Governments sign pact to create Chinese-led Asian bank

BEIJING (AP) – Envoys of governments that plan to join a Chinese-led Asian bank endorsed a structure Monday that gives Beijing the biggest voting stake at the start but no veto power.

Each member of the Asian Infrastructure Investment Bank will receive voting shares in line with its contribution to the bank’s planned $100 billion in capital, under the proposed structure. As the biggest donor, Beijing would get 26 percent of votes, with India in second-place with 7.5 percent and Russia third with 5.9 percent.

Beijing’s proposal for the AIIB attracted unexpectedly wide support from U.S. allies including Britain, New Zealand, France, Australia and South Korea despite U.S. opposition. Washington and its ally Japan have refrained from seeking membership.

The Beijing-based bank is part of China’s efforts to gain a bigger voice in global financial regulation that is dominated by the United States and Europe.

The bank is intended to finance investments in railways, cargo ports and other trade links. The U.S. government had objected that the bank would undercut existing institutions such as the World Bank and might allow looser lending standards.

Some 57 governments have expressed interest in joining the AIIB, but not all signed Monday’s agreement. The Philippines said it and six other countries including Thailand and South Africa would not sign immediately and had until December to make a final decision.

“This proposal was designed to meet Asia’s infrastructure development and promote Asia’s connectivity and also deepen regional cooperation for the sake of development,” said Chinese President Xi Jinping during a meeting with the foreign envoys in the Great Hall of the People in central Beijing.

“The very fact that representatives from the 57 prospective founding members are gathering in this room today is testimony to this spirit of solidarity, cooperation, openness and inclusiveness.”

China’s voting share may be diluted as more members join, Vice Finance Minister Shi Yaobin told the official Xinhua News Agency.

“China is not deliberately seeking a veto power,” said Shi, according to Xinhua.

The bank will be led by a president with a five-year term that can be extended once. Its working language will be English.