China–Japan Competition in Infrastructure Investment in Southeast Asia: A Two-Level Analysis

The article examines to what extent China and Japan compete in infrastructure investment in Southeast Asia. At the state level, China pursues more geo-economic goals whereas Japan seeks more mercantilist objectives, which mitigates their competition to a substantial extent. At the institutional level, the China-led Asian Infrastructure Investment Bank (AIIB) and the Japan-led Asian Development Bank (ADB) compete for potentially valuable infrastructure projects in Southeast Asia from the supply-side perspective. It is necessary and sensible for the AIIB to cooperate with other multilateral development banks (MDBs), including the ADB. That the AIIB keeps a low profile, other MDBs accommodate the AIIB’s preference, and the non-condition principle catalyses the cooperation between the AIIB and other MDBs. Therefore, there is no need to be alarmed by the competition in infrastructure investment in Southeast Asia between China and Japan because there are still possibilities for China-led AIIB and Japan-led ADB to cooperate at the institutional level.