Economy

Why Europe Wants A Piece Of Our Bank - A Chinese Take On AIIB Expansion

Chinese Vice Premier Ma Kai and German Finance Minister Wolfgang Schaeuble. On March 17 Germany confirmed it was joining the AIIB.
Chinese Vice Premier Ma Kai and German Finance Minister Wolfgang Schaeuble. On March 17 Germany confirmed it was joining the AIIB.
Wang Bijun and Zhang Ming

BEIJIJNG — On March 12, Britain applied to join the China-led Asian Infrastructure Investment Bank (AIIB) as a founding member. It was the first major Western country to do so. Other European countries including France, Germany, Italy, but also Luxemburg and Switzerland have since followed suit. Not only has the AIIB attracted more than 20 Asian countries, but it has surprised many by appealing to the advanced Western nations.

So why are European countries so eager to join the AIIB?

First, because as the Chinese economy's global influence grows, developing their trade and investment cooperation with China has become a strategic priority. Even though China's rate of growth has been slowing recently, as the world's second largest economy the absolute level of China's economic influence remains high and enables it to play a pivotal role in the global economy.

This is why even when, for its own strategic and geopolitical considerations, America repeatedly expressed its opposition to its allies' joining the new financial institute, these countries ignored Washington, preferring to bet on both sides.

Secondly, these European countries are expecting immediate benefits from the investment returns of the AIIB, aiming to win a share of the fruit of the emerging Asian economic growth. The overall economic performance of the Eurozone is sluggish while Europe's political landscape is uncertain and plagued by complicated and entangling problems such as Greece and Ukraine. The Old Continent is in urgent need of a new path to economic growth.

Infrastructure appetite

The establishment of the AIIB dates back to 2013 during visits by China's President Xi Jinping and Premier Li Keqiang to different Southeast Asian countries. The aim is to support infrastructure construction in these developing countries, amidst a large shortfall in the funding of these projects. As the Asian Development Bank estimated, in the next eight to ten years, demand for Asian infrastructure funding will reach $730 billion a year.

By contrast, the World Bank and the Asian Development Bank's investments in Asia total only around $30 billion annually. The establishment and operation of the AIIB is expected to make up the shortfall, to promote regional development and undoubtedly bring about huge business opportunities. Therefore, it is not at all difficult to understand the eagerness of the major European states in grasping a potential investment opportunity outside the EU.


The implication of signing up advanced countries to the AIIB is twofold. First, it significantly boosts the representation and diversity of the institution since before the UK, France, Germany and Italy joined up, the new bank's funding members were, except for
China and India, relatively small economies, hailing almost exclusively from Asia. The United States continues to preach that without major Western countries' participation in the structure it will not reach the high standard of other multilateral development organizations such as the World Bank, especially in such aspects as linking loans to environmental standards and clean governance.

The European countries' eagerness to join can thus be viewed as a slap to America, and a helping hand to the new bank in exerting greater influence in multilateral economic cooperation.

In addition this will also put greater pressure on the countries which, for various reasons, haven't yet applied to sign up for AIIB. To avoid being marginalized, South Korea and Australia have in the last few days given indications that they would reconsider their previous refusal to join.

The European countries' participation in the AIIB is also likely to stimulate the US and Japan to step up their negotiations over the "Trans-Pacific Partnership Agreement" (TPP). Since President Obama informed Congress of his intention to launch the America-led regional free trade talks, originally programmed to be finished by the end of 2013, the negotiations have stalled.

The US and Japan account for more than 70% of the total economic output of TPP members. One of the important reasons why the talks haven't progressed is because of an increasing divergence between the two powers, in particular over their respective industrial sectors' interests, such as in automotive and agricultural issues, and the resulting political pressure.

A question of leadership

The emerging countries have long wished to play a more important role in international economic and financial governance, particularly in light of the lessons of the 2008 financial crisis, as well as their growing share of global economy. Against this background, the new China-led international bank aims to provide a platform for raising the influence of the emerging markets.

Nevertheless, whether China has the ability to play the leading role in smoothly and successfully operating this bank has repeatedly been questioned. Not only does China lack experience in operating a multilateral institute or project, it does not possess the knowledge base and the corresponding institutional mechanisms. Meanwhile, China's experience in developing Africa has always been accused of lacking transparency and being entirely devoted to extracting resources.

Since the UK, France, Germany and Italy are key stakeholders in existing development banks, their accession to AIIB will help on many fronts: its governance structure, decision-making mechanism, financing and fund-raising, project operations, risk management, information disclosure and performance evaluation. With their proven experience and team work this will increase the AIIB's operational capability to an international level.

The advanced countries' joining the AIIB is a great opportunity, but will also render it an even greater test of Chinese leadership in the world.

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Society

The Food Truck, A Sign That The White And Wealthy Are Moving In

In San Diego, California, a researcher tracked how in the city's low-income neighborhoods that have traditionally lacked dining options, when interesting eateries arrive the gentrification of white, affluent and college-educated people has begun.

Balboa Park Spring Fling Food Truck festival

San Diego Food Trucks via Facebook
Pascale Joassart-Marcelli

SAN DIEGO — Everybody, it seems, welcomes the arrival of new restaurants, cafés, food trucks and farmers markets.

What could be the downside of fresh veggies, homemade empanadas and a pop-up restaurant specializing in banh mis?

But when they appear in unexpected places – think inner-city areas populated by immigrants – they're often the first salvo in a broader effort to rebrand and remake the community. As a result, these neighborhoods can quickly become unaffordable and unrecognizable to longtime residents.

An appetite for gentrification

I live in San Diego, where I teach courses on urban and food geographies and conduct research on the relationship between food and ethnicity in urban contexts.

In recent years, I started to notice a pattern playing out in the city's low-income neighborhoods that have traditionally lacked food options. More ethnic restaurants, street vendors, community gardens and farmers markets were cropping up. These, in turn, spurred growing numbers of white, affluent and college-educated people to venture into areas they had long avoided.

This observation inspired me to write a book, titled The $16 Taco, about how food – including what's seen as "ethnic," "authentic" or "alternative" – often serves as a spearhead for gentrification.

Take City Heights, a large multi-ethnic San Diego neighborhood where successive waves of refugees from places as far away as Vietnam and Somalia have resettled. In 2016, a dusty vacant lot on the busiest boulevard was converted into an outdoor international marketplace called Fair@44. There, food vendors gather in semi-permanent stalls to sell pupusas, lechon (roasted pig), single-sourced cold-brewed coffee, cupcakes and tamarind raspado (crushed ice) to neighborhood residents, along with tourists and visitors from other parts of the city.

Informal street vendors are casualties.

A public-private partnership called the City Heights Community Development Corporation, together with several nonprofits, launched the initiative to increase "access to healthy and culturally appropriate food" and serve as "a business incubator for local micro-entrepreneurs," including immigrants and refugees who live in the neighborhood.

On paper, this all sounds great.

But just a few blocks outside the gates, informal street vendors – who have long sold goods such as fruit, tamales and ice cream to residents who can't easily access supermarkets – now face heightened harassment. They've become causalities in a citywide crackdown on sidewalk vending spurred by complaints from business owners and residents in more affluent areas.

This isn't just happening in San Diego. The same tensions have been playing out in rapidly gentrifying areas like Los Angeles' Boyle Heights neighborhood, Chicago's Pilsen neighborhood, New York's Queens borough and East Austin, Texas.

In all of these places, because "ethnic," "authentic" and "exotic" foods are seen as cultural assets, they've become magnets for development.

Food vendor at outdoor international marketplace called Fair@44.

Fairat44 via Instagram

A call for food justice

Cities and neighborhoods have long sought to attract educated and affluent residents – people whom sociologist Richard Florida dubbed "the creative class." The thinking goes that these newcomers will spend their dollars and presumably contribute to economic growth and job creation.

Food, it seems, has become the perfect lure.

It's uncontroversial and has broad appeal. It taps into the American Dream and appeals to the multicultural values of many educated, wealthy foodies. Small food businesses, with their relatively low cost of entry, have been a cornerstone of ethnic entrepreneurship in American cities. And initiatives like farmers markets and street fairs don't require much in the way of public investment; instead, they rely on entrepreneurs and community-based organizations to do the heavy lifting.

In City Heights, the Community Development Corporation hosted its first annual City Heights Street Food Festival in 2019 to "get people together around table and food stalls to celebrate another year of community building." Other recent events have included African Restaurant Week, Dia de Los Muertos, New Year Lunar Festival, Soul Food Fest and Brazilian Carnival, all of which rely on food and drink to attract visitors and support local businesses.

Meanwhile, initiatives such as the New Roots Community Farm and the City Heights Farmers' Market have been launched by nonprofits with philanthropic support in the name of "food justice," with the goal of reducing racial disparities in access to healthy food and empowering residents – projects that are particularly appealing to highly educated people who value diversity and democracy.

Upending an existing foodscape

In media coverage of changing foodscapes in low-income neighborhoods like City Heights, you'll rarely find any complaints.

San Diego Magazine's neighborhood guide for City Heights, for example, emphasizes its "claim to authentic international eats, along with live music venues, craft beer, coffee, and outdoor fun." It recommends several ethnic restaurants and warns readers not to be fooled by appearances.

Longtime residents find themselves forced to compete against the "urban food machine"

But that doesn't mean objections don't exist.

Many longtime residents and small-business owners – mostly people of color and immigrants – have, for decades, lived, worked and struggled to feed their families in these neighborhoods. To do so, they've run convenience stores, opened ethnic restaurants, sold food in parks and alleys and created spaces to grow their own food.

All represent strategies to meet community needs in a place mostly ignored by mainstream retailers.

So what happens when new competitors come to town?

Food vendor at outdoor international marketplace called Fair@44.

Fairat44 via Instagram

Starting at a disadvantage

As I document in my book, these ethnic food businesses, because of a lack of financial and technical support, often struggle to compete with new enterprises that feature fresh façades, celebrity chefs, flashy marketing, bogus claims of authenticity and disproportionate media attention. Furthermore, following the arrival of more-affluent residents, existing ones find it increasingly difficult to stay.

My analysis of real estate ads for properties listed in City Heights and other gentrifying San Diego neighborhoods found that access to restaurants, cafés, farmers markets and outdoor dining is a common selling point. The listings I studied from 2019 often enticed potential buyers with lines like "shop at the local farmers' market," "join food truck festivals" and "participate in community food drives!"

San Diego Magazine's home buyer guide for the same year identified City Heights as an "up-and-coming neighborhood," attributing its appeal to its diverse population and eclectic "culinary landscape," including several restaurants and Fair@44.

When I see that City Heights' home prices rose 58% over the past three years, I'm not surprised.

Going up against the urban food machine

Longtime residents find themselves forced to compete against what I call the "urban food machine," a play on sociologist Harvey Molotch's "urban growth machine" – a term he coined more than 50 years ago to explain how cities were being shaped by a loose coalition of powerful elites who sought to profit off urban growth.

I argue that investors and developers use food as a tool for achieving the same ends.

When their work is done, what's left is a rather insipid and tasteless neighborhood, where foodscapes become more of a marketable mishmash of cultures than an ethnic enclave that's evolved organically to meet the needs of residents. The distinctions of time and place start to blur: An "ethnic food district" in San Diego looks no different than one in Chicago or Austin.

Meanwhile, the routines and rhythms of everyday life have changed so much that longtime residents no longer feel like they belong. Their stories and culture reduced to a selling point, they're forced to either recede to the shadows or leave altogether.

It's hard to see how that's a form of inclusion or empowerment.The Conversation

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Pascale Joassart-Marcelli is a Professor of Geography and Director, Urban Studies and Food Studies Programs at San Diego State University

This article is republished from The Conversation under a Creative Commons license. Read the original article.


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