As Donald Trump heads to China, US and Japan sign infrastructure deals
A day before Donald Trump is welcomed on a state visit to China, his govt signed two deals with Japan, pledging cooperation on projects in the Indo-Pacific region
Tokyo: A day before US President Donald Trump is welcomed on a lavish state visit to China, his government signed two deals with regional rival Japan, pledging cooperation on infrastructure projects in the Indo-Pacific region.
The agreements appeared to offer emerging economies an alternative to China’s Belt and Road initiative, a pillar of President Xi Jinping’s economic policy. The “new Silk Road” connecting China with Europe is financed by China’s Asian Infrastructure Investment Bank, in which both Japan and the US have so far declined to take part.
Trump’s rejection of the Trans-Pacific Partnership (TPP) regional trade deal in January disappointed many Japanese policy makers, who had seen it as an opportunity for the allies to exercise joint influence in the region, counterbalancing the growing weight of China. Joint funding of infrastructure projects could be a step toward a new regional strategy.
“Of course both the US and Japan are concerned about the possibility that the Belt and Road could be used for geopolitical and military purposes,” said Masahiro Kawai, director-general of the Economic Research Institute for Northeast Asia, adding that infrastructure cooperation could form part of a new US strategy in Asia, which he said had been lacking since Trump took office.
Kawai previously worked at the Asian Development Bank, an organization traditionally headed by a Japanese citizen, and where the US and Japan have the largest voting rights.
While the signing ceremony between organizations that finance and insure overseas investment projects took place after Trump had left Japan, he referred to the agreements as “a major development that will advance our shared interests in the region” in remarks to business leaders in Tokyo on Monday.
According to a White House statement, Trump had discussed the deals with Prime Minister Shinzo Abe and agreed that infrastructure projects in the region needed market competition, transparency and responsible financing.
Ray Washburne, president of the Overseas Private Investment Corporation, signed the memoranda with his counterparts from the Japan Bank for International Cooperation and Nippon Export and Investment Insurance.
“It sends a message to this entire region that the United States and Japan are working in a cooperative fashion to take both our expertise and leverage them in a much greater sense,” Washburne said in an interview ahead of the signing. “We both see a great economic opportunity to invest in this whole region, it just needs a new focus on it. It’s re-setting the table on US focus in the whole region.”
Swath of countries
No specific projects have been earmarked for cooperation as yet, and there is no budget forecast, but the focus will be on a swath of countries from Pakistan and India down to Southeast Asia, Washburne said. The agreements came a day after the US Trade and Development Agency signed a separate memorandum of cooperation with Japan’s trade ministry on building energy infrastructure in third countries.
Abe said in June that Japan was ready to cooperate with China’s Belt and Road initiative under certain conditions. However, there were no discussions this week about Japan or the US joining China’s AIIB, Washburne told reporters before the signing, saying that the two nations would operate separately from China. Bloomberg
- Sushma Swaraj holds trade talks with Luxembourg PM Xavier Bettel
- Indonesia calls for stronger trade links
- Govt issues draft cross-border insolvency norms, seeks public comments
- CBI asked to conclude Saradha, Narada probes
- Buoyant stock market, real estate made Indian HNIs wealth grow fastest in 2017: report
Editor's Picks »
- With fall of the last dove, MPC minutes portend more than one RBI rate hike
- RITES IPO ticks the valuations box, but not the growth one
- Is Reliance Jio really India’s most profitable telecom firm?
- How US-China trade war will affect India
- Dear ICICI Bank board, giving a red card to Chanda Kochhar is not enough