China has received critical support from the International Monetary Fund and Asian Development Bank for its goal of establishing a new Chinese-led multilateral lender, adding to a growing wave of endorsements that has worried the United States.
Leaders of the IMF and ADB, speaking at a conference in Beijing on Sunday, said they were in talks with or happy to cooperate with the Asian Infrastructure Investment Bank (AIIB), a $50bn (£33bn) lender to be majority funded by Chinathat is seen by some as a rival to these established international financial institutions.
The United States, concerned about China’s growing diplomatic clout, has urged countries to think twice about signing up and questioned whether the AIIB will have sufficient standards of governance and environmental and social safeguards.
Twenty-seven countries have already signed up to participate in the AIIB, China’s finance minister, Lou Jiwei, told China National Radio on Saturday. It will provide project loans to developing countries and is slated to begin operations at the end of 2015.
The United States’ key strategic allies in the region, Australia, Japan and South Korea, are also considering joining the proposed Beijing-based bank.
Early opposition to the AIIB from western countries partially dissolved after Britain said this month it would join, with France, Germany and Italy swiftly following suit.
Canberra could formally decide to sign up to the AIIB when the full cabinet meets on Monday, Australian media have said.
At least eight more countries may join the lender by the 31 March deadline, Jin Liqun, secretary general of the interim secretariat that is establishing the AIIB, told a panel at the conference on Sunday.
The fund will have approval from its shareholders at the start to double its capitalisation to $100bn, he said.
“China will follow the rules of the international community and will not bully other members but work together with them and try to reach consensus in all the decisions we make without brandishing the majority shareholder status,” he said.
In an editorial published on the same day, China’s official Xinhua news agency suggested that the US might be embarrassed that many of its allies had not heeded its warnings.
“For decision-makers in the United States, they really have to be reminded that if they do not jump on the bandwagon of change in time, they will soon be overrun by the bandwagon itself,” it said.
The IMF’s managing director, Christine Lagarde, said on Sunday that the fund would be delighted to cooperate with the AIIB.
China’s Lou and ADB president, Takehiko Nakao, said at the conference they had held discussions on possible cooperation, with the Chinese finance minister adding that topics discussed included safeguard standards.
Lou has previously said AIIB would complement rather than compete with other institutions such as the ADB, the Manila-based multilateral lender dominated by Japan and the United States.
The AIIB’s Jin said developing countries in Asia would receive the bulk of loans for infrastructure projects, which could be co-provided with commercial banks and pension funds.
Non-Asian countries would also only hold 25% of the AIIB’s shareholding, lower than their stakes at the founding of the ADB, he said.
Written for Reuters on March 22, 2015.