ONE of China’s biggest ever foreign policy successes will take concrete shape today when delegates from 57 countries sign an agreement on the Asian Infrastructure Investment Bank (AIIB) in Beijing.
The founding members of the China-backed AIIB will sign articles of agreement that decide each member’s share and the bank’s initial capital.
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 US allies including Britain, Germany, Australia and South Korea.
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 represented in the bank. China has said it has left the door open for them to join.
“It’s a huge diplomatic and strategic win for China,” said Malcolm Cook, a senior fellow at the Institute of Southeast Asian Studies in Singapore.
“(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 to take into account China’s role as the world’s second-largest economy were blocked in Washington.
Asian countries are expected to own up to 75 per cent of the bank while European and other nations will own the remainder.
Each Asian member will be allotted a share of that 75 per cent quota based on their economic size, two Japanese sources said.
The AIIB will begin with authorized capital of $50 billion, to be raised to $100 billion.
China will hold a 25 to 30 per cent stake, while India will be the second biggest shareholder with 10 to 15 per cent, delegates at a meeting to finalise the new bank’s articles of agreement said in May.
Germany plans to take a 4.1 per cent stake to become the fourth-biggest member after China, India and Russia, according to a finance ministry draft.
China says it will not hold veto power within the AIIB, unlike the World Bank where the United States holds a limited veto.
China has also pledged billions of dollars to the Silk Road fund and the “One Belt, One Road” initiative, also aimed at funding infrastructure to increase connectivity between Europe and Asia.
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