/7/15, Phillip Y., Who's Afraid of the AIIB;
Why the United States Should Support China's Asian Infrastructure Investment Bank,
https://www.foreignaffairs.com/articles/china/2015-05-07/whos-afraid-aiib,
downloaded 4/23/16, JMP)
When China first proposed creating the Asian Infrastructure Investment Bank (AIIB) in 2013, it generated considerable
anxiety in Washington and many other capitals. Many pundits and policymakers view the AIIB as a bid to undermine or
replace the international architecture designed by the United States and its allies since the end of World War II. Although
several U.S. allies, including Australia, Germany, and the United Kingdom, have declared their intention to join the AIIB,
others, including Japan, have expressed ambivalence. For its part, the United States has made it clear that it will seek to
influence the institution from the outside. But it would be a mistake to shun or undermine the AIIB.
Rather, it should be welcomed. Both
the United States and Japan have far more to gain by joining
the AIIB and shaping its future than remaining on the sidelines. The details remain vague, but the
AIIB is meant to be a multilateral development institution that will focus on infrastructure needs in Asia. There is no
question that this is a deserving cause. Asias large population, rapid growth, and integration with the global economy all
generate demand for better infrastructure. A report by the Asian Development Bank (ADB) estimates the region needs
about $750 billion annually in infrastructure-related financing. Citing historical underinvestment, McKinsey & Company,
a global management consulting firm based in New York City, proclaims a $1 trillion infrastructure opportunity in Asia.
Although precise estimates vary from one report to another, the broad point is uncontroversial: Asia needs more
infrastructure, and international financing can help. Why, then, is the AIIB itself controversial? There are essentially two
reasons. First, Western governments fear that the AIIB will, in one way or another, undermine existing international aid
institutions. U.S. policymakers have publicly expressed concern that the AIIB will undercut social and environmental
standards adopted by existing institutions such as the World Bank and International Monetary Fund (IMF). An
underlying fear is that the AIIB could eventually overshadow and undermine these institutions, which are based in
Washington and seen as closely reflecting U.S. interests. Japanese policymakers have expressed similar reservations.
Second, there is concern about Chinas intentions within the broader context of its economic and geopolitical rise. The
AIIB signals that China intends to play a larger international role. Will China act like a responsible stakeholder by further
integrating itself into the existing world order, or will it focus more on challenging U.S. hegemony by seeking to
undermine and replace the postWorld War II international architecture? The AIIB seems to indicate that China is
interested in the second scenario. After all, why else would China choose to design its own development institution from
scratch rather than working through existing institutions? Yet both sets of concerns are largely misplaced.
The AIIB is highly unlikely to undermine existing aid organizations, and the creation of
the AIIB conveys very little information about Chinas broader international intentions.
On balance, the United States and Japan have more to gain from joining the AIIB and shaping its future than seeking to
exert influence as bystanders. INSTITUTION IN-CROWD China has a unique relationship with postWorld War II
international organizations. After the Chinese civil war, Chiang Kai-sheks Taiwan remained the de jure representative of
all of China in major international organizations. This was a serious fault line of the early Cold War, triggering the Soviet
boycott of the UN Security Council in 1950. However, the United States used the boycott to its advantage, securing UN
Security Council authorization for operations against North Korea during the Korean War. The Soviet Union grudgingly
returned to the council to aggressively exercise its veto, but the question of Chinese representation remained unresolved.
China exacerbated its international isolation by withdrawing from several international organizations, such as the
Universal Postal Union and the World Meteorological Organization, in protest of Taiwans membership. As a result, by the
1960s, China had essentially no representation in the postwar institutional architecture. There were a few occasions on
which China endorsed proposals that would pose competition with existing institutions. For example, the premier of
China, Zhou Enlai, encouraged Indonesia under President Sukarno to challenge the architecture: In these
circumstances, he said, another UN, a revolutionary one, may well be set up so that rival dramas may be staged in
competition with that body which calls itself the UN but which is under the manipulation of United States imperialism and
therefore can only make mischief and do nothing good. China sent the largest delegation and won the most medals at
Sukarnos Games of the New Emerging Forces, an athletic competition created to pose direct competition against the
Olympics, from which China was excluded. Indonesia also became the only country in the UNs history to formally
withdraw from the organization in 1965, and Sukarno proposed the creation of an alternative institution, the New
Emerging Forces Organization (NEFO). The proposal raised concerns among U.S. policymakers, who worried that the
initiative might entice developing countries away from the UN. NEFO ultimately went nowhere, though, as Sukarnos grip
over his own country slipped. Indonesia returned to the UN only a year later. If Chinas isolation from the international
architecture had continued in subsequent decades, such challenges may have become more serious. However, in a pivotal
UN General Assembly vote in 1971, China displaced Taiwan as the sole representative of its country in the UN. Although
membership in other organizations came with varying lags, within about a decade, China had completely turned the tables
on Taiwan. Chinas history of contestation over representation sets the scene for contemporary debates about the
international architecture. For decades after the end of World War II, a major Chinese foreign policy objective was to
secure recognition and status in postwar international organizations. Once that status was secured, Chinas unique
method of entry gave it significant advantages that were denied to many other rising powers. The postwar architecture
systematically advantaged the major Allied powers of World War II over countries on the wrong side of the war (Japan
and Germany) or countries that were weak or colonized (Brazil and India). In many respects, China avoided these
disadvantages: it automatically assumed the formal privileges that had been granted to the Republic of China, most
notably permanent membership and veto power in the UN Security Council. These factors mean that when it comes to
major international institutions, China is more of a status quo power than one might expect. Much of the contemporary
Chinese foreign policy narrative emphasizes Chinas contributions to the Allied victory in World War II against fascism
and militarism. Undermining the architecture is not in Chinas interest: it provides material benefits, enhances Chinese
legitimacy, and is not obviously biased against China. For sure, Chinese underrepresentation is an important problem in
several areas, such as in the voting rights of the IMF and the representation of Chinese nationals among the personnel of
major organizations. However, for the most part, China has more to gain from incremental adjustments of the architecture
than from a wholesale redesign. HOW AID WORKS The AIIB does not alter this basic picture. It is useful to consider
some features of contemporary development aid. Development aid is a highly competitive and fragmented policy area.
There are at least 28 multilateral international organizations that already specialize in international development akin to
the AIIB. In addition, most major economies also engage in bilateral aid through their own aid agencies. These include 29
members of the Development Cooperation Directorate of the Organization for Economic Cooperation and Development
and a host of developing countries, including China. To top it off, numerous private foundations and firms participate in
development directly or indirectly. On a yearly basis, the ADB and Inter-American Development Bank each disburse the
equivalent of about 40 percent of the World Banks disbursements. Yearly U.S. bilateral aid is typically on a par with
World Bank disbursements. Aid organizations often work collaboratively, pooling expertise and resources to implement
projects. However, competition is also an important feature of contemporary development aid.
Donors have numerous channels through which they can give out aid; likewise, potential
recipients can receive aid from a wide range of sources. This is particularly true for the
rapidly developing countries of Asia, which the AIIB will target. The competition
imposes accountability and places important limits on international aid organizations. A
good example is the United Nations Development Program. The UNDP is considered one of the premier international
development organizations. It was established in 1966 as a major agency of the United Nations, and it has near-universal
membership. However, the agency was created with a decision-making structure that limits the influence of important
donor states: following the broader UN principle that each member state should have equal representation, the
organization follows a one-country-one-vote rule. Hence, the United States, one of the largest donors to the organization,
has the same voting power as Nepal, a major aid recipient. This means that large donor states feel their interests are not
sufficiently reflected in UNDP decision-making. As a consequence, they have effectively shifted their attention elsewhere,
depriving the UNDP of resources and forcing the organization to pursue noncore arrangements over which it has limited
control. The UNDP has faced a chronic shortage of funding: adjusted for inflation, core disbursements by the UNDP
peaked in 1981 and have steadily declined to about half those levels. This type of competition has two implications for the
AIIB. First, to remain relevant, aid organizations must be accountable to their stakeholders.
If the AIIB is seen as being overly dominated by China, other members will turn their
attention elsewhere, depriving the organization of resources, attention, and skilled staff.
There is no plausible scenario under which the AIIB could supplant existing
organizations such as the World Bank and ADB unless the organization suitably reflects
the concerns and interests of the broader international community. Second, maintaining
governance and accountability standards in development aid is already extremely difficult, particularly when dealing with
relatively successful developing countries that can pick and choose from a wide range of multilateral, bilateral, and private
financing sources. For this reason, the entry of the AIIB as an additional funding source in Asia is
unlikely to make a significant difference in social and environmental standards. If China
truly seeks to undercut the quality and conditions of existing aid agencies, it can already do so more expediently through
bilateral aid and overseas activities of its state-owned enterprises. INSTITUTIONAL POWER Many pundits and
policymakers see the AIIB in zero-sum terms: if China is successful, the United States and its allies lose. A recent article in
the conservative Japanese Sankei newspaper is illustrative, arguing that the AIIB represents Chinas attempt to follow
Sun-tzus teachings to subdue the United States and Japan without engaging in direct combat. But there is a fundamental
problem with this worldview: international institutions are not like military equipment or
strategic territory, which makes a country more powerful and potentially threatening.
Multilateral international institutions are fundamentally cooperative arrangements,
premised on mutual benefits. On net, the activities of the AIIB are much more likely to
bring benefits rather than costs to the United States as well as the broader international community. The
most obvious of these is the positive spillover of economic development. China itself is testament to the importance of
infrastructure investment for growth. Better infrastructure in Asia will mean more economic activity and business
opportunities not only for Chinese firms but also for American, European, and Japanese firms. For sure, some
infrastructure can be designed to bring disproportionate benefits to specific countries: for example, roads and pipelines
that direct traffic toward China. However, in an age of interconnected markets and global supply chains, it is practically
impossible to limit positive spillover effects to a single country. Multilateralism will also make it more
difficult for China to overtly manipulate projects funded by the AIIB. An important reason the
United States established multilateral institutions after the end of World War II was to reassure its allies that their voices
would be heard and that the United States would not seek unilateral domination. Multilateralism not only
enhances but also constrains the ability of powerful states to get what they want. For all the
shortcomings of U.S. foreign policymaking since the end of World War II, its emphasis on multilateralism has been a
resounding success. Take trade. Before the 1930s, U.S. trade policy oscillated between openness and closure depending
on which political party controlled Congress. The contemporary trade architecture, initially based on the General
Agreement on Tariffs and Trade and more recently the World Trade Organization and a host of regional arrangements,
prevents such dramatic swings. It also surely benefits U.S. economic interests by maintaining the free flow of international
commerce The same logic applies to the AIIB. The AIIB will likely give China some important
advantages akin to what the United States and Japan enjoy, respectively, in the World Bank
and ADB. However, China will also be constrained by other members of the institution.
The structural advantages that China enjoys in the AIIB will be beneficial only insofar as other members take the
institution seriously and provide funding, skilled staff, and coordination. If the institution is perceived as being unfair or
nontransparent, it will become nothing more than a shell organization through which China disburses bilateral foreign
aid. To put it differently, China has a basic choice. It can create an AIIB that is mutually
beneficial, reflects the broader concerns of its members, and perhaps modestly
overrepresents Chinese interests. If, instead, China seeks to dominate the AIIB, the
institution will shrivel into irrelevance. In the former case, U.S. membership in the
AIIB will provide an opportunity to influence and shape the trajectory of an
institution that will make a meaningful contribution to economic development in Asia.
In the latter case, there is no meaningful threat to U.S. interests anyway. COOPERATIVE
CONFLICT Realist international relations scholars have predicted that China and the United
States face inevitable conflict based on the idea that power transitions create turbulence as rising powers seek to
assert their newfound authority and status quo powers resist. An optimistic alternative, based on the
liberal tradition, predicts a more benign outcome, in which the pacifying effects of
economic interdependence, international institutions and norms, and, perhaps one day,
democracy will push Beijing and Washington toward cooperation rather than conflict.
Between these two extremes is a third possibility that ought to be taken more seriously:
the renegotiation of the world order. To some degree, contestation over
international institutions replicates the functions performed by military
clashes in prior eras. It shapes geopolitical and economic outcomes, provides
markers for relative status among states, and integrates states into groupings that share
common values and purposes. Japans emergence in the late twentieth century is
illustrative. Scholarly work in the early 1990s predicted confrontation between Japan and the United States as the
former emerged as a major economic power. The political scientist Kenneth Waltz, for example, forecasted that Japan
would increase its military capabilities and perhaps acquire nuclear weapons as it reemerged as a great power and
reasserted its authority. Others worried that tensions between the United States and Japan could
intensify as the latter sought to reestablish its predominant position in the East Asian
region. For the most part, Japan instead maintained close ties with the United States and
focused its diplomatic attention on international institutions as venues for promoting its
newfound status and policy prescriptions for the international order. A crucial
battleground for competing Japanese and American visions has been international
economic institutions. In the World Bank and IMF, Japan sought to achieve greater voting rights and recognition
for its economic approach, which has emphasized greater state intervention and a focus on basic infrastructure. Japan also
sought to create regional institutions through which it could exercise influence, such as the ADB and the failed Asian
Monetary Fund. Of course, China differs from Japan in many respects, but its proposal for the AIIB is best seen in this
light. The AIIB would give China somewhat greater material and ideological influence over multilateral development
lending than it currently enjoys. Perhaps equally important, the AIIB can be interpreted as a
marker of status and prestige. One could argue that a multilateral development
bank is one of the bells and whistles that comes with contemporary great power status:
the United States has the World Bank, Japan has the ADB, and the EU has the European Bank for Reconstruction and
Development. China will have the AIIB. The upshot is that the influence and prestige of contemporary
international institutions give countries a new avenue through which to gently contest
the contours of the world order. There is less of a need to resort to coercion or
military conflict. The heart of the matter is this: Does the United States prefer a world in
which China seeks to establish its influence and international prestige by
building multilateral development banks or one in which it seeks to do so by
building aircraft carriers? Pushing back against the former sends the troubling
message that the United States is concerned about not just the means but the ends of
Chinas rise. The AIIB provides an opportunity to acknowledge and applaud
Chinas emergence as a builder of multilateral institutions and a contributor
to global public goods. The institution may very well give China more influence over development in
Asia, but it will be a more transparent and accountable way of exerting influence
than through bilateral economic or military pressure. The AIIB may or may not
ultimately succeed, but it poses very little risk to U.S. and Japanese interests, since it enters a
crowded, competitive field of multilateral development agencies. The United States thus
has every incentive to encourage, not discourage, Chinese foreign policy initiatives such
as the AIIB.
 1AC ENVIRONMENT ADV CLIMATE IMPACT

Advantage 2 is the Environment

The AIIBs Environmental and Social Framework allows for flexible

interpretation and ineffective implementation must ensure follow-
through that prioritizes sustainability
Larsen and Gilbert 3/14/16 [Gaia, Senior Associate in the WRI's Sustainable
Finance Center, where she leads its work on financial institutions and climate finance
readiness, Sean, China director and Director of Sustainability Reporting Framework at
the Global Reporting Initiative, Asian Infrastructure Investment Bank Releases New
Environmental and Social Standards. How Do They Stack Up?, World Resources
Institute, 3/4/16, http://www.wri.org/blog/2016/03/asian-infrastructure-investment-
bank-releases-new-environmental-and-social-standards] MG
Last week, the new Asian Infrastructure Investment Bank (AIIB) released its Environmental and Social
Framework, which will help guide how the bank deals with its investments impacts on
people and the environment. With authorized capital of $100 billion and promises to deliver aid with less
bureaucracy, the AIIB could play a big role in re-shaping countries around the
region. Negotiations over its formation have been punctuated by questions over what standards it would apply to
govern its investments. For its part, the AIIB has committed to being lean, clean and
greenand to applying world-class standards. So what can we see in the newly released Framework? The
Highs and Lows First, the Framework does indeed send a signal that AIIB is acting on its commitment to meet the
international standards used by development banks to consider impacts on people and the environment before
committing funds to a development project. The Framework lays out a vision, a policy, and three supporting standards
that are broadly similar in nature to those of the World Bank (WB), Asian Development Bank (ADB) and other established
multilateral development banks. On some issues, the AIIB has embraced more progressive positions than some of its
peers. For example, the AIIB excludes financing for commercial logging operations in tropical or old-growth forests, which
goes beyond the current commitment made by the World Bank. On other subjects, the AIIBs commitments are not quite
as strong. For example, the AIIB has not followed the lead of the ADB or International Finance Corporation (IFC) in giving
Indigenous Peoples the right to consent to activities taking place on their lands. In general, though, the
Frameworks vision recognizes many of the issues such as climate change, gender,
biodiversity and ecosystems, resettlement, labor practices and Indigenous Peoples that
AIIB will encounter as it begins to make investments. It also makes very important commitments
around transparency, information disclosure and public participation that exceed those of a number of national
development banks, including key players such as the China Development Bank and the China Export-Import Bank.
Following through on these commitments will be critical to building trust and
confidence in the banks approach. Looking Ahead: Going from Guidance to Implementation Looking ahead,
there are two key areas for next steps. First, policies are the starting point,
but implementation requires as muchif not more
attention. The Framework contains the building blocks for a robust system, but leaves
much room for interpretation. It states that requirements should be
implemented in proportion to the risk, and allows for variation under
certain circumstances. While these provisions are not unreasonable, interpretation of
this language will require subjective, professional judgments, and will
define how the Framework shapes engagement with clients in practice. The
Framework will need to be supported by more detailed operating
procedures and efficient consultation processes to help guide these
judgments. Equally important, sustainability will have to be socialized
within the bank and built into the institutional culture such
that it is truly accepted as integrated. It must be seen as part of
the role of investment officers, and not just a compliance requirement
overseen by a risk management team. The second important area of work will be how the AIIB
proactively guides investment priorities towards green and inclusive growth. If implemented correctly, the
Framework document can help the AIIB reduce risks and mitigate negative impacts.
However, particularly in a post-Paris world, banks need to go beyond
avoiding risks to proactively assessing whether infrastructure projects place
nations and the world on the right development track towards achieving
global targets on climate, landscape restoration, inclusive growth and other
goals. Research is increasingly showing that green growth may have winners and losers at the sectoral level (e.g., oil
industry vs. solar industry), but that it does not present major trade-offs at the level of whole economies. For example, the
New Climate Economy has found that the differential between business-as-usual and climate-friendly investment is only
$270 billion per year globally, just 5 percent more. To be fair, this is a challenge facing many MDBs,
which means that the AIIB has an opportunity for leadership and leap-frogging
as it builds its systems from the ground up. The Framework outlines a vision that
includes supporting green growth and assisting clients in achieving their nationally
determined contributions and developing knowledge. The question now lies
in how to best do this such that performance targets around, for example, climate
change mitigation and adaptation, natural capital enhancement, or gender equity are
treated as equal in importance to metrics of GDP growth and the banks own financial
performance. The AIIB has put forward a good starting point for ensuring that its
investments support sustainable infrastructure. But it also has an opportunity to
take more pioneering approaches as it looks at what it means to help clients develop infrastructure
As the AIIB moves
that moves our economies and societies to a model of long-term, sustainable growth.
forward, the next steps will be as important as the first in
ultimately determining the nature of its contribution to
development.

Without a change to its procedures the AIIB will fuel mega infrastructure
projects and a massive expansion of coal use
Bankwatch 15 [CEE Bankwatch Network, international non-governmental
organisation with member organisations from countries across central and eastern
Europe that monitors activities of IFIs to promote sustainable projects, New Beijing-
backed Asian Infrastructure Investment Bank struggles to convince on environment and
sustainability issues, 12/17/15, http://bankwatch.org/bwmail/63/new-beijing-backed-
asian-infrastructure-investment-bank-struggles-convince-environment] MG
The Asian Infrastructure Investment Bank (AIIB), the China-led financial institution, has emerged as a multilateral
development bank with the backing of 57 members in record time. Jin Liqun, president designate of the new
financial institution set up to provide financing for infrastructure projects in south east Asia and countries along the Silk
Road route in South Asia, Central Asia, the Caucasus and the periphery of Europe, has declared that the AIIB
will be a lean, clean, and green institution which upholds the highest standards of 21st
century governance. Early doubts, though, hang over these aspirations. A second
review of the AIIBs draft environmental and social framework (ESF) is currently ongoing, and
the banks Articles of Agreement require its Board of Directors to approve the final version before any formal decisions can
be taken on policies or projects. In the absence of a functioning board, the AIIB has nonetheless
leapt into the process of lining up its project pipeline for 2016, including naming infrastructure
projects in Pakistan as forthcoming investments for the institution. The AIIBs loan book, which has a capital base
of USD 100 billion, is to be capped in the short- to medium-term at USD 100 billion. Other multilateral
development lenders such as the Asian Development Bank have agreed to identify projects for co-financing with the AIIB,
while the European Bank of Reconstruction and Development (EBRD) says it will be ready to present the AIIB with
several projects ripe for immediate co-financing from next year. Just last month, an official from
Indonesias Ministry of Finance was quoted praising the AIIB's readiness to provide USD 1
billion in loans to Indonesia over the next four years, including for coal-fired power
projects. This was backed up by a reported assertion that " AIIB imposes looser
environmental requirement in disbursing its loans, making it the preferred creditor for
financing Indonesias coal-fired power plant projects". This statement was retracted and replaced with
"AIIB as opposed to other multilateral lenders like Asian Development Bank or the World Bank allowed its financing
to be used for Indonesias coal-fired power plant projects." Such sweeping and conflicting statements
about the AIIB's future financing of coal projects in Indonesia prior to the approval of a
functioning Board of Directors which has yet to be elected into office are highly
alarming. Yet they chime with Chinas previous suggestion that a technical panel will make expert decisions on AIIB
funded projects rather than the banks board in tandem with the guidance of an internal sector investment policy. What
remains critically missing is a sector investment policy for coal. Indeed, during one of the few effective dialogue sessions
held with civil society organisations via video conferencing, the AIIBs chosen format for conducting a succession of
hurried public consultations on its first ESF back in September, the bank was unable to either clarify in
principle or in detail its procedures for project approval and for time-bound information
disclosure related to investments which will have significant to irreversible
environmental and social impacts. Currently, at the time of writing, the final draft of AIIBs
environmental and social policies is being negotiated behind closed doors. What
remains critically missing is a sector investment policy for coal, or an analysis
of the known and irreversible environmental, social and health risks specific to coal,
enabling quantification and avoidance strategies that could offer guidance on the viability and
prudence of planned coal projects. The EBRD, the World Bank, as well as the European Investment Bank have all
adopted climate and energy policies in recent years which limit their funding of highly polluting coal-fired power plants.
Some shareholder countries within these public development banks which have effectively stopped financing coal projects
are also founding members of the AIIB, including 14 EU member states. While the non-regional/European members of
the AIIB make up a small percentage of the total shareholders, it is unclear whether these EU countries have acted during
the AIIBs set-up negotiations to support restricted financing of unabated coal projects, consistent with the policies they
have supported at the other multi-laterals. Regrettably, the apparent lack of tough talking on
the issue of coal at the AIIB negotiating table would suggest that policy
incoherence can be tolerated. Similarly, the European countries concerned risk forfeiting their relevance
by muting their agreed climate and energy policy targets to fit in with the new kid on the blocks intention to help drive
forward more unabated coal projects at precisely the wrong moment. This is unacceptable in the wake of the Paris climate
summits historic agreement which many observers have viewed as spelling the beginning of the end for the fossil fuels
era. Jin Liqun has meanwhile gone on the record to suggest that coal power is a human rights issue for people living in
poor countries with no access to power, and that the AIIB therefore ought to make exceptions for the funding of new coal.
However, a recent study from the Overseas Development Institute (one of many published recently) shows that in practice
new generation capacity does not translate directly into new electricity connections or even lower prices for existing
poor consumers. In short, the construction of new coal plants is no silver bullet for solving energy poverty. As the
AIIB appears to be set on autopilot mode for providing funding for big-ticket
energy and transport infrastructure projects, doubts persist about whether
sustainable development goals will be hamstrung by unwarranted, unfit policies which
fail to protect communities and the environment in which they inhabit from the
predictable, well-documented and irreversible harms associated with mega-scale
infrastructure projects, including coal. How can the latest entrant to the multilateral development lender
sphere plan to uphold the clean and green agenda and foster sustainable economic development, as prescribed by its
founding articles, if not through the adoption of measurable policies compatible with the type of environmental and social
Without some
due diligence standards already practiced by other multilateral development banks?
rapid-fire injection of ambition and responsibility into its
policies and procedures, the new beginnings under way at
the AIIB threaten to see a return to the darkest,
unregulated days of international development finance.

Infrastructure development in Asia key to global climate change --- ensuring

strong AIIB standards is critical
Nassiry and Nakhooda 16 [Darius, head of international cooperation department at
Global Green Growth Institute, Director at Millennium Challenge Corporation where he
led teams for development of investment programs in Asia, Smita, Climate finance fellow
at World Resources Institute, The AIIB and investment in action on climate change,
Working Paper 433, April 2016, https://www.odi.org/sites/odi.org.uk/files/resource-
documents/the_aiib_and_investment_in_action_final_20160413.pdf] MG
The Asian Infrastructure Investment Bank (the AIIB or the Bank) is poised to be an
important new actor in international development finance, led by developing
countries to scale up investment in infrastructure. The choices that Asian
countries make about how to meet their infrastructure
needs, particularly in key sectors such as energy and
transport, will fundamentally affect the planets ability to
achieve low emission and climate resilient development,
and keep global temperature changes to well below 2C
degrees above pre-industrial temperatures, as stated in the Paris
Agreement on climate change. As a new multilateral development bank (MDB) conceived
to tackle pressing development challenges of the 21st century, the AIIB has an
opportunity establish a new approach to infrastructure investment that
prioritizes renewable energy, climate resilience and sustainable
development. Indeed, the AIIB has the potential to exceed the practices of other MDBs
in these areas by finding new approaches that resonate with member needs and
priorities. As the founding member of the AIIB and its largest shareholder, there is a
strong case for China to support such an emphasis given its leadership in clean energy
industries. The AIIBs investments can help expand markets for renewable energy, and
change the narrative around the emphasis of Chinas overseas investments as one
focused on clean sustainable development, rather than resource extraction. Asian
countries are already emerging as leaders in clean energy with new business models that
meet the needs of poor people within poor countries. Most countries in the region are
also highly vulnerable to the impacts of climate change. A focus on low emission paths to
sustainable development represents an investment in a future with major long-term
commercial benefits for many members of the AIIB. The Intended Nationally
Determined Contributions (INDCs) that Asian countries have proposed and their
emerging priorities with respect to achieving the Sustainable Development Goals (SDGs)
provide a basis for the AIIB to develop its investment strategies. The AIIB should set
targets around clean energy investment, and developed country members could make
concessional funds available to support the achievement of these goals. Incentives
should be structured so staff emphasise low emission development options and climate
resilience. Tools such as the use of carbon footprinting and shadow pricing to reflect the
externalities of fossil fuel emissions should be used to inform the AIIBs investment
decisions. Such measures could enable the Bank to achieve its stated aim to be lean,
clean and green.

Warming is real, anthropogenic, and threatens extinction --- prefer new evidence that
represents consensus
Griffin 15 (David, Claremont philosophy professor, The climate is ruined. So can
civilization even survive?, 4-14, http://www.cnn.com/2015/01/14/opinion/co2-crisis-
griffin/)
Although most of us worry about other things, climate scientists have become increasingly worried
about the survival of civilization. For example, Lonnie Thompson, who received the U.S. National Medal of
Science in 2010, said that virtually all climatologists "are now convinced that global
warming poses a clear and present danger to civilization." Informed journalists share
this concern. The climate crisis "threatens the survival of our civilization," said Pulitzer
Prize-winner Ross Gelbspan. Mark Hertsgaard agrees, saying that the continuation
of global warming "would create planetary conditions all but certain to end
civilization as we know it." These scientists and journalists, moreover, are worried not only about the
distant future but about the condition of the planet for their own children and grandchildren. James Hansen, often
considered the world's leading climate scientist, entitled his book "Storms of My Grandchildren." The threat to
civilization comes primarily from the increase of the level of carbon dioxide (CO2) in the
atmosphere, due largely to the burning of fossil fuels. Before the rise of the industrial age, CO2 constituted only 275
ppm (parts per million) of the atmosphere. But it is now above 400 and rising about 2.5 ppm per year. Because of the
CO2 increase, the planet's average temperature has increased 0.85 degrees Celsius (1.5
degrees Fahrenheit). Although this increase may not seem much, it has already brought
about serious changes. The idea that we will be safe from "dangerous climate change" if we do not exceed a
temperature rise of 2C (3.6F) has been widely accepted. But many informed people have rejected this assumption. In the
opinion of journalist-turned-activist Bill McKibben, "the one degree we've raised the temperature already has melted the
Arctic, so we're fools to find out what two will do." His warning is supported by James Hansen, who declared that "a target
of two degrees (Celsius) is actually a prescription for long-term disaster." The burning of coal, oil, and
natural gas has made the planet warmer than it had been since the rise of civilization
10,000 years ago. Civilization was made possible by the emergence about 12,000 years
ago of the "Holocene" epoch, which turned out to be the Goldilocks zone - not too hot,
not too cold. But now, says physicist Stefan Rahmstorf, "We are catapulting ourselves way out of the Holocene."
This catapult is dangerous, because we have no evidence civilization can
long survive with significantly higher temperatures. And yet, the world is on a trajectory
that would lead to an increase of 4C (7F) in this century. In the opinion of many scientists and the World Bank, this could
happen as early as the 2060s. What would "a 4C world" be like? According to Kevin Anderson of
the Tyndall Centre for Climate Change Research (at the University of East Anglia),
"during New York's summer heat waves the warmest days would be around 10-12C (18-
21.6F) hotter [than today's]." Moreover, he has said, above an increase of 4C only about
10% of the human population will survive. Believe it or not, some scientists consider
Anderson overly optimistic. The main reason for pessimism is the fear that the planet's
temperature may be close to a tipping point that would initiate a "low-end runaway
greenhouse," involving "out-of-control amplifying feedbacks." This condition would result, says
Hansen, if all fossil fuels are burned (which is the intention of all fossil-fuel corporations and many governments). This
result "would make most of the planet uninhabitable by humans." Moreover,
many scientists believe that runaway global warming could occur much more quickly,
because the rising temperature caused by CO2 could release massive amounts of
methane (CH4), which is, during its first 20 years, 86 times more powerful than CO2.
Warmer weather induces this release from carbon that has been stored in methane hydrates, in which enormous amounts
of carbon -- four times as much as that emitted from fossil fuels since 1850 -- has been frozen in the Arctic's permafrost.
And yet now the Arctic's temperature is warmer than it had been for 120,000 years -- in other words, more than 10 times
longer than civilization has existed. According to Joe Romm, a physicist who created the Climate Progress website,
methane release from thawing permafrost in the Arctic "is the most dangerous amplifying feedback in the entire carbon
cycle." The amplifying feedback works like this: The warmer temperature releases millions of tons of methane, which then
further raise the temperature, which in turn releases more methane. The resulting threat of runaway global
warming may not be merely theoretical. Scientists have long been convinced that
methane was central to the fastest period of global warming in geological history, which
occurred 55 million years ago. Now a group of scientists have accumulated evidence that
methane was also central to the greatest extinction of life thus far: the end-Permian
extinction about 252 million years ago. Worse yet, whereas it was previously thought that significant
amounts of permafrost would not melt, releasing its methane, until the planet's temperature has risen several degrees
Celsius, recent studies indicate that a rise of 1.5 degrees would be enough to start the melting. What can be done
then? Given the failure of political leaders to deal with the CO2 problem, it is now too
late to prevent terrible developments. But it may -- just may -- be possible to keep
global warming from bringing about the destruction of civilization. To have
a chance, we must, as Hansen says, do everything possible to "keep climate
close to the Holocene range" -- which means, mobilize the whole world to
replace dirty energy with clean as soon as possible.
 1AC PLAN + SOLVENCY --- SUSTAINABLE
INVESTMENT STANDARDS

Plan: The United States federal government should substantially increase its
economic and diplomatic engagement with the Peoples Republic of China to
develop sustainable investment standards in Chinas financing institutions.

U.S. participation in the AIIB ensures that China exercises constructive

global leadership --- SQ sends the signal of containment
Bergsten, 15 --- director emeritus and senior fellow at the Peterson Institute for
International Economics (3/15/15, Fred, US should work with the Asian Infrastructure
Investment Bank; Washington should sign up and bless the desire of its friends to join,
writes Fred Bergsten, https://next.ft.com/content/4937bbde-c9a8-11e4-a2d9-
00144feab7de, article downloaded 5/2/16, JMP)
Chinas decision to create a new development bank for Asia is proving a highly divisive
enterprise. The Asian Infrastructure Investment Bank, due to open its doors later this
year, has sparked deep divisions between Beijing and Washington. The latter argues that
the bank will undermine existing international institutions and that it will be a vehicle
for a broader expression of Chinese strategic interests. Now the AIIB has also become a
source of major discord between the US and some of its chief allies, including the UK,
which has decided to become a founder member of the new institution. That sparked an
angry response in Washington, a sorry development that reflects the huge mistake the
US has made in opposing a bank aimed at helping to meet Asias need for trillions of
dollars of investment in energy, power, transportation, telecommunications and other
infrastructure sectors. China and 20 other Asian countries agreed in October to establish
the AIIB. Beijing will provide the bulk of capital and founding members include India,
the second largest shareholder, as well as two Gulf Arab states, Kuwait and Qatar. A
number of non-regional countries were invited to be founder members, an offer rejected
by the US, which then lobbied allies, including Australia, South Korea, the UK and other
European states, not to join. Washington argues there is no need for a new development
lender, given the World Bank and the Asian Development Bank. There are dark
mutterings in DC that AIIBs Chinese leadership may ignore international lending norms
and support projects that promote Chinese political, or even military, interests. The US
is wrong to adopt this position. President Barack Obama has called for more Asian
infrastructure investment. The existing institutions are only scratching the surface of
those needs and have adopted different priorities in recent years. Competition is good for
development lending as well as other markets. Concerns about backsliding from
standards on transparency, procurement and anti- corruption are justified
but the way to address them is to join the institution and work from within;
it is nonsense to argue that carping from outside will be more effective. Most
importantly, this issue represents a fresh skirmish in the inevitable
competition for leadership of the world economy in the 21st century. As the
incumbent power, the US naturally wants China to support the international rules and
institutions that it has led for 70 years. As the rising power, China naturally challenges a
status quo it had no role in creating and wants to begin shaping a modified order itself.
The US has correctly urged China to exercise leadership consistent with its expanding
power, and to provide more resources to support development and other global goals.
When the Chinese move in those directions, as they are doing with the AIIB, it is short-
sighted and hypocritical for the US to seek to block them. This is especially true when the
Obama administration has not persuaded Congress in four years to adopt legislation to
provide enhanced roles for China and other emerging economies in the International
Monetary Fund, as agreed by all other countries; and has opposed increasing the capital
of the Asian Development Bank. This US hostility reinforces the Chinese view
that US strategy is to contain and suppress it; so increasing rather than
decreasing the prospect of uncooperative Chinese behaviour. The UK and
other US allies, by contrast, are wise to accept Chinas invitation to join. The US
should reverse course. It should join the bank and persuade Congress to provide the
small amounts needed to fund a minority share. It should bless the desire of its friends in
Asia and Europe to join, to help counter any untoward Chinese actions. And it should
encourage the World Bank and the other current multilateral lenders to co-operate
closely with the new institution. The AIIB initiative can then play a positive role
in the world economy and capitalise on Chinas growing willingness to
exercise constructive global leadership.

The plan reverses the perception of hostility

Marston, 16 --- Southeast Asia analyst at a Washington, D.C., think tank (2/28/16,
Hunter, A Four-Point Plan for Reviving the U.S. Role in Asia,
http://nationalinterest.org/blog/the-buzz/four-point-plan-reviving-the-us-role-asia-
15342?page=show, article downloaded 5/3/16, JMP)
Downplay the Current Mindset of Rivalry The great challenge of the century for
future American leaders will be accounting for Chinas rise. In the immediate
term, the next president should focus on two measures which can downplay the
current mindset of rivalry between Washington and Beijing. The next
administration should learn from the Obama administrations strategic mishandling of
Chinas announced Asian Infrastructure Investment Bank (AIIB). When Beijing
announced its new regional economic initiative, Washington voiced strong opposition
and wasted serious political capital by leaning hard on allies and partners to not join the
AIIB. Despite its vociferous resistance, Australia, the United Kingdom, Germany, and
France, all joined Chinas infrastructure bank. Only Japan held off, citing concerns with
transparency and governance, before announcing its own $110 billion funding for
regional infrastructure via the Asian Development Bank. Competition for infrastructure
projects across Southeast Asia between the United States, Japan and China, does not
present a no-win scenario. In fact, the United States should let Chinas AIIB thrive,
because it signals a net positive for all parties concerned: the United States and
Japan, China, and especially Southeast Asian countries in need of infrastructure
development and connectivity, which will provide trade links throughout the region. As
part of reducing the sense of rivalry, Washington and Beijing must also take steps to
mitigate the chances for strategic mistrust and conflict. James Steinberg and Michael E.
OHanlon in their book, Strategic Reassurance and Resolve: U.S.-China Relations in the
Twenty-First Century, provide a compelling case for enhanced cooperation between the
two sides, even amidst escalating competition. Yet, strategic rivalry need not breed
armed conflict. The region holds the potential for both explosive economic growth as
well as great power conflict, as the United States and Japan, two of the three largest
economies in the world, attempt to accommodate Chinas rise within the liberal
international order of free market democracy that has largely set global norms since
World War II. The contradiction is that China is neither liberal nor democratic; nor, as
the worlds fastest growing economic power for several decades, does it embrace free
market standards espoused by the West. The stark differences of Chinese social values
and conceptions of governance have created great uncertainties for other countries, who
find themselves wrestling with the question: is China a revisionist power seeking to
rewrite the rules of the game, or will China attempt to fit into the world order that has
enabled its rise thus far? The next American president would do well to corral a strong
foreign policy team with Asia expertise and to give the above questions some serious
consideration. The ability of both parties candidates to articulate a credible Asia policy
to the American public will win votes, and it will also determine U.S. standing in the
world in the Asian century.

Plan will stimulate reform and innovation in the existing international

economic order --- including the World Bank, IMF and ADB. Direct U.S.
engagement is critical to begin the process and ensure environmentally
destructive projects arent funded.
Elgin-Cossart & Hart, 9/22/15 --- *Senior Fellow at American Progress, where she
works on issues involving foreign policy, international development, and global conflict,
AND **Senior Fellow and Director of China Policy at American Progress (Molly Elgin-
Cossart and Melanie Hart, Chinas New International Financing Institutions;
Challenges and Opportunities for Sustainable Investment Standards,
https://www.americanprogress.org/issues/security/report/2015/09/22/121668/chinas-
new-international-financing-institutions/, article downloaded 4/23/16, JMP)
In recent years, China has moved into development finance in a very big way. In July 2014,
China took the lead in bringing together the major emerging national economies of Brazil, Russia, India, China, and South
Africaknown as the BRICSto form the New Development Bank, or NDB, an international lending institution that will
provide at least $50 billion in development funding to emerging markets. Then, in June 2015, China led a group of more
than 50 nations to launch the Asia Infrastructure Investment Bank, or AIIB, another China-led development bank that
plans to invest at least $100 billion to build new infrastructure projects across Asia. The AIIB launch was a major coup for
Beijing because it was not just a developing country initiative. Multiple G7 nations, including France, Germany, Italy, and
the United Kingdom, rushed to join the AIIB as founding members. Importantly, the United Kingdom joined despite
reported objections from the United States, which chose to stay out of the AIIB and openly criticized the United Kingdoms
decision to join. With the AIIB, China is now playing a leading role not only among emerging
nations, but among major developed economies as well. In addition to these two multilateral
initiatives, China is also rolling out two new unilateral lending programs: Chinas South-
South Cooperation Fund, which will provide $20 million annually to support climate work in developing nations,
and the $40 billion China Silk Road Fund that will fund projects associated with Chinas
Belt and Road Initiative, which is Chinas new marquis outbound investment initiative. Based on dollar amounts
alone the NDB, AIIB, and Silk Road Fund stand to operate on par with existing financial institutions, such as the World
Bank Group and the Asian Development Bank, which operate on capital basesmoney both paid in and pledged by
member nationsof $223 billion and just more than $160 billion, respectively. Once the new organizations get rolling,
borrowing nations will have a much larger menu of lending options to choose from. The U.S.-dominated World Bank and
the Asian Development Bankin which the United States is the first and second largest shareholder, respectivelywill no
longer be the biggest lending game in town, particularly in the broader Asia-Pacific region. From a Chinese perspective,
challenging U.S. dominance is exactly the point. Chinese leaders are throwing capital into these new lending institutions
because they are frustrated with Washingtons refusal to support reforms in the World Bank and the International
Monetary Fund, or IMF, that would give China and other emerging nations more voting powerand more lending
responsibilityon par with their growing economic clout. The U.S. Congress has been the biggest roadblock to reform in
the IMF. The Obama administration has made multiple attempts to move forward on IMF governance reform. But those
changes require congressional approval, and Congress has refused to support reform even though the proposed changes
would not substantially reduce the U.S. votes in the IMF relative to other member nations. U.S. congressional
representatives may have been resisting these reforms in an attempt to deny Chinas aspiration for a stronger voice in the
current international financial architecture. But instead of containing China, U.S. inaction emboldened China to go out
and form its own institutions. Even more importantly from Beijings perspective: when China stepped up to the plate,
other nations were willing to follow, even major developed nations such as the United Kingdom. Now the major U.S.-led
institutions face stiff competition from new Chinese-led institutions where the United States is not a member. It would be
easy to assume that this shift in the balance of lending power poses strategic threats to the United States and the U.S.-led
global financial architecture. However, the United States does want China to take on more
responsibilities in development finance, and Beijing is not going to put more Chinese
money on the table without having a say about where that money is spent. That is certainly an
understandable position. If Washington can help Beijing implement responsible lending
practices within these new banks, then Chinas challenge may be just what Americas
existing infrastructure needs to get out of a stagnant rut. Current U.S.-led organizations
such as the World Bank, IMF, and Asia Development Bank, or ADB, are not keeping pace with
changing global investment needs; these pre-existing institutions are not attracting enough
capital from lender nations to fill escalating investment needs, and their outdated governance structures
have failed to effectively leverage lending capital from China and other rising economies.
The alacrity with which the AIIB was formed points to the potential of the
AIIB and other new international institutionssuch as the BRICS New Development Bank
to stimulate much needed reform and innovation in the existing
international economic order. Development lending, just like other markets,
benefits from competition. At present, however, China and its new lending partners are
going to need more engagement and support from the United States and existing
financial institutions to kick off this positive cycle. This issue brief will provide an overview of the
existing international financial order, how Chinas new financial institutions fit in to the status quo system, and what the
United States should do to make sure these new banks drive a race to the top in finance for sustainable investment. The
existing order In many ways, the formation of the AIIB is a symptom of a larger problem: the current
development financing system is outdated and badly in need of reform. The
World Bank, IMF, and ADB simply are not putting forward enough capital to meet
current development needs, borrowers complain of unreasonable demands and delays,
and the structure of these institutions has not evolved over time to fit a changing global
economy. Within these institutions, China and other fast-rising economies can shift from borrowers to lenders as their
economies grow. But regardless of how much capital they are willing to put forward, they are not granted decision-making
power on par with the original founding nations. The World Bank is badly in need of a new strategy. Lending has declined
in recent years, driven by low capital infusions from World Bank members and increased competition from regional
development banks and private institutions. Commitments from the International Bank for Reconstruction and
Developmentthe branch of the World Bank that loans to middle-income countriesaveraged more than $25 billion per
year during the 1980s and 1990s. But support has since declined to around $15 billion per year, although 2014 saw an
increase to $18.6 billion. Lack of adequate, stable resourcesthe result of low capital infusions and inconsistent capital
increaseshas been a continual problem. The proliferation of ad-hoc trust fundswhich began as a
way to co-finance specific projects but are now mostly focused on global public goods
that cross borders, such as climate change or public health initiativespoint to the
inadequacy of the World Banks traditional lending instruments to tackle complex global
problems. The Asian Development Bank is facing similar challenges. The United States is the second largest
shareholder in the Asian Development Bank, behind Japan; China is number three. The combined capital base of the
World Bank and ADB is less than $400 billion, not enough to meet growing infrastructure investment needs in developing
Asia-Pacific nations. Chinas new kids on the block The New Development Bank was the first new Chinese-led institution
to come online. It was established in July 2014 by Brazil, Russia, India, China, and South Africa at the annual BRICS
Summit with $100 billion in authorized capital and $50 billion in subscribed capital. The NDB is structured to heavily
favor the founding BRICS members, and any contributions from new members may not reduce the BRICS voting shares
below 55 percent or increase the new members shares beyond 7 percent of the total voting shares. The ADB has similar
minimum regional representations. The protected dominance in voting shares, along with a requirement that the
president and vice president hail from BRICS countries, are likely to discourage other large economies from joining. While
the BRICS claim that they are aiming for a more inclusive governance structure compared to existing institutions, their
terms belie these claims. In contrast, the Asian Infrastructure Investment Bank is more open, with 57 founding members,
compared to five for the BRICS bank. AIIBs Articles of Agreement specify an open procurement policy, which means non-
AIIB members can provide goods and services for AIIB-funded projects. However, China will be the largest shareholder
and host the headquarters of the AIIB. While the call for members opened the floodgates that led to
a diplomatic coup for China, the result of AIIBs broader membership roster is
that it is much more likely to adopt more stringent governance and higher
environmental and social standards, with strong support from countries such as
South Korea and Australia. Non-Asian members will be limited to 25 percent of the AIIBs voting share and
therefore will have less influence on its decisions. As far as these big new multilateral institutions are
concerned, while the United States wont be writing the lending rules in the Asia-Pacific,
neither will the Chinese. There is a great deal of potential, then, for these new
institutions to create the impetus for revitalizing the global lending system
as a whole in both old and new multilateral development banks, and in the
process, create a race to the top. The standards question There is a clear need for new
investment capital in the developing world. The estimated need of infrastructure investments in Asia
alone over the coming years is more than $1 trillion annually. The AIIBs $100 billion capitalization would make the AIIB
two-thirds the size of the ADB. Giventhat the needs for Asian infrastructure have been estimated
in the trillions, there is more than enough space for multiple lenders in the region. In terms
of investment demand, the AIIB and NDB are clearly filling a gap. The unanswered question is which
type of projects these new development banks will support, and that is
determined by the standards they employ for project approval. If these institutions
adopt strong standards that safeguard people and the environment, they will support new development projects with a
positive impact on borrowing nations and regions. High environmental and social standards at
the AIIB and NDB could even push existing international lending
institutions to tighten their own project standards and streamline their
processes to become more efficient. On the other hand, if the AIIB and NDB adopt
standards that are too lax, they could wind up funding a wave of problematic
projects such as hydroelectric dams that devastate the local environment or
coal plants that accelerate global warming. Although most of its neighbors in the region welcome
Chinese lendingincluding via the AIIBBeijing is already encountering push back from nations
that initially welcomed Chinese investment but later turned sour on China after it
became clear that the projects brought unacceptable environmental damage or were
poorly constructed. Striking the right balance on lending standards for development aid is a difficult task. The
AIIB has said it will require projects to be legally transparent and protect social and
environmental interests; the AIIB secretariat is currently circulating a draft environmental and social framework
for public comment. The NDB, however, has been silent on the specifics of its
standards. On the environmental front in particular, the question remains: should a development bank support
energy developments that provide cheap fossil energy but also increase local air pollution, possibly damaging local public
health and speeding global climate change? The World Bank is a pioneer in the area of
establishing safeguards but can hardly claim unambiguous success. There is
tension between alignment with borrower priorities and the often slow and arduous
process of safeguards and accountability. This trade-off will only become sharper as
recipient countries grow in economic size and are presented with more lending options,
as will be the case when the AIIB and NDB come online. The World Banks introduction of
mandatory environmental and social safeguards followed the 1991 Pelosi Amendment. The U.S.
Congress passed the provision, sponsored by Rep. Nancy Pelosi (D-CA), to force the World Bank to conduct
environmental assessments for proposed projects and reject those with significant
negative environmental effects. This led to the rapid expansion of safeguard expertise at the bank. Additional
governance safeguards were developed during former World Bank President Paul Wolfowitzs 2005 reforms. Yet even
with safeguards in place, the system is far from perfect. In 2010, the World Bank green-
lighted a $3.75 billion development loan for the Medupi coal-fired power plant project in South Africa. At that time, South
Africa was suffering severe power shortages, and the World Bank believed that coal-fired power was the best option for
bringing energy online in large quantities and at low rates despite the projects expected environmental costs. The bank
required the plant to incorporate emission-control equipment, but the United States, United Kingdom, Netherlands,
Norway, and Italy all viewed the proposed power station project as a potential environmental disaster. Those nations
supported sustainability over fast fixes and were frustrated by their inability to block World Bank funding for the Medupi
project. In October 2013, as part of President Barack Obamas climate action plan, the U.S. Treasury
Department announced that the United States would no longer support multilateral
development bank funding for new coal-fired power plants except in narrowly defined
circumstances. The Obama administration took that unilateral step because it wanted to ensure that American
taxpayer dollars would not be used to support development projects that undermine public health and climate security.
The World Bank adopted a similar policy and now limits funding for new coal-fired
power projects to so-called rare circumstances. The United Kingdom, France, and
several other industrialized lending nations have followed suit. On this issue, the World
Bank and the major industrialized lending nations are now presenting a relatively united
front. The question now becomes, will the AIIB and NDB support or
undermine these efforts to strengthen development-lending standards? On
coal-fired power, will AIIB and NDB adopt a similar stance, or will they step in to build
all of the dirty-coal plants that the World Bank refused to fund? If the AIIB and NDB go
with the latter approach, that could severely undermine the global battle to
combat climate change. If instead the new banks adopt a reasonably high-standards
approach, then the projects that they fund will complement what the World Bank is
already doing. The new lending institutions could even wind up challenging
the World Bank to further tighten its own standards, thus driving a global
race to the top. Of course, setting high lending standards is not an easy thing to do. A Center for American
Progress research team recently visited potential AIIB borrowing nations across Southeast Asia to find out what emerging
markets in the broader Asia-Pacific region expect from the AIIB and how they are communicating those expectations to
China and other AIIB member nations. Many Southeast Asian nations are lobbying against high
AIIB project standards. They argue that if standards are set too high, then some nations will not qualify for a
single AIIB loan. Indonesia, for example, has been unable to move forward on projects with the World Bank because
Indonesia cannot meet the banks high project standards. Indonesia and many other emerging markets
expect China to provide a helping hand to its developing neighbors. These nations expect
that it will be easier to secure loans through the AIIB than it would be for them to obtain
funding from the World Bank. On the other hand, Beijing understands the political
damage China will face if the AIIB, NDB, and Silk Road Fund become synonymous with
dirty-coal plants and crumbling infrastructure. China is already facing some of these problems with its
outbound foreign direct investment. In Myanmar, for example, officials in that nation forced Chinese investors to halt
construction of the planned Myitsone dam after local citizens complained that the dam would flood critical historical areas
and damage biodiversity. As a consequence of that projects controversy, Chinas image has been severely undermined
among the Myanmar people. In Malaysia, citizens are complaining about bauxite-mining operations that supply
aluminum production in China but flood surrounding areas with poisonous byproducts, including cadmium, lead, and
thorium. Can China thread the needle between providing funding where it is most needed, while at the same time setting
standards high enough to ensure that AIIB will not trigger Asias next environmental disaster? Chinese leaders
have indicated that they do indeed want to aim high. AIIB Interim Secretary Jin
Liqun has stated that the bank will aim to operate in a lean, clean, and green fashion
and absolutely will not replicate Chinas pollution first mistakeswhich required expensive
clean upin AIIB borrowing nations. However, in private conversations, it is clear
that Chinese leaders have not yet figured out how they are going to keep that
promise. Unfortunately, the AIIBs draft environmental and social framework, released last
week, does not look promising. The framework is the set of loan application and loan assessment guidelines that
will determine the types of projects the AIIB will support and the environmental and social measures project borrowers
will need to employ to remain compliant with AIIB lending standards. While the current draft suggests
that the AIIB secretariat is making environmental and climate protection a
high priority in principle, the language in the draft framework contains
plenty of loopholes. It appears extremely likely that the AIIB will
support new coal projects, creating massive climate risk.
There is no explicit ban on coal-fired power plants. Coal-fired power is not even
mentioned in the environmental and social exclusion list, which is the list of banned projects, nor
does the draft specify limitations or conditions on funding coal projects, such as certain
levels of efficiency, or how they will promote cleaner alternatives. The AIIB guidelines
include the following statements: Loan applicants should assess a projects potential climate impacts and develop
mitigation or adaptation measures, as appropriate. Based on the current draft, there is no specificity
regarding the mitigation or adaptation measures that would be appropriate or required
in a specific circumstance. Project developers could potentially decide that it would be
appropriate to do nothing. Consider alternatives and implement technically and financially feasible and cost-
effective options to reduce Operation-related greenhouse gas emissions during design and operation. Based on the
current draft, project developers could apparently consider various alternatives and then reject them on the grounds that
they are too expensive to employ. For Operations that are expected to or currently produce more than 25,000 tons of
CO2-equivalent annually, where technically and financially feasible, quantify direct emissions from the facilities owned or
controlled within the physical boundary of the Operation. Based on the current draft, project developers can apparently
get out of this requirement by claiming that it is not technically and financially feasible to report the projects
greenhouse gas emissions. Most of the draft environmental and social guidelines depend on the
host countrys own regulatory framework; if a project does not violate host country
standards, then it will be eligible for funding. Based on this draft, the AIIB could wind
up funding projects that benefit powerful local interest groups but violate
international environmental standards and would therefore not be eligible
for World Bank funding. Such projects often anger local communities and can lead to massive
environmental and social disasters that turn host governments against these project as well. If the AIIB begins
lending based on these current draft environmental and social guidelines, not only is
there a massive risk of climate and environmental damage, but many AIIB
projects could create political headaches for Beijing and undermine Chinas image as a
good economic partner in the Asia-Pacific region. The current draft is just thata draftand the AIIB
secretariat released the draft because it wanted to consult with a large array of experts and hear their ideas for modifying
this draft. Now that the draft is out, this is an ideal time for the United States to engage.
That doesnt mean the United States needs to join the AIIB; but the United States could work
with institutions of which it is a member, such as the World Bank, IMF, and ADB, and
the new Chinese-led institutions to improve and unify standards across the board
by building on the hard-won lessons learned by the World Bank and other international
financial institutions and multilateral development banks. Given the risks if proper safeguards are
not in place, it behooves new and old institutions to cooperate. The AIIB and NDB, especially, will be preoccupied with
obtaining a high credit rating, which will allow them to loan on favorable terms, and they will therefore need to carefully
assess lending risks. World Bank President Jim Kims remarks ahead of the 2015 annual spring World Bank/IMF
meetings reflected the realization of this when he said, If the worlds multilateral banks, including the new ones, can form
alliances, work together, and support development that addresses these challenges, we all benefit. Recommendations
The IMF and the World Bank are already engaging the AIIB and NDB to help these new
banks learn from best practices in the west, but there is also a need for the
United States to engage directly. Currently, if one were to ask Chinese officials and
international financial experts what the U.S. position is on the new China-led financial
institutions, they would say the United States opposes the new banks and would point to the fact
that Washington reportedly tried to block its allies from joining the AIIB and failed. In addition, the Chinese would note
that the United States in essence turned AIIB membership into a choice between it and Chinaand China won. Moving
forward, the United States needs to take a more balanced approach to China-led
development financing and make it very clear that America welcomes China and other
nations to step up to the plate and provide much needed development financing, as long
as those projects meet reasonable environmental and social investment
standards. The Obama administration is certainly moving in that direction with official
statements, but the United States still does not have actual direct engagement on
this issue. This weeks U.S.-China presidential summit is a great opportunity to begin rectifying that situation.
Specifically, when it comes to the new development banks, the United States should support a review of
current and expected future global financing needs and engage in discussions about how
the institutionsnew and oldcan complement each other in their investment focus.
Even with the new institutions online, a funding gap will remain. Thus it is important
to develop a shared understanding of the needs and where the highest
priorities lie, as well as the comparative advantage of each institution in
undertaking specific projects. As part of this exercise, all development banksthe World Bank, the
regional development banks, and the new institutions such as the AIIBshould come together around a shared vision and
objectives based on achievement of the United Nations Sustainable Development Goals summit in late September in
Washington. The United States should work with China to formulate sustainable
investment standards that are acceptable to both developed and developing
countries. The United States and China have already tackled the developed versus
developing country divide under the United Nations Convention on Climate Change. The
two nations can apply the same model to international development finance. If the
United States and China can identify a set of common standards that both
nations can accept, it is highly likely those standards will be acceptable to
other nations as well. As they did in the climate negotiation realm, Washington and
Beijing will need to think outside the box to find a model that indicates complementarity
without requiring complete agreement across all parameters. For example, Chinaor the
AIIB secretariatcould issue a lending policy on coal-fired power that
parallels the U.S. policy, even if it does not perfectly match it . Conclusion It is clear
that the world of development finance is becoming more diverse and fragmented and
that can be a great thing for the United States: Washington can finally let China and other
rising economies carry more water around the world. Investment needs are too great to leave potential
lending nations on the sidelines. As more lending options emerge, however, standards are going to become even more
critical for shaping the types of projects development banks fund around the world. The United States faces a stark
choice between leading a cross-bank standardization effort or stepping back and ceding
that role to others. America has much to gain from helping China find its way
forward on this issue. From a U.S. perspective, leaning in should be the only
option on the table.

Independently, harmonizing sustainable investment standards

demonstrates U.S.-China global climate leadership
Hart et al., 6/13/16 (Melanie Hart, Pete Ogden, Kelly Sims Gallagher, Melanie
Hart is a Senior Fellow and Director of China Policy at the Center for American Progress.
Pete Ogden is a Senior Fellow at the Center. Kelly Sims Gallagher is professor of energy
and environmental policy at The Fletcher School, Tufts University. 6-13-2016, "Green
Finance: The Next Frontier for U.S.-China Climate Cooperation," Center For American
Progress,
https://www.americanprogress.org/issues/security/report/2016/06/13/139276/green-
finance-the-next-frontier-for-u-s-china-climate-cooperation/ // PD)
International finance: Going green or brown? In the post-Paris era, the United States and China not
only will need to grapple with domestic green finance challenges but also will play critical
roles in determining whether the world meets the climate challenge through their roles
in overseas investment and assistance. Moreover, there is reason to be concerned that
absent policy intervention, Chinas overseas investments will skew
browntoward fossil-fuel-intensive energy infrastructurerather than
greentoward a low-carbon pollution future. This would undermine global
efforts to achieve the goals of the Paris climate agreement. While this section of the
brief focuses on policies in the United States and China that shape and direct overseas investments and assistance, it is
important keep in mind the central role of the host country to which the investments flow in all of this. The Paris
Agreement provides some very useful parameters in this regard, as virtually every country in the world has committed to a
plan to reduce domestic emissions and, collectively, to the goal of limiting global temperature rise to below 2 degrees
Celsius. The United States has ramped up its international climate assistance over the past six years, reaching $15.6 billion
of public support between 2010 and 2015. This includes bilateral assistance; public support provided by the U.S.s
development finance institution and export credit agency, which in turn leverages significant additional private green
finance; and U.S. support though multilateral institutions such as the World Bank. As part of this effort, the United States
has committed to provide $3 billion to the Green Climate Fund by 2020 and delivered its first installment of $500 million
earlier this year. The other side of the coin is the extent to which the United States is working to limit its public support for
overseas assistance and investment and public assistance for highly polluting technologies, infrastructure, and other
projects that do not move countries along a path of sustainable economic development consistent with the Paris climate
agreement. On this front, the United States also has made progress, though more work remains to be done. In 2013,
President Barack Obama announced that the administration would not provide public support for new coal plants
overseas except in rare circumstances, a policy now shared by the World Bank and a number of other countries around
the world. The administrations announcement also helped make possible a 2015 agreement by all Organisation for
Economic Co-operation and Development export credit agencies to eliminate financing for new coal plants that were not
ultra-supercritical by 2017, albeit with exceptions for supercritical coal power plants smaller than 500 megawatt capacity
and subcritical coal power plants smaller than 300 megawatt capacity built in International Development Association-
eligible countries. In addition, in 2014, President Obama issued executive order 13677, which requires U.S. government
agencies to factor climate resilience considerations systematically into the federal governments international
development work. In other words, U.S. foreign assistance programs should not promote maladaptation to climate change
or worsening resilience. In
China, the situation is more complicated and, from a climate
perspective, potentially perilous if the necessary policy guidelines are not instituted
quickly. On one hand, China has for the first time demonstrated a new willingness to participate directly and publicly in
international climate aid efforts by launching and then pledging 20 billion renminbi, or $3.2 billion, for the new China
South-South Cooperation Fund on Climate Change. China also supports green finance initiatives internationally though
the World Bank and other multilateral development banks. In contrast to these instances of positive investment strategies
that promote sustainable economic growth and development through cleaner energy, adaptation, and climate resilience,
the Chinese government does not appear to have any overarching technical
guidelines or policies governing its overseas development investments or
aid to avoid negative investment outcomes. Unlike the United States, for example, China
does not impose limitations on public financing for highly polluting projects in other
nations, such as high-emission coal plants. The lack of overseas investment
guidelines is triggering concerns that China may continue to make green
investments at home and brown investments abroad. Some observers speculate that this
investment inconsistency could be intentional. Coal, steel, cement, and other pollution-intensive heavy industry sectors
are suffering from overcapacity in China. Where overcapacity is particularly acute, investing in heavy industry projects
abroad is generally seen as a winning strategy for creating new export markets to absorb excess production in an era of
declining demand at home. In the open market, firms would react to weaker demand by scaling back production or closing
down. If clean energy policies swing demand from coal to renewable sources, the market should follow suit. In China,
however, coal and other heavy industry sectors are dominated by state-owned enterprises with strong local government
ties, access to cheap capital, and a tendency to leverage both of those advantages to keep their factories running regardless
of the markets ability to absorb what is produced. One thing those sectors have done when demand slows at home is to
seek new markets abroad, often using state funds to do so. Chinas new Belt and Road program is the epitome of that
strategy. Under the program, Beijing is leveraging the nations diplomatic ties to help Chinese companies secure projects
in other nations and then backing those projects through the countrys $40 billion Silk Road investment fund. Some
observers are concerned that rising overcapacity in Chinas domestic coal sectors
combined with unclear environmental and climate standards for outbound investments
will trigger a new wave of overseas Chinese coal investments that could
counteract some of the good work China is doing at home to reduce
greenhouse gas emissions. Officials in Shanxi Provinceone of Chinas biggest coal-
producing regionsstate that they are actively pushing coal companies to go out and
build projects in Indonesia, Pakistan, and other Belt and Road nations to draw down the
provinces excess coal capacity. If the goal is to maximize coal consumption in other
nations, those investments could pose significant greenhouse gas emission
risks. The Global Economic Governance Initiative at Boston University has compiled a new data set on Chinas
overseas energy investments. Based on this data set, it appears that between 2001 and 2016, the Chinese government has
supported the construction of more than 50 coal-fired power plants abroad. A majority of these power plants58
percentuse subcritical coal technology, which is the most energy inefficient form of coal-fired power plant and therefore
the type that is most carbon intensive. Most of the remainder were supercritical plants, which are approximately 12
percent more efficient than subcritical plants. One such plant, in Egypt, was an ultra-supercritical plant, which is the most
energy efficient coal-fired power plant technology available. On an annual basis, this fleet of more than 50 coal-fired
power plants was estimated to release 594 million metric tons of carbon dioxide, equivalent to 11 percent of total U.S.
emissions in 2015 and 6 percent of total Chinese emissions in 2014the latest year for which data are available. If a 30-
year lifetime for these plants is assumed, they will emit 17,828 metric tons of carbon dioxide cumulatively, equal to slightly
more than U.S. and Chinese emissions put together on an annual basis. China
already is one of the
biggest providers of international energy assistance through the China
Development Bank and the Export-Import Bank of China. Now, it is establishing major
new financial institutions, including the Asian Infrastructure Investment Bank, or AIIB; the New
Development Bank, which is often referred to as the bank of Brazil, Russia, India, China, and South Africa, or the BRICS
Development Bank; President Xis signature Belt and Road initiative; and Chinas South-South Cooperation Fund on
Climate Change. In light of this, guideline clarifications for both bilateral development
aid and overseas investments represent an important opportunity for U.S.-
China collaboration going forward. Not only would clarified policy statements be useful to guide
investments and potentially harmonize standards, but the two nations could also once again
demonstrate joint leadership. China and the United States could collaborate on
positive, climate-friendly investment strategiesincluding on specific projectsand
establish information-sharing protocols regarding these investments. Moreover, both
countries could experiment with a wider range of investment programs, learning from
each others successes. The most recent U.S.-China joint statementon the occasion of President
Xis September 2015 visit to Washington, D.C.provides a promising diplomatic opening for bilateral
engagements. During the visit, China pledged to strengthen green and low-carbon policies and regulations with a
view to strictly controlling public investment flowing into projects with high pollution and carbon emissions both
domestically and internationally. For its part, the
United States reaffirmed its existing commitment
to end public financing for new conventional coal-fired power plants except in the
poorest countries. Both nations reiterated these commitments at the June 2016 U.S.-China Strategic and Economic
Dialogue, or S&ED, meetings in Beijing. Given this alignment, the United States and China could work to maximize
economic benefits for developing countries while minimizing environmental, social, and climate risks. Policy
recommendations The United States and China have a near-term opportunity to work together on their respective
implementation plans for the Paris climate agreement. It is critical for both nations to get the
implementation rightnot only because they are the worlds largest greenhouse gas emitters but also because
U.S. and Chinese policy successes can provide a blueprint for the rest of the
world to follow. To that end, U.S. and Chinese leaders should expand cooperation as follows:
Enhance bilateral cooperation on domestic policy. This would include work in the areas of gases other than carbon
dioxide, improved measurement capabilities for land-use change and the forestry sector, technological innovation, and
resilience. Devise common definitions for climate finance and green finance and set up a new collaborative initiative
on domestic clean energy finance policy. The United States and China have different economic and political systems, so
the same financing solutions will not always apply in both nations. However, China and the United States have enough in
common that both would benefit from the exchange of best practices and lessons learned as they relate to clean energy
finance. Clarify
guidelines for both bilateral development aid and overseas investments.
Not only would clarified policy statements be useful to guide investments
and potentially harmonize standards, but the two countries could also once
again demonstrate leadership by collaborating on positive, climate-friendly
investment strategies and projects. Establish information-sharing protocols regarding these
investments to promote transparency, learning, and improved practices over time. Launch a U.S.-China collaboration on
mobilizing green finance abroad. These types of foreign investment should be aimed at helping the least-developed
countries achieve the goals and targets that they set for themselvessuch as their Nationally Determined Contributions
as part of the Paris Agreement. Conclusion Just as the United States and
China played decisive roles in
the worlds ability to reach a climate agreement in Paris, the two countries will play
decisive roles in the worlds ability to fulfill the terms of the accord. This will
require that the United States and China not only mobilize green financing domesticallywhich is necessary to meet both
countries respective national clean energy and carbon pollution reduction commitmentsbut also that they use their
individual public overseas investment tools and assistance to help achieve the targets committed to in Paris. Through
engagement and cooperation, green finance can be another constructive plank in the U.S.-China climate relationship.

Plan solves climate change --- gives markets not politicians the potential
to drive the process
Taggart, 15 --- principal of Sydney, Australia-based Grenatec, a non-profit research
organization studying the viability of a Pan-Asian Energy Infrastructure (4/10/15,
Stewart, Can Chinas Infrastructure Bank Fix Climate Change?
http://www.chinausfocus.com/finance-economy/can-chinas-infrastructure-bank-fix-
climate-change/, article downloaded 6/20/16, JMP)
Can Chinas Asian Infrastructure Investment Bank (AIIB) fix climate change? Yes. Only if it funds
infrastructure encouraging common standards, integrated markets and
deeper energy network interconnection. Chinas partners in the bank need
to push this, hard. If they do, the benefits to both Asia and the world will be
enormous. To date, AIIB analysis has focused upon shortsighted, geopolitical handicapping of the power balance
between China and the United States. This misses the far larger story: the AIIBs ability to alter 21st
Century history through constructive, much-needed energy market reform. Asia now
accounts for a large proportion of the world economy. Supplementing regional
infrastructure investment with energy decarbonization will generate incalculable net
present value. The AIIBs founding members, therefore, should push investment toward
creating a Pan-Asian Energy Infrastructure (PAEI) of integrated high-capacity cross-
border power lines, gas pipelines and the fiber optics to manage them. This would enable
non-discriminatory access to a massive regional market for energy sources
ranging from sun, wind, biomass, hydro, geothermal, ocean thermal and
others including closed-cycle nuclear. All energy sources would have access to ubiquitous delivery
infrastructure. Winners and losers would then be sifted by price, availability, carbon emissions and distance between
producer and consumer. In other words, a PAEI would create a perfect market in energy in the
worlds largest regional economy. It would be based upon innovation, generation and
delivery. This will create economic dividends lasting for a century or more. It will
virtually solve global climate change. It would also replace dirty, short-lived,
uneconomic bilateral infrastructure like Liquid Natural Gas, a perverse symbol of the status quo
energy market. In the future, whats needed is an Internet of energy with a topology and management to match the
common carrier, open access principals and geography of the data internet. The benefits of that innovation over the past
two decades are indisputable. Toss in carbon pricing and the positive picture is complete. Instead of viewing the AIIB as a
symbol of looming Chinese economic hegemony, the AIIB should instead be viewed as a global
climate change solution (starting in Asia) and major market opener with
powerful, vastly distributed benefits. Seen this way, the AIIB benefits all. Thats particularly so if
other members hold a veto over China. Whats needed now is an intellectual bridge to be made between the AIIB and the
COP21 meetings in Paris later this year. At the COP21 meeting, countries must pledge future numerical carbon emissions
reduction targets all will ignore. A far better plan would be to use global need for new and
revamped energy infrastructure to remove impediments to better carbon-adjusted
creation, valuation and delivery of energy. When this happens, markets not
politicians can take the lead in reducing carbon emissions. The timing has never
been better. For China the creation of the AIIB or something like it is now an economic necessity. China now
desperately needs to recycle its growing and economically destabilizing multi-trillion dollar foreign reserve hoard. The
hoard accumulated during Chinas three-decade macroeconomic development policy centered on a weak currency. The
result: China stayed employed while the West got cheap consumer products. But the policys now hit a wall. China must
now find other means for ensuring full employment and social stability. Deploying her now world competitive
infrastructure companies to build international infrastructure is that means. Nothing wrong there. Done right, everyone
will benefit. Given this, Chinas AIIB partners hold more power in the fledging bank than they
might think. Thats because they hold the access keys to their own domestic
infrastructure markets. Without the external labor sink of infrastructure projects,
domestic Chinese unemployment will rise. This compromises Chinas sullen and brittle social contract:
rising incomes in exchange for reduced political freedom. Handled correctly, an ideal, symbiotic
middle course looks to be opening up with the AIIB front and center.
Under this middle course, China reorients its economy from cheap component assembly
to high-tech exports. Chinas neighbors get new and upgraded energy infrastructure.
Both sides get a technical standard-setting vehicle in the form of the AIIB.
Markets get greater efficiency through removal of perversities. The world gets a
regional solution to climate change replicable elsewhere.

China has a huge incentive to accept collaboration on environmental

standards --- it has a willingness to improve its environmental standards
and enforcement but it needs greater expertise and experience --- cant rely
on host government regulations to ensure effective protections
Ma 14 (Yuge Ma, DPhil Candidate at the Environmental Change Institute (ECI), University of Oxford,
12-5-2014, "The Environmental Implications of Chinas New Bank," Diplomat,
http://thediplomat.com/2014/12/the-environmental-implications-of-chinas-new-bank/ // PD)
On October 24 this year, 21 Asian countries signed an agreement in Beijing that signaled
the launch of the Asian Infrastructure Investment Bank (AIIB), whose main backer is China. The
agreement authorized $100 billion in capital for the new bank, with an initial subscribed capital of around $50 billion. But
will the new bank be able to implement best practice when it comes to governance and environmental concerns?
According to the Asian Development Bank (ADB) Japan-led and the largest existing multilateral development bank in
Asia between now and 2020 the Asia and Pacific regions will require infrastructure investment of at least $8 trillion. As
Chinas Xinhua news agency commented, the existing international financial system is insufficient to meet this huge
demand. This gives China ample scope to play a crucial role. While the Western world might fear losing influence in the
growing Asian market or a potential challenge to the U.S.-led international order, the AIIB raises another
concern: the potential threat Chinese money might represent to established international
standards of foreign aid In her book By All Means Necessary: How Chinas Resource Quest Is Changing the
World (Oxford University Press, 2014), Elizabeth Economy, senior fellow and director for Asia
studies at the Council on Foreign Relations in New York, and her colleague Michael Levi argue
that the best way to understand the local implications of Chinese overseas investments is
to observe how it operates at home, where neither the Chinese government nor
companies pay much attention to environmental protection. Despite the fact that
China had established a nationwide system of environmental impact
assessment (EIA), in practice it is hamstrung by widespread data fraud,
corruption, and political intervention from local officials. Only now is the Chinese
government beginning to govern this chaotic field. However, the authors have also observed some improvements in
Chinese companies social and environmental awareness in recent years. The first is top down: in order to reduce
unsustainable development, Chinas leadership has been encouraging companies, especially state-owned enterprises, to
engage in more corporate social responsibility-related international initiatives by launching a set of policy incentives that
apply to both domestic and overseas investments. The second change is coming from outside. As more Chinese companies
go abroad, they are receiving more exposure to the best practices of their foreign counterparts. In addition, Chinas
Ministry of Commerce has encouraged Chinese companies to be more active in the United Nations Global Compact and
other international rating systems to improve their international image. Finally, the third change is from the bottom up,
and refers to the growing public awareness of the negative environmental and social impact of Chinese investment and
active NGO participation in pushing Chinese companies to change their behavior. Still, none of the above
motivations have been sufficient to meaningfully alter the fundamental logic of growth-
at-any-cost. Without strict environmental regulations and effective
enforcement from their host countries, Chinese corporations still cant stop
using the tried and tested albeit outdated methods they have used over decades. When
Chinese energy-related projects have entered more mature markets, such as Australia, Canada, and even Poland and
Brazil, the host countries environmental authorities and vibrant civil society groups have forced them to accept much
stricter environmental laws. As a result Chinese investors have had to pay a very high price to learn those lessons, leading
to unforeseen profit losses. Cai Jinyong, the first Chinese national to become CEO of the International Finance
Corporation (IFC) said in a recent interview that Chinese overseas investment projects are generally good at construction,
but weak at long-term management. The environmental impact is an important component of managing a sustainable
project in terms of both financial and social consequences. Put simply, even though Chinese companies
want to improve their environmental practices not always the case in countries
without de facto environmental regulations a lack of expertise and experience
remains a significant obstacle. Xi Jinping has promised that the principles of AIIB will be equality,
inclusiveness and efficiency, while Chinese Finance Minister Lou Jiwei has declared that AIIB will learn from the best
practice in the world and adopt international standards of environmental protection. Yet, infrastructure-hungry
Asian countries are themselves causing severe environmental degradation air
pollution, water scarcity and soil contamination to name a few. They also suffer from
weak government accountability and lack of civil society participation in environmental
issues. It is unlikely they will be able to enforce international standards on
Chinese-financed projects solely on their own. Elizabeth Economy argued in a recent
opinion article that the international world, especially the US, should see the creation of
the AIIB as a chance to introduce robust environmental standards to China-
led infrastructure investments in Asia. An editorial in The Hindu urged India, presumably the
AIIBs second largest shareholder, to work closely with China to ensure that best practices are followed in projects for
will China readily
procurement and materials and in terms of labour and environmental standards. But
accept involvement from the U.S., its close allies, and other emerging countries in
its ambitious multilateral initiative, which aims to increase its political and economic
influence in the region? One thing we can be sure about is the Chinese
leadership understands very
well that its long-term international influence does not solely depend on hard power; it also
relies on soft power, mainly the social and environmental consequences of
its extensive global presence. As Joseph Nye, creator of the popular soft power
concept said last year: The development of soft power need not be a zero-sum game. All
countries can gain from finding each other attractive. Leaders from the U.S.,
China, and other Asian countries, developed or developing, will need
political wisdom as well as professional collaboration to
ensure the sustainable development of the most populous
and fastest-growing region in the world.