China, 20 other nations sign MOU for new Asian multilateral bank. (Australia, Indonesia and South Korea skipped the launch of the AIIB ...)

China and other 20 countries signed a memorandum of understanding (MOU) Friday on establishing a new multilateral bank for infrastructure projects in Asia, a move analysts said will improve economic cooperation in this region and strengthen developing countries' say in international financial institutions.

The memorandum specifies that the authorized capital of the Asian Infrastructure Investment Bank (AIIB) will be $100 billion, with the initial capital being expected to be around $50 billion.
The paid-in capital ratio will be 20 percent. As agreed, Beijing will be the host city for the AIIB's headquarters, the Xinhua News Agency reported.

It is expected that the prospective founding members will complete the signing and ratification of the articles of agreement in 2015 and the AIIB will be formally established by the end of 2015.

"[The establishment of the AIIB] will help to improve global financial governance, which is very meaningful," said Chinese President Xi Jinping, adding that he hopes all sides concerned will make concerted efforts to make the AIIB a financing platform for infrastructure construction and multilateral development bank that meets the demand of all countries in the region.

Foreign media like AFP commented that the launch of AIIB is a "counterweight" to Western-backed international development banks such as the World Bank and Asian Development Bank (ADB).

AIIB is an open institution, which will not take the place of any current multilateral banks, but act as a supplement, Chinese foreign ministry spokeswoman Hua Chunying said at a press conference Friday.

AIIB will be "complementary" to other global development banks, and will play an important role in infrastructure development and cooperation in this region, analysts said.

"AIIB will push other global financial institutions to improve their function and efficiency," Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, told the Global Times.

Bai noted that other international development banks like ADB, which is dominated by developed countries such as the US and Japan, play an important role in economic development in Asia, but developing countries have a weak say in decision making.

Chinese Finance Minister Lou Jiwei said on Friday that AIIB plans to offer loans to developing nations, and China is scheduled to hold a stake of up to 50 percent in the bank in accordance with the country's previous statement.

But the percentage of the stake held by China will decline further with the growth of membership countries, Lou noted.

• Australia, Indonesia and South Korea skipped the launch of the AIIB as the US said it had concerns about the new rival to Western-dominated multilateral lenders, Reuters reported Friday.

• Australian Prime Minister Tony Abbott said on Friday that "Australia has been under pressure from the US for some time to not become a founding member of the bank," the Australian Financial Review reported.

Xu Hongcai, director of the Department of Information under the China Center for International Economic Exchanges, said that the three countries "were in a deep dilemma" due to the pressure from the US, which aimed to impose its own will on cooperation among other countries and regions.

Joining in the AIIB "will be helpful for economic development for those Asian countries, [who still have not signed the MOU]," Xu told the Global Times. 
By Zhao Qian Source: Global Times
25/10/14
--
-
Related:

• Three nations absent as China launches world bank rival in asia ...