China Signs Deal With 20 Other Nations to Establish International Development Bank

[Saifullah Sani]

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 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, with allies like Australia and South Korea, has campaigned against the project, 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 Chinese state-run news agency.

Mr. Xi also said that 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 treasurer of Australia, said on 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 from the bank to meet international standards on issues like the environmental impact of projects funded. “If such issues are resolved, there will be no reason for us not to join,” Mr. Choi said on Wednesday.

Still, the countries’ absence on Friday was a blow to the project.

Chinese officials have said that the bank is designed to complement existing lending organizations, not to compete with them. In March, Lou Jiwei, the Chinese finance minister, 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 view on 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 ceremony on Friday 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.

http://www.nytimes.com/2014/10/25/w...establish-international-development-bank.html

 

[Saifullah Sani]

 

[MM_Haider]

just one billion dollars were required to get the veto power in the bank.. India did but Pakistan failed to contribute this meager amount and just remain a founding member.. this myopic and parochial approach of our leadership has isolated Pakistan in the whole world.. These tunnel vision leaders have wasted the opportunity to be in some leading role at some front.. a chance wasted..

 

[Beidou2020]

just one billion dollars were required to get the veto power in the bank.. India did but Pakistan failed to contribute this meager amount and just remain a founding member.. this myopic and parochial approach of our leadership has isolated Pakistan in the whole world.. These tunnel vision leaders have wasted the opportunity to be in some leading role at some front.. a chance wasted..

Pakistan needs to get rid of its US-worship mentality if you want to be taken seriously in the world.

India for all its faults has some backbone to stand up against the US as we saw with the diplomat incident.

 

[MM_Haider]

Pakistan needs to get rid of its US-worship mentality if you want to be taken seriously in the world.

India for all its faults has some backbone to stand up against the US as we saw with the diplomat incident.

Can't agree more

 

[MarkovChain]

Good move from China and the participating countries. The world bank can use competition to improve its efficiency and western-centric focus of underwriting.

 

[OrionHunter]

just one billion dollars were required to get the veto power in the bank.. India did but Pakistan failed to contribute this meager amount and just remain a founding member.. this myopic and parochial approach of our leadership has isolated Pakistan in the whole world.. These tunnel vision leaders have wasted the opportunity to be in some leading role at some front.. a chance wasted..

I can't believe why Pakistan failed to cough up the meager amount of $1 billion! Probably it didn't seem important enough seeing that it has more pressing requirements like funding the fastest growing nuke arsenal in the world, which needless to say will never be used.

I think it's high time Pakistan gets it's priorities right or it will continue to languish at the bottom of the international pecking order.

 

[daring dude]

Beijing (AFP) - China and 20 other countries moved forward on Friday towards setting up an Asian infrastructure lender seen as a counterweight to Western-backed international development banks.




The signatories put their names to a memorandum of understanding to establish the Asian Infrastructure Investment Bank (AIIB) at a ceremony in the Great Hall of the People in Beijing.

The institution, whose development has been driven by China, will be based in Beijing according to the official news agency Xinhua, and is expected to have initial capital of $50 billion.

It is intended to address the region's burgeoning demand for transportation, dams, ports and other facilities, officials say.

"In China we have a folk saying," Chinese President Xi Jinping told delegates after the signing ceremony. "If you would like to get rich, build roads first, and I believe that is a very vivid description of the importance of infrastructure to economic development."

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.




But other than China, among Asia's 10 largest economies only India and Singapore signed the AIIB memorandum, with three of the top five -- Japan, South Korea and Indonesia -- notably absent.

The Japanese head of the Asian Development Bank, another regional lender, said after the signing ceremony that questions remained over the AIIB's structure and that it needed to adhere to international standards.

"It is vitally important that AIIB adopt international best practices in procurement and environmental and social safeguard standards on its projects and programmes," ADB President Takehiko Nakao said in a statement.

The Japanese government has expressed concern, while the United States is reportedly fiercely opposed to the AIIB.



- 'Good practices' -

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Chinese President Xi Jinping (C) takes photos with guests of the Asian Infrastructure Investment Ban …


China maintained it is open to more countries joining, and said it was still in talks with the US and Japan on the issue.

"We have maintained communication with the US, Japan, Indonesia and other countries," Chinese foreign ministry spokeswoman Hua Chunying said at a regular briefing.

"We welcome the participation of other countries in the process, and we will stay in contact with all relevant parties."

Xi moved to reassure after the signing. "For the AIIB, its operation needs to follow multilateral rules and procedures," he said.

"We have also to learn from the World Bank and the Asia Development Bank and other existing multilateral development institutions in their good practices."

The MOU signatories will negotiate the bank's specifics in the coming months and expect to finish by the end of next year, according to a statement from Singapore's finance ministry.

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.

 

[MM_Haider]

I can't believe why Pakistan failed to cough up the meager amount of $1 billion! Probably it didn't seem important enough seeing that it has more pressing requirements like funding the fastest growing nuke arsenal in the world, which needless to say will never be used.

I think it's high time Pakistan gets it's priorities right or it will continue to languish at the bottom of the international pecking order.

lol @Arsenal requirement.. even that is not being fulfilled.. they are busy making overheads for freaking metro buses... this is quite sad that Pakistan will again remain at receiving end but this doesn't matter to our finance minister whose total wealth in Pakistan is one suitcase, couple of ties and suits along-with couple of pairs of shoes. height of BS!