June 28, 2015
One of China's biggest foreign policy
successes ever will take concrete shape Monday when delegates from
57 countries sign an agreement on the Asian
Infrastructure Investment Bank (AIIB)
The founding members of the China-backed AIIB will sign articles of
agreement that decide each member's share and the bank's initial
The multilateral institution, seen as a rival to the
Western-dominated World Bank and
Asian Development Bank, was initially opposed by the United States
but has attracted many prominent U.S. allies including,
Other founding members include most
Asian nations and countries from the Middle East and South America.
Japan and the United States are the most prominent nations not to
have any representation in the venture.
China has said it has left the door open
for them to join.
"It's a huge diplomatic and
strategic win for China," Malcolm Cook, a senior fellow at the
Institute of Southeast Asian Studies in Singapore, said of the
"(But) the fact that so many have signed on will mean that the
management of the AIIB will be quite complicated... The more
countries you have on board, the more interests will be at play
and more each member will of course want the institution to
serve their own interests."
One senior Western diplomat in Beijing
said China felt it had no choice but to set up its own bank after
repeated attempts to reform existing institutions like the
International Monetary Fund (IMF)
to take into account China's role as the world's second-largest
economy were blocked in Washington.
"The United States only has itself
to blame," said the diplomat, from a country which has signed up
to the AIIB, speaking on condition of anonymity.
Asian countries are expected to own up
to 75 percent of the bank while European and other nations will own
Each Asian member will then be allotted
a share of that 75 percent quota based on their economic size, two
Japanese sources have said. The AIIB will begin with authorized
capital of $50 billion. This will eventually be raised to $100
China is likely to hold a 25-30 percent stake, while India will be
the second-biggest shareholder with a possible 10-15 percent,
delegates at a meeting to finalize the new bank's articles of
agreement said in May.
Germany plans to take a 4.1 percent stake to become the
fourth-biggest member after
China, India and Russia, according to a Finance Ministry
draft document seen earlier this month.
Australia said last Wednesday it would contribute 930 million
Australian dollars ($719.36 million) over five years to become the
institution's sixth largest shareholder.
China says it will not hold veto power within the AIIB, unlike the
World Bank where the United States holds a limited veto.
The AIIB is the brainchild of influential Chinese think tank
China Center for International Economic Exchanges (CCIEE),
which is helmed by former vice premiers and ambassadors, among
The think tank proposed the creation of
the bank in 2013 as an institution that balances China's political
and economic priorities, CCIEE officials said.
"The AIIB has made a lot of progress
so far in its preparatory work, but this is only the first step
in a long road ahead," Chinese Finance Minister Lou Jiwei said
in a commentary published on the website of the official
People's Daily newspaper Thursday.
"It will require a lot more effort to bring the AIIB up to the
standards of global financial institutions."
Apart from backing the AIIB, China has
also pledged billions of dollars to the Silk Road fund and the "One
Belt, One Road" initiative, which are also aimed at funding
infrastructure to increase trade and connectivity between Europe and