Northeast Asia Program

The Asian Infrastructure Investment Bank (AIIB) is a controversial addition to Asian economic regionalism. It is the first multilateral development bank (MDB) dedicated to infrastructure, and the first international economic institution created by China. However, critics have alleged it is a vehicle for Chinese geostrategic goals, may dilute good governance initiatives, and compete with other MDBs working in Asia. During membership negotiations in 2015, China had to strike a balance between its own goals and its partners’ desire for a transparent and commercially oriented bank. To ensure the bank’s legitimacy, China has compromised with member states to create an institution which conforms to international best practices in development financing, and works with – rather than against – the existing MDBs to help close infrastructure gaps in Asia. 

In the pursuit of the prosperity of Asia and its surrounding region, it is important that we consider the way in which we get there. Japan-Australia relations are of increasing importance in this regard. In the pursuit of peace, stability and prosperity in the Indo-Pacific region, their strategic thinking is coming into alignment. Both countries are committed to upholding the rule of law, ensuring free access and human rights. This publication, based on a speech presented by His Excellency Ambassador Kusaka, Ambassador of Japan to Australia, outlines the prospects, uncertainties, challenges and opportunities which currently face the Indo-Pacific region. Most particularly, it focuses on the importance of a co-operative effort among Japan, Australia, India, the United States and other allies when facing the increasing challenges in the Indo-Pacific region and the globe.

The US commitment to Asia remains under scrutiny, particularly after the recent withdrawal from the Trans-Pacific Partnership agreement. China’s flexing of its military muscle in the South China Sea challenges the rule of law in the region. Countries are responding to the perceived shift in power in the region by shoring up their own defense due to the unpredictability of the US-China dynamic. If Australia and Japan can achieve consensus on these views and take steps to deepen their relationship, then they enhance their strategic flexibility while promoting a stable, prosperous Asia Pacific region that respects the rule of law.