China is expected on Friday to sign a memorandum of understanding with around 20 countries towards the establishment of the Asian Infrastructure Investment Bank (AIIB), as Beijing seeks to increase its global heft.
“Our position about AIIB is first that it is understandable because there is a very big financing need in the region,” ADB President Takehiko Nakao told reporters.
But he said he was still awaiting details about the bank such as membership, shareholdings, the location of its headquarters and who will head it.
The AIIB should “adhere to the international standards,” he said.
Beijing last year proposed the bank, seen as a potential rival to existing Western- and Japanese-dominated institutions such as the World Bank and the ADB, which is based in Manila.
China’s rise to become the world’s second-largest economy has been accompanied by a desire to play a greater role in international organisations, such as the International Monetary Fund, the World Bank and the ADB, which have been dominated by Europe, the United States and Japan.
Concrete details about the AIIB remain elusive, but it is reportedly expected to have initial capital of $50 billion and will be designed to meet Asia’s burgeoning demand for transportation, dams, ports and other facilities.
Chinese foreign ministry spokeswoman Hua Chunying said Thursday that the AIIB “will carry out close cooperation with other… development institutions and promote regional cooperation and partnership”.
She added that 21 Asian countries have decided to become founding members of the bank or are willing to do so, including India.
– Japanese concerns –
World Bank President Jim Yong Kim said in July that estimates for infrastructure needs in developing countries are at least $1 trillion annually, far beyond the current capacity of his institution and private investment to handle.
“We think that the need for new investments in infrastructure is massive and we think that we can work very well and cooperatively with any of these new banks once they become a reality,” Kim told reporters in Beijing.
He was referring to the AIIB as well as a multilateral bank created earlier this year by the BRICS countries — Brazil, China, India, Russia and South Africa.
Despite positive comments by Kim and Nakao, the Japanese government has expressed concern, while the United States is reportedly fiercely opposed.
“We are asking some questions to Chinese authorities about this AIIB because we need to clarify the structure, or the governors, of this new bank,” Tatsuo Yamasaki, Japan’s vice finance minister for international affairs, told reporters at the Asia-Pacific Economic Cooperation (APEC) forum finance ministers’ meeting in Beijing on Wednesday.
“So we have not yet had enough information from China.”
China says that its focus on infrastructure investment is no threat to existing institutions, and Beijing’s finance minister Lou Jiwei told reporters that the bank’s infrastructure lending activities “will facilitate the flow of knowledge, people and trade” in the region. -AFP