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AIIB Opens in Beijing as World Bank Rival

AIIB Opens in Beijing  as World Bank Rival AIIB Opens in Beijing  as World Bank Rival

Australia, Indonesia and South Korea skipped the launch of a China-backed Asian infrastructure bank on Friday as the United States said it had concerns about the new rival to Western-dominated multilateral lenders.

China's $50 billion Asian Infrastructure Investment Bank (AIIB) is seen as a challenge to the World Bank and Asian Development Bank, both multilateral lenders that count Washington and its allies as their biggest financial backers, Reuters reported.

China, which is keen to extend its influence in the region, has limited voting power over these existing banks despite being the world's second-largest economy.

The AIIB, launched in Beijing at a ceremony attended by Chinese finance minister Lou Jiwei and delegates from 21 countries including India, Thailand and Malaysia, aims to give project loans to developing nations. China is set to be its largest shareholder with a stake of up to 50 percent.

Japan, China's main rival in Asia and which dominates the $164 billion Asian Development Bank along with the United States, was also not present, but it was not expected to be.

Media reports said US Secretary of State John Kerry put pressure on Australia to stay out of the AIIB.

Use of Experience

In a speech to delegates after the inauguration, Chinese President Xi Jinping said the new bank would use the best practices of the World Bank and the Asian Development Bank.

"For the AIIB, its operation needs to follow multilateral rules and procedures," Xi said. "We have also to learn from the World Bank and the Asian Development Bank and other existing multilateral development institutions in their good practices and useful experiences."

South Korea, one of Washington's strongest diplomatic allies in Asia, has yet to say it will formally participate in the bank. Its finance ministry said last week it has been speaking with China to request more consideration over details such as the AIIB's governance and operational principles.

"We have continued to demand rationality in areas such as governance and safeguard issues, and there's no reason (for Korea) not to join it," South Korean Finance Minister Choi Kyung-hwan said in Beijing on Thursday.

The AIIB is expected to begin operations in 2015 with senior Chinese banker Jin Liqun, ex-chairman of investment bank China International Capital Corp, expected to take a leading role.

On Thursday, the Asian Development Bank (ADB) chief said he did not welcome a China-backed rival bank that will have a virtually identical aim. China has a 6.5 percent stake in the ADB, while the United States and Japan have about 15.6 percent each.

 

Financialtribune.com