The World Bank, meet your challenger: China-led AIIB
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China today hosted the signing ceremony of the Asian Infrastructure Investment Bank (AIIB), a new international financial institution set to rival the World Bank and Asian Development Bank.
Delegates from 50 countries signed articles that determine each member’s share and the bank’s initial capital.
The UK, Germany, Australia, Russia, France and South Korea are among the founding members.
Japan and the US, which oppose the AIIB, are the most prominent countries not to join.
27 August 2016 update: AIIB to increase to 90 member states. The announcement came ahead of G20 Summit in China on 4-5 September 2016 in the city of Hangzhou, Zhejiang.
The AIIB will review more than 30 new membership applications beginning in September, and the bank may have as many as 90 members by early 2017, outstripping the membership numbers of US and Japan-led Asian Development Bank (ADB), said Jin Liqun, the bank’s president, at the China Entrepreneurs Forum on 25 August.
The AIIB, which was created in October by 21 countries, led by China, will fund Asian energy, transport and infrastructure projects.
Above: Country delegates gathered at Beijing’s Great Hall of the People for the signing ceremony.
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Australia was the first country to sign the articles of association creating the AIIB’s legal framework, followed by 49 other members.
Seven more countries are due to sign by the end of the year.
Most Asian countries and countries from the Middle East and Latin America have joined, with the launch of the Beijing-led bank being hailed as a diplomatic and strategic success for China.
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Pakistan is also a founding member of AIIB and the 17th largest shareholder (1.2 percent stake). Finance Minister Senator Ishaq Dar (fourth from left in second row, top) attended the signing ceremony.
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It is one of several institutions China has created to push its own economic agenda, largely driven by frustration over its lack of influence in the big global financial institutions such as the World Bank, says the BBC’s Martin Patience in Beijing.
The AIIB begins with authorised capital of $50 billion, eventually to be raised to $100 billion.
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China holds a 30.34 percent stake, with India the second-biggest shareholder with a possible 10 percent stake. This gives China 26.06 percent of the voting rights within the multilateral institution.
Russia and Germany make up the third and fourth biggest member stakes.
Chinese Finance Minister Lou Jiwei said he was confident the AIIB could start functioning before the end of the year.
Report courtesy: BBC (edited)
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Analysis: Carrie Gracie, China editor, BBC News
This is not just a diplomatic win for China, it serves an important economic objective too. China wants to move away from building infrastructure at home. Its engineering giants need somewhere else to build ports, roads and cities.
Answer – lend the region the money to pay Chinese companies to build a 21st Century Asia according to a Beijing master plan and with Chinese influence at its core.
This is China under President Xi Jinping flexing its muscle as a major power, but many observers say the move might not have come so soon if the US had been able to lead the reform of existing global financial institutions to make room for China at the top.
After 30 years of breakneck Chinese growth, the distribution of power in those institutions no longer reflects the reality of the global economic landscape.
One British official told me: “If an alien landed on earth they would be puzzled by its international financial institutions as China is grossly underrepresented.”
China has 26.06 percent of voting rights. China will also put $29.78 billion into the bank, giving it a 30.34 percent stake. – SCMP
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