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24 Mar, 2015 17:17

Support of China’s development bank is ‘gigantic concession’ by US

Washington and the World Bank have no choice but to co-operate with Beijing on the new China-led development bank. The US has changed its tune after first opposing its allies cozying up to China.

“This is a gigantic concession on the part of the US, that it is not the world’s only superpower,” Jeffrey Albert Tucker, CLO of the Foundation for Economic Education, told RT.

Instead of fighting the new China-led development bank, the US was forced to add its support to the development bank after allies jumped ship to join the $100 billion China-led project that could rival the World Bank.

“This represents a dramatic shift on the part of Washington and a concession to its allies in Europe,” Tucker said.

US officials had voiced displeasure when the UK, Germany, France and Italy agreed to work with the Bank, but now, in an apparent concession, the US will work with, and not against, the new global development fund. The White House wants to co-finance projects with Beijing along with existing banks such as the World Bank, the WSJ reported Monday.

The offer is a massive U-turn in Washington's stance on the Asian Infrastructure Investment Bank. The tone quickly changed last week after an unnamed US official told the Financial Times that America was “wary about a trend toward constant accommodation of China.”

RT @Russian_Council: Is the #AIIB the New Bretton Woods? By Y. Lisovolik (@DeutscheBank) http://t.co/WkRqdacmtvpic.twitter.com/Rp80c8q37C

— Anton Tsvetov (@antsvetov) March 24, 2015

Chinese state newspaper lambasted the comment, calling the attitude towards China childish paranoia.

“Essentially there was no more of this cold war attitude that the US was having towards China. Was boycotting the AIIB, but it received massive pushback from very important governments around the world, so the US did not get its way,” Tucker said.

The British government was the first to announce that they would be a founding member of the financial institution, which is largely seen as a rival to the World Bank. Luxembourg and Switzerland were the latest to sign up along with France, Germany, and Italy.

READ MORE:France, Germany, Italy to join China-led $50bn infrastructure bank

Similar to the World Bank, the Asia Infrastructure Investment Bank (AIIB) will offer financing for infrastructure projects, but mostly in the Asia, especially in developing economies.

READ MORE: Washington ‘shifts tone’ towards China-led infrastructure bank

The bank was launched in October 2014 and is due to be fully operational by the end of 2015.

“What people in the US have yet to recognize, is that China’s economy is probably by some measures as big, or bigger than the US, and the US needs to start engaging China as a partner.”

The Chinese economy has been keeping pace with the world’s biggest, the US, and in October, surpassed the superpower in terms of purchasing power adjusted GDP

The idea for the new development bank was first floated when China unveiled plans in October 2013.