Despite fears that China would channel AIIB money direct to its military allies and other unsavory regimes, the number one beneficiary of AIIB lending to date has been democratic India.
Coming amidst the fastest economic growth in three years and four Fed rate hikes in 12 months, it seems clear that America’s burgeoning capital account surplus reflects the fact that international investors are looking for a piece of the action in the world’s more advanced, most dynamic mature economy.
As long as China has currency reserves, it will keep them mainly in Dollars.
If all else fails, China’s disciplined leadership can always massage the numbers to suit its goals.
The Treasury Department is probably right to be concerned about a Chinese company buying MoneyGram and using it as a platform to enter the U.S. payments market.
In contrast to China, India has the bad luck to be surrounded by poorer countries, not richer ones, and to look across the Indian Ocean to Antarctica, not across the Pacific Ocean to California.