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TWENTY-ONE Asian nations signed a memorandum of understanding in Beijing yesterday to create a new international bank for Asia.
The Asian Infrastructure Investment Bank reflects China’s desire to push investment in the region and its frustration with US, Japanese and European dominance of the World Bank, International Monetary Fund and Asian Development Bank.
Countries signing up in Beijing’s Great Hall of the People ranged from regional giant India to small impoverished countries such as Laos and wealthier states including Singapore and Qatar.
Close US allies Japan, South Korea and Australia were invited to join but chose to stay away.
Joining the bank will give countries input at the outset in what could become a major international lender and an alternative to development projects financed directly by China.
The new lender aims to fund construction of roads, railways, power plants and telecommunications networks that are needed to develop the region’s economies.
“In China we have a folk saying. If you would like to get rich, build roads first and I believe that is a very vivid description of the very importance of infrastructure to economic development,” said President Xi Jinping.
His presence underlines China’s hopes that the bank will boost its global clout and end unfair discrimination against it in economic and political spheres.
Mr Xi proposed the bank a year ago at a gathering of Asia-Pacific nations.
China will provide most of the initial $50 billion (£31bn) in capital, with private institutional lenders expected to stump up another $50bn.
Singaporean Finance Minister Tharman Shanmugaratnam said that the countries involved hoped to finalise the bank’s articles of agreement by mid-2015 so it can start lending “as soon as possible.”
China is also backing another $50bn lending institution — the New Development Bank, sponsored by the BRICS countries that include Russia, India, Brazil and South Africa.
The planned capital of the Chinese-backed development banks is relatively small compared with the World Bank at about $220bn (£137bn) and the Asian Development Bank with $175bn (£109bn) capital.
Washington is miffed at what it views as a challenge to its domination of international finance markets and has been briefing media outlets against the developments.
