China launches AIIB in Asia to counter World bank
China along with other 21 countries including India launched the Asian Infrastructure Investment Bank (AIIB) for funding Asian infrastructure. Australia, Indonesia and South Korea were found to be missing from the pool of delegates, despite last year’s interest to join the bank. The absence is found to be the result of US lobbying efforts. It is launched as a counter measure to the western-dominated development banks like World bank, International Monetary Fund (IMF) and Asian Development Bank (ADB) both financially backed by US and its allies.
The 21 countries that inked the MoU are China, India, Sultanate of Oman, Qatar, Kuwait, Brunei Darussalam, Bangladesh, Uzbekistan, Cambodia, Kazakhstan, Lao P DR, Malaysia, Mongolia, Myanmar, Nepal, Pakistan, Philippines, Singapore, Sri Lanka, Thailand, and Vietnam.
According to News sources, the authorised capital of AIIB will be $100 billion. AIIB’s headquarters is to be located in Beijing. The articles of the agreement are to be formulated by mid 2015. Accordingly, AIIB will start working at the end of 2015.It is expected to have a initial capital of $50 billion, while China invited India to be founding member of AIIB earlier.
The ADB was created in 1966 that offers fund and below-market interest rates on loans to lower to middle-income countries. By the end of 2013, its financing operations accumulated to $21.02 billion. Despite China having a 6.5% stake in the ADB, the major shareholdings are secured by the United States and Japan.
China is keen on influencing its power in the region as being the world’s second largest economy it exercises less voting powers. According to ADB study it was projected that Asia would require an funding of $800 billion annually till 2020 for developing infrastructure, offering China enough financial powers to influence its neighbourhood countries. It is to be noted that recently BRICS bank was veiled by the BRICS (Brazil, Russia, India, China and South Africa) countries with China holding 41% share in the bank and also hosting the head quarters of the bank.
Source – Reuters