US failure to prevent much of the global financial community from joining the China-proposed Asian Infrastructure Investment Bank (AIIB) marks not just a setback for US efforts to dominate global financial affairs. It also provides the precedent whereby would-be US allies can begin to dissent from US hegemonistic demands.

From the beginning the rationale for Washington to oppose the Chinese move was weak. A China excluded from the G7 grouping of major industrial powers, despite China's industrial sector far exceeding that of most G7 members, was bound to want to assert itself globally. Did Washington really think that a China, that was denied any real role in the US-dominated World Bank, the European-dominated IMF and Japan-dominated Asian Development Bank, would want meekly to submit for ever to this global triumvirate despite having reserves of around $4 trillion and already having a superior record in providing infrastructure aid to developing nations around the globe?

It was inevitable that Beijing would want to go off and create its own alternative axis of global financial affairs. Much of the world seems to have appreciated the move.

In the campaign to discredit the AIIB proposal, Washington and some of its friends have spoken loudly about the need for good governance, for transparency and fairness in any new global financial institution. But the rival Western institutions hardly provide models in this respect.

The World Bank has often provided generous funds to weak economies with attractive resources and corrupt pro-Western governments. Then when the inevitable occurs and the funds are wasted and repayment is impossible, the IMF moves in with its demands that they impose austerity and sell off government assets, often to Western-controlled enterprises. An AIIB which avoids this kind of legalized two-tag banditry would be welcome.

True, the enthusiasm of many Western nations, led by the UK, to join the AIIB is not entirely altruistic. They would hope to qualify for the consultancies and large capital equipment contracts that go with large infrastructure projects. They would also wish to continue to receive the Chinese money that helps sustain their weakened economies.

There was also the band-wagon effect as we saw with APEC, which was originally a Japan-Australian attempt to encourage the Asian economies to look eastward and away from China, but which has since been forced by its large membership to include China. Governments are always afraid of missing the bus when new institutions are created. Even so, the de facto admission by almost 50 nations that the existing global financial system needs to be improved is significant.

So too are the political repercussions. Canberra with its lock-step pro-US foreign policies was originally expected to succumb to strong US pressure and reject any invitation to join. But with the example of the UK before it, and under counter-pressure from many business and other groups that realize China's importance for Australia's economy, it was forced to reverse course. South Korea's willingness to run counter to US wishes was also significant.

Will Japan also eventually do the same? Currently the nationalistic, anti-China biases of the Shinzo Abe-centered leadership make it unlikely it will want to do anything that adds of China's global prestige and creates a rival to the Asian Development Bank it helped create. It is also doing all it can to lock the US into its East Asian military strategies and is in no mood to say no to the US on any issue.

Even so, some business groups have voiced concern. And some remember how in the wake of the 1997 Asian financial crisis a hegemonistic US crudely intervened to prevent Tokyo from setting up an Asian Monetary Fund to prevent a recurrence. They ask whether Japan needs constantly to bow to US demands.