China ‘not seeking veto’ over AIIB
Print Edition
CHINA has not sought veto power over a new multilateral bank, a top finance ministry official said yesterday, following reports that Beijing enticed major European countries to join by offering to give up its control over decisions.
Britain, Germany, France, Italy, Luxembourg and Switzerland have in the past two weeks announced their intention to sign up for the China-led Asian Infrastructure Investment Bank, despite skepticism in Washington.
The new lender is viewed as a competitor to the United States-led World Bank and Japan-led Asian Development Bank, but China has denied any such intention and said the region’s burgeoning infrastructure needs mean there is plenty of room for it.
The Wall Street Journal reported that as part of its efforts to persuade European countries to sign up despite Washington’s opposition, China offered to give up authority over the bank’s decisions.
It cited Chinese and European officials negotiating its establishment, and contrasted the position with the IMF, where the US has the final say on some decisions.
“It is an unfounded proposition that China seeks or foregoes veto power,” Vice Finance Minister Shi Yaobin said in a statement.
“Prospective founding members are deliberating on the AIIB agreement, including its decision-making mechanism and share distribution. As a proposition ... the AIIB will be an open, transparent and efficient multilateral organization,” he said.
“Every member’s share will decline commensurately with the gradual increase in the number of the member countries,” he said, reiterating Beijing’s position that “all interested countries, either inside or outside the region” are welcome to join.
China and 20 other countries signed a memorandum of understanding in October to establish the Beijing-headquartered US$50 billion bank. That number has since grown to 27.
France is one of the European countries applying to join, and a Paris source said the lender’s founding treaty is still being negotiated.
“We came to the conclusion that it was better to be one of the founding members and play a part in drawing up the treaty, rather than looking on from outside,” the source said.
Australia is also expected to join if conditions such as multilateral and transparent governance are met, Prime Minister Tony Abbott said yesterday, saying an announcement will be made “in the next few days.”
Abbott said his government had approached China about how the bank will be governed.
“We have been talking to the Chinese to try to ensure that it is in fact a multilateral institution, that it is run in all important respects by a board, that its processes are transparent, that it is genuinely accountable and that it is not controlled by any one entity,” he told parliament.
“Under those circumstances we would certainly be prepared to join.”
Abbott said he had several conversations with US President Barack Obama and Japanese Prime Minister Shinzo Abe about the AIIB.
On the subject of whether the new lender will set up regional centers, Shi said it was a matter of future consultation in consideration of its business performance.
“The AIIB will draw on experience from multilateral development banks such as the World Bank and Asian Development Bank, to avoid their mistakes and seek even better standards,” he said.
“This way, (it) will turn into a financing platform that’s professional and efficient,” he said.
Shi said also that China has been in communication with notable regional absentees South Korea and Japan, and the US about their possible inclusion.
“China is willing to strengthen communication with them under bilateral or multilateral economic dialogue mechanisms and cooperate with existing multilateral organizations such as the World Bank and the Asian Development Bank,” he said.
“However, China will respect their decision whether or when to join,” he said.
ADB chief Takehiko Nakao said his institution could cooperate with the AIIB and co-finance projects if standards for loans were met.
“When it is formally established ... We’d like to proceed with co-financing” and other ways of cooperation, Nakao told a news conference.
The World Bank has also said it is discussing cooperation with the AIIB.
On Monday, International Monetary Fund head Christine Lagarde welcomed the bank’s creation.
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