China’s international politics influences the East Asian economy and brings America in a troubling situation

It currently seems that China’s international politics influences the East Asian economy. This blog post focuses on how the following three points will establish China as the dominant authority in East Asia and bring America in trouble: 1. By creating the Asian Infrastructure Investment Bank (AIIB) 2. By extending its territory in the South China Sea 3. By eventually creating an Air Defence Identification Zone (ADIZ) over the East China Sea.

First, officially AIIB was created to provide money to build highways, mobile phone networks and other types of infrastructure in the less developed parts of East Asia. The Economist conspires that America lobbied its allies not to join the AIIB (What’s the big deal?, 2015). Furthermore, it states that the real, implicit reason is that China will use the AIIB to increase its influence in East Asia – at the expense of America’s World Bank and Japan’s ADB (Why Chinais creating, 2014). To contrast, the World Bank has an equity base (money that is paid in and assured by members) of 223 billion US Dollars, the ADB has just over 160 billion US Dollars and the AIIB will start with 50 billion US Dollars in capital. However, AIIB’s focus is East Asia and one might assume that AIIB’s opportunities to investment will grab the region’s attention, which could result in increased Chinese influence in the region’s economy. For example if capital from the AIIB flows into Malaysia, Malaysia will reciprocate the favor in one way or in other way.

Second, China is currently reclaiming land in the South China Sea while extending its territory (Making waves, 2015). On the 28th of April members of the Association of South-East Asian Nations (ASEAN) stated that the island-building endeavor, much of it close to the Philippines, is a potential threat to peace, security and stability. The message that China is trying to communicate is, according to Carlyle Thayer of the University of New South Wales, to persuade its neighboring counties to gradually accept the idea of a dominant role for China in the East Asian order. The goal, he argues, is that “everybody may win, but China wins more.” It becomes clear to me that the message that China tries to convey arrived. There is no other rival to China in the East Asian region and although ASEAN is complaining about China’s political behavior, it will gradually need to accept that China is the dominant authority. Therefore, the greater influence of politics in the region will simultaneously increase the influence of the economy.

Third, on the 26th of May, a Chinese foreign ministry official said his country would decide whether to establish ADIZ over the East China Sea partly on the basis of “whether and to what extent the security of airspace is threatened” — a clear warning to America since America is currently present near the East China Sea (Try not to blink, 2015). ASEAN countries welcome America’s military presence in the region but although they appreciate America’s support they fear what they do if China gets more involved. No Asian country wants to be forced to make a clear choice between backing America or backing China. For America, staying out of trouble will be difficult. At the same time, the crisis in Ukraine is drawing Russia closer to China and it remains to be seen what the Russian-Chinese pole will imply to the West (An uneasy friendship, 2015).


An uneasy friendship. (2015). Retrieved June 05, 2015, from http://www.economist.com/news/china/21650566-crisis-ukraine-drawing-russia-closer-china-relationship-far-equal

Making waves. (2015). Retrieved June 07, 2015, from http://www.economist.com/news/china/21650150-china-tries-strengthen-its-hand-dangerous-dispute-making-waves

Try not to blink. (2015). Retrieved June 07, 2015, from http://www.economist.com/news/asia/21652348-china-asserts-itself-naval-and-air-power-and-america-responds-risks

What’s the big deal? (2015). Retrieved June 07, 2015, from http://www.economist.com/news/asia/21647330-why-whiff-panic-has-entered-americas-pacific-trade-negotiations-whats-big-deal

Why China is creating a new “World Bank” for Asia. (2014). Retrieved June 07, 2015, from http://www.economist.com/blogs/economist-explains/2014/11/economist-explains-6

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