Beijing (dpa) – A China-backed Asian development bank was officially established in Beijing Monday, state media reported, capping months of debate over which countries would participate and about China’s growing financial clout abroad.
China will be the single-largest shareholder in the Asian Infrastructure Investment Bank (AIIB), according to the official Xinhua news agency, with the next biggest investors being India and Russia from among the 57 countries taking part.
The bank aims to invest money in roads, ports, airports, energy provision and telecommunications in developing countries in Asia.
China will subscribe to 29.78 billion dollars of shares in the AIIB and hold 26.06 per cent of voting rights.
Vice Finance Minister Shi Yaobin told Xinhua the country’s large stake and voting share in the initial stage are “natural results” of the bank’s current rules, and may be diluted as more members join.
Former Chinese vice finance minister Jin Liqun is expected to become the bank’s president, an informed diplomat told dpa.
The bank has hired former World Bank staff as well as people from other international financial institutions of different nationalities, the diplomat said.
“The Chinese side … they have a goal to have a clean bank,” the source said.
Details including governance structure and financial shares of each member were released to Xinhua by the Ministry of Finance.
The authorized capital stock will be 100 billion dollars divided into 1 million shares having a par value of 100,000 dollars each, which will be available for subscription, according to the document.
India and Russia will have a voting share of 7.5 per cent and 5.92 per cent respectively, according to Xinhua.
Germany is the largest non-regional shareholder with 4.48 billion dollars worth of shares. Britain and France have also joined.
The United States and Japan are not participating in the bank. Both countries have raised concerns over governance and transparency at the new institution, seen as a potential rival to the Asian Development Bank and World Bank.
Countries in Asia will hold up to 75 per cent of total subscribed capital stock and be allocated a share of the quota based on their economic size, according to Xinhua.
No subscriptions will be authorized in the future which would reduce the percentage held by regional members, the terms said.
The ceremony took place at the Great Hall of the People in central Beijing, according to reports.
The terms will not enter into force until at least 10 signatories whose subscriptions make up at least 50 per cent of total initial subscriptions formally ratify the terms, according to the document.
Negotiators from 57 governments agreed on the bank’s charter in May during a meeting in Singapore.
The Asian Development Bank estimates that infrastructure needs in Asia would require 750 billion dollars in investments annually until 2020.
“If the AIIB manages to ignite new growth momentum in Asia … the rest of the world will benefit,” said Sandra Heep, head of the economic policy and financial system programme at the Mercator Institute for China Studies in Berlin.
However, Heep said “there is no question” that China would want to support its own business.
“In particular, Beijing would want to help its construction industry, which is plagued by overcapacity, to locate new markets and investment opportunities through AIIB-financed infrastructure projects,” she said.
“China will seek to practice good governance … but in the implementation of projects there could be some risk,” said Yan Chengzhong, director of economic development and cooperative study at Shanghai’s Donghua University.
“This is because China’s understanding of some of the countries and economies it wants to cooperate with is still shallow,” he added.