China Takes Lead to Set Up $50 Billion Multilateral Infra Funding Bank in Asia
By Rama Mohan | March 7, 2014 11:24 PM EST
With a capital of $50 billion, China is to set up a multilateral bank to finance infrastructure projects in Asian countries. The Finance Ministry of China said on 7 March 2014 that the new bank would look into the demand for infrastructure growth and investment projects in the economies in the region.
Russian Prime Minister Dmitry Medvedev shakes hands with Chinese President Xi Jinping before a meeting at the Great Hall of the People in Beijing. (A representational picture)
The proposed bank, Asian Infrastructure Investment Bank (AIIB) would be founded by member countries and it would fund infrastructure projects in the same member countries, Government of China said in a statement on Friday.
The proposed bank would have a mandate from the members to fund infrastructure projects. The bank would complement the work of other such funding agencies like the Asian Development Bank.
"The AIIB will mainly focus on infrastructure construction in Asia to promote regional connectivity and economic cooperation. Existing Multi-Lateral Development Banks (MDBs), such as the World Bank and the Asian Development Bank, put their priorities more on poverty reduction," Chinese Finance Minister Lou Jiwei said in the statement.
In October 2013, Chinese President Xi Jinping and Premier Li Keqiang announced the planned bank during their visit to Southeastern Asian countries. The first multilateral meeting on the bank ended on 24 January 2013, the statement added.
Some countries were intending to become founder members, the Minister added in the statement without mentioning the name of those countries.
"Funds in the existing multilateral development banks are limited and savings rate are high in many countries in Asia, so it is necessary to consider establishing a new regional platform to channel more funds into infrastructure, Lou said.
A Reuters report said that China is involved in an increasingly ugly territorial spat with some Southeastern Asian countries, including Vietnam and the Philippines, over parts of the South China Sea, which has worried many in the region about Beijing's intentions.
China, however, has been reassuring the Southeastern Asian countries that its rise will help to bring economic benefits to them. Already a free trade agreement has been made between China and the Association of Southeast Asian Nations (ASEAN) and this can be cited as an example for China's intention to cooperate with the contries.
(Edited by Anu James)
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