China and 20 other countries signed a memorandum on Friday agreeing to create an international development bank that Beijing hopes will rival organizations like the World Bank. But some leading Asian countries refrained from joining the project, which the United States has been quietly lobbying against.
Japan, Australia, South Korea and Indonesia were not represented at the signing ceremony for the bank, the Asian Infrastructure Investment Bank, in Beijing. India joined the bank, along with Malaysia, Thailand, Vietnam and the Philippines, news agencies reported.
The development bank, proposed a year ago by President Xi Jinping of China, is to offer financing for infrastructure projects in underdeveloped countries across Asia. China, which has promised to contribute much of the initial $50 billion in capital, sees it as a way to increase its influence in the region after years of fruitless lobbying for more say in other multinational lending organizations.
But the United States has campaigned against the project with allies like Australia and South Korea, characterizing it as an attempt to undercut the World Bank and the Asian Development Bank, which are dominated by the United States and Japan.
Mr. Xi, meeting with representatives of the founding members following the signing ceremony, said the new bank “will help to improve global financial governance,” according to Xinhua, the state-run news agency.
He also said all countries were welcome to join the bank, which should work together with existing multilateral organizations, Xinhua reported.
Australia has yet to make a final decision on joining the bank, Gemma Daley, a spokeswoman for Joe Hockey, the Australian treasurer, said Friday. The South Korean finance minister, Choi Kyung-hwan, said earlier this week that Seoul was willing to participate under certain conditions, including a commitment to meet international standards on issues like the environmental impact of projects funded by the bank. “If such issues are resolved, there will be no reason for us not to join,” Mr. Choi said Wednesday.
Still, the countries’ absence on Friday was a blow to the project.
Chinese officials have said the bank is designed to complement existing lending organizations, not compete with them. In March, Finance Minister Lou Jiwei said the bank would “mainly focus on infrastructure construction,” whereas the World Bank and Asian Development Bank “put their priorities more on poverty reduction.”
The Asian Development Bank’s president, Takehiko Nakao, disputed that Thursday. “There’s a misunderstanding that the A.D.B. is for poverty reduction and the A.I.I.B. is for infrastructure, but the majority of our banking is to infrastructure,” Reuters quoted him as saying.
Mr. Lou said at the Friday ceremony that the bank’s headquarters would be in Beijing.
China already directly finances many infrastructure projects in the developing world, and many Chinese analysts see the bank as a sensible next step.
Wang Yong, director of Peking University’s Center for International Political Economy Research, said it was natural for China to work with other countries to fill the investment gap in infrastructure, which he called “tremendous.” The Asian Development Bank estimated in 2009 that the region would need $8 trillion in infrastructure investment by 2020.
Mr. Wang said the concern about the increasing influence of China in the region, shared by the United States and some of its allies, was understandable.
Zha Daojiong, a professor of international relations at Peking University, said projects funded by the bank could be less prone to corruption than ones financed directly by China.
“Good old-fashioned aid, with China doing everything by itself, meaning Chinese money, Chinese companies, Chinese construction materials and even Chinese workers — frankly speaking, that is an invitation to malpractice and outright corruption,” Professor Zha said.
By BREE FENG October 24, 2014 in The New York Times