China-led Asian Infrastructure Investment Bank officially opened for business on Saturday in Beijing after a formal ceremony led by Chinese President Xi Jinping.
Representatives from 57 member countries attended the opening ceremony, where China announced it would pledge $50 million to a special fund to prepare less developed countries for infrastructure projects, AP reported.
The United States and Japan are not members of AIIB, saying it is a rival to already existing multilateral banks such as the World Bank, but Beijing says the AIIB supplements existing institutions and will boost investments for infrastructure projects in Asia.
The bank, intended to finance railways, cargo ports and other trade links, is a key part of Beijing’s “One Belt One Road” outreach to extend China’s economic influence in the region.
Beijing has pledged to put up most of the bank’s initial $50 billion in capital and says that total will rise to $100 billion.
In order for Asia to continue to be the most dynamic region for global growth, it needs to invest in infrastructure and connectivity, Premier Li Keqiang said, during the afternoon session of the opening ceremony.
The AIIB is expected to lend $10 billion-$15 billion a year for the first five or six years and will start operations in the second quarter of 2016.
Even so, no specific infrastructure projects would be announced “for the time being”, AIIB President Jin Liqun told Reuters on the sidelines of the launch.
Luxembourg Finance Minister Pierre Gramegna said the establishment of the AIIB was “further proof of the rebalancing of the world economy”.
A successful AIIB that sets itself apart from the World Bank and the International Monetary Fund would be a diplomatic triumph for China, which opposes a global financial order it says is dominated by the United States and does not adequately represent developing nations, Gramegna said.
The AIIB will require projects to be legally transparent and protect social and environmental interests, but it will not force borrowers to adopt the kind of free-market practices favored by the IMF, sources told Reuters in September.
By not insisting on some free market economic policies recommended by the World Bank, the AIIB is likely to avoid the criticism leveled against its rivals, which some say impose unreasonable demands on borrowers.
It could also help Beijing stamp its mark on a bank regarded by some in the government as a political as much as an economic project.
China has an initial subscription of $29.78 billion in authorized capital stock in the AIIB, out of a total of $100 billion. It invested another $50 million on Saturday.
