By Mark Wachtler
April 22, 2015. Beijing. (ONN) Friends are friends but business is business. That’s what America’s allies are telling the US after nearly all of them dismissed an American warning and applied to join the new China Development Bank. The CDB is the brainchild of the Communist Chinese government and was created to rival, or even replace, the US-controlled International Monetary Fund. With the deadline to be a founding member now over, 57 countries have pledged to join the CDB. See the full list below.
Even US allies like Ireland (above) are fed up with what they call IMF predatory lending. Image courtesy of SofiaEcho.com.
The deadline to be a founding member of the China Development Bank was April 1st. Harvard Business Review reports the final number of applicant countries surged in the final days to 57, including most of America’s allies. CDB officials announced that while they have stopped accepting applications from countries to be ‘founding members’, they will be accepting applications for regular member status going forward.
Asia Development Bank is not the China Development Bank
The new China Development Bank should not be confused with the Asia Development Bank which China is a member of, but is controlled by the US and Japan. The CDB and ADB are actually rivals. The China Development Bank website publicly says the CDB plans to compete with the IMF and ADB for the world’s investment funds.
China first announced the idea of the CDB in 2013. Since then, 57 nations have applied to be members. By comparison, the ADB was founded in 1966 and boasts 67 member nations including the US, Australia, Georgia, Fiji, Hong Kong, India, Indonesia, Japan, South Korea, New Zealand, the Philippines, Taiwan, and of course China.
The China Development Bank, while still in its infancy, already rivals the ADB. But it’s only a fraction of the size of the International Monetary Fund. According to the account from the Harvard Business Review, the Asia Development Bank has working capital of $168 billion. The China Development bank has an estimated $100 billion. By comparison, the IMF has $2.2 trillion in capital.
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What is the China Development Bank?
The goal of the CDB is similar to the IMF and the ADB - to fund and facilitate financial investments in developing countries and to provide financing to nations and multi-national corporations to modernize their infrastructure, including the development of roads, trains, mining and electricity. China isn’t without a track record to back up the pledge. The Chinese government routinely touts the fact that their economic system has lifted 680 million people out of extreme poverty. Now, with the CDB as its vehicle, China intends to do the same for the rest of Asia, Africa and South America.
Just to give readers an example, the most recent announcement from the CDB came less than two weeks ago when it announced it had formed a partnership with Petrobras. Petrobras, headquartered in Brazil and listed on the NYSE, is one of the world’s largest corporations. The CDB agreed to extend a $3.5 billion credit account so the energy giant could develop projects in impoverished regions. Petrobras is also the most indebted corporation in the world and will now depend on the CDB for its very survival.
57 founding nations of the China Development Bank
Political leaders in the US have warned America’s allies against joining the China Development Bank, suggesting there would be repercussions for any nation that betrayed the IMF and its World Bank. Published under the title of, ‘Asian Infrastructure Investment Bank’, the 57 founding member nations of the China Development Bank include:
United Arab Emirates
*Readers will notice a small block of US allies missing from the list. They include Canada, Mexico and Japan.
Collapse of the US Dollar
Why would the United States be so vehemently against a program to develop the infrastructure and economies of the world’s impoverished nations? The reality is, America isn’t against that. America is against China being in charge of the effort. There are two cataclysmic reasons for this policy, if not outright fear.
The United States and its allies have dominated the International Monetary Fund and the countries that have fallen prey to its endless cycles of financial dependence. Long accused of rigging the world’s economy, Western corporations including banks, energy companies, mining companies, and other multi-nationals have profited handsomely at the expense of the debtor countries’ own citizens and businesses. If the world switches its economic dependence from the IMF to the CDB, US officials fear the countries will also change their political and military dependence. That means a monumental loss of military security for the American people and a similar loss of profits for US and fellow Western corporations.
Even more destructive for the United States would be the change from the American Dollar to the Chinese Yuan as the world’s global currency. It’s no secret that after printing trillions of un-backed US Dollars over the past six years, the US Dollar should be worthless. But it’s not. And that’s only because it is the world’s common currency. But in the past 12 months, 177 nations have pledged to stop using the US Dollar for international trade and find a different global currency. Nobody knows yet if that currency will be the Chinese Yuan, the Euro, gold or possibly a new world currency that has yet to be created.
In today’s world of American finance, currencies are backed by little more than “the full faith and trust” of the people that use them. And it appears the world no longer has faith and trust in the American people, their US Dollars or their economic stewardship. And nothing proves that more than the overwhelming success of the new China Development Bank.
For additional information, read ‘133 G77 Nations vow to destroy America’s New World Order’ and 'Russia-China Deals move US Dollar closer to Collapse'.