Barry Eichengreen, George C. Pardee and Helen N. Pardee Professor of Economics and Political Science

 

The international community should applaud the series of economic policies that China is implementing rather than treating these measures with suspicion and hostility, said Barry Eichengreen, a professor of economics and political science at the University of California, Berkeley.

Eichengreen cited the Asian Infrastructure Investment Bank (AIIB), “One Belt, One Road” project and the internationalization of the RMB as examples of policies that can have a positive global impact.
 

For China, the AIIB and “One Belt, One Road” present alternatives to domestic investment, serve as a solid foundation for trade with South Asian countries and allow China’s domestic construction industry to enter Central Asia, he said. In a similar vein, other countries will benefit from trade with China. AIIB can satisfy demand for infrastructure investment in many regions and strengthen their ties with China and the rest of the world.
 

The AIIB has been criticized since China first proposed it as a supplement to existing international financial institutions. It is widely suspected that China might dictate the agenda and policies of the AIIB as the largest shareholder. Critics also argue that road and railway projects subsidized by the AIIB might be biased toward China’s interests. Consequently, countries subsidized by the AIIB are likely to be more dependent upon donor countries.
 

These speculations are unfounded, Eichengreen said. More than 50 economies, including developed countries, are participating in the initiative, which demonstrates that there will be robust multilateral supervision. Additionally, China has promised to embrace an open, fair and transparent mechanism of operation.
 

Eichengreen also urged stakeholders to embrace the internationalization of the RMB. China has already negotiated currency swaps with Asian and European countries and others. In this light, China’s ambition is to promote the RMB instead of forming a currency bloc, he said.
 

He added that other countries will benefit from the internationalization of the RMB because they will be offered an alternative to the dollar. In the event that the American financial industry falters, such an alternative would be advantageous to all, Eichengreen said. In a word, China should bear more responsibilities and play a more significant role in stabilizing the international system, he said.

 

Chu Guofei is a reporter at the Chinese Social Sciences Today.