France, Germany, Italy to join AIIB

Bank complements functions of IMF, ADB

Three more European countries on Tuesday announced their intention to join the China-led Asian Infrastructure Investment Bank (AIIB) as founding members, a trend observers believe will help boost the bank's global representation.

France, Germany and Italy on Tuesday asked for founding member status, after the UK took the lead, announcing it planned to join last Thursday.

China's Ministry of Finance on Tuesday said China welcomes the three countries' participation. China will consult other members and will make the formal announcement of the three countries' founding member status after two weeks.

South Korea, Switzerland and Luxembourg were also considering joining, reported the Xinhua News Agency.

The $50-billion bank, initiated by China last October to spur infrastructure investment in Asia, is touted as a potential rival to the Western-dominated World Bank and the Asian Development Bank (ADB).

Australia, a key US ally in the Asia-Pacific, has made a U-turn and is now reconsidering its position after reportedly coming under US pressure to stay out of the new bank, turning down China's invitation last year, the Financial Times reported.

Australian Prime Minister Tony Abbott said Sunday during an interview with Sky News that Australia is expected to make a decision within weeks on whether it will seek membership.

On Tuesday, Washington's top diplomat for East Asia, Daniel Russel, said the US remained concerned about the AIIB development but the decision on whether to join was up to individual nations.

China has said nations could join as founding members of the bank until March 31.

China's foreign ministry on Tuesday said China welcomes any country which expresses interest in joining the bank, and noted that participation from non-regional countries will increase representation for the institution.

China's Finance Minister Lou Jiwei said on March 6 that 27 countries had applied to join the bank as founding members. China plans to finalize the articles of agreement by the end of the year.

"The UK's participation has served an exemplary effect in increasing the institution's recognition globally. The country will also benefit from stronger decision-making power as a founding member of the institution," Huang Wei, deputy director of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences, told the Global Times.

The AIIB, set to open by the end of this year, was first initiated by Chinese President Xi Jinping last October with China contributing half of the initial capital. India, the second-largest shareholder in the bank, was among the first 20 countries other than China to join.

A number of non-regional countries were also invited to be founding members, but the US reportedly lobbied allies including Australia, South Korea, the UK and other European states not to join, the Financial Times reported.

"Asia, as the world's fastest developing region, has a strong need for infrastructure development. But the existing world financial institutions like the World Bank and the ADB can no longer satisfy such needs because of their limited capital and adoption of different priorities," Ding Yifan, a research fellow with the Institute of World Development at the Development Research Center of the State Council, told the Global Times.

Zhao Yongsheng, vice chairman of Paris-based China-France Association of Lawyers and Economists, told the Global Times that the AIIB will not be competing with the existing institutions like the International Monetary Fund (IMF), World Bank and ADB, but will fill the gap to develop infrastructure in Asia.

He also noted that the new bank will separate China's political interest from economic development, as it will not impose ideology and conditionality on recipient countries to increase its political influence.

The AIIB will shortlist its lenders with project proposals that will be beneficial to the "One Belt, One Road" initiatives, as investment returns and the project's feasibility and sustainability will be the bank's main selection criteria, Zhao noted.

China has long called for world financial institutions the IMF and the World Bank to give China and other developing countries more voting power. But the US is reluctant to honor the commitment of a quota reform plan approved by the IMF's Executive Board in 2010, which promised China and other developing countries more say at the fund.

Currently, China holds 3.72 percent of voting shares, or quota, in the IMF, compared with a 16.74 percent quota for the US and 6.12 percent for Japan, while China's voting share in the World Bank is 4.42 percent, ranked third after 16 percent for the US and 6.84 percent for Japan.