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It is just a boring old bank but for Canada a decision to buy shares in China's pet project, the Asian Infrastructure Investment Bank (AIIB), would be a very big deal, not just a decisive pivot toward Asia, but a massive snub toward Washington. If the Harper administration has any sense, it should hold its nose and do it.

There could be fireworks: The Obama administration is already in high dudgeon over the decision by Britain to ignore America's towering disapproval and apply for membership of the Chinese-sponsored development bank. The response from Washington was incendiary by the custom and standards of Anglo-American diplomacy. An Obama administration official delivered a public rebuke, accusing Britain of "constant accommodation of China, which is not the best way to engage a rising power."

China launched its development bank last October, signing up 21 Asian states plus New Zealand for its project, putting up most of the $50-billion (U.S.) in capital which is intended to back infrastructure projects in the region. It sounds worthy but the United States correctly assumed that there was a large political dimension to the project. It is an exercise in soft power as well as a development tool in which China is likely to push its diplomatic agenda in the region, currying favour with politicians and peddling influence as well as its general world view.

If you thought this sounded a bit like the World Bank, you would not be wrong and the comparison is not lost in Washington, where the White House has been sounding off loudly and negatively. It gives warning that the AIIB's governance standards might fall short of those of the venerable Bretton Woods institutions – the IMF and the World Bank – and that its commitment to environmental issues, anti-corruption and the general tenor of "Western values" may be equally lacking. The AIIB will be based in Shanghai and China will have the biggest shareholding – it will be a Chinese institution in all but name, says Washington.

Initially, Australia, Japan, South Korea and the European Union states held back, but last week, Britain took the plunge, applying for membership. The British argue that it's better to take part and pull strings from the inside than to sneer from a distance. In Washington, the view is that the Brits are, as usual, playing the City of London card, hoping for more yuan trading business and investment.

But there is much more going on here than a bit of argy-bargy over Chinese trading relationships. A big crack has opened in the post-1945 international settlement under which the United States became both the world's policeman and its financial regulator. China's AIIB has widened it. As Britain quit the fold, Germany, France and Italy swiftly followed, signalling their interest in joining the Chinese bank and Australia is now considering its option. South Korea will certainly not wish to be left out of a bank committed to invest in infrastructure projects, a sector in which its heavy industries are big players and China is Australia's biggest client.

Canada would dearly love to have Australia's access to Chinese resource markets. It has been late and ineffective in developing trade with the People's Republic but there is an even larger concern about the United States's apparent determination to block Beijing's efforts to engage in soft-power influence. The United States has badly mishandled China's efforts to play a larger part in multilateral institutions. It's a bit rich for Washington to complain that the AIIB will be a Chinese poodle when it has its own sheepdogs in the World Bank and IMF where Congress is steadfastly blocking the ratification of agreements to raise China's voting power in those institutions.

China's economic ascendancy is a fait accompli; it's clout will exceed the United States's in numerical terms. The only question is whether it starts to blunder about like an enraged elephant, sending gunboats to obscure islands off the coast of Japan, or whether it is invited to play a bigger game at the top table. The AIIB is a clear signal that Beijing would like to engage in the latter form of influence. It would be utterly foolish for the rest of the world to shun these gestures and Canada should show willingness to back the Chinese bank.

Carl Mortished is a Canadian financial journalist based in London.