China’s development bank plans test rising power’s strategic shift

In an influential speech in 2005, then-US deputy secretary of state Robert Zoellick called on China to become a “responsible stakeholder” in the international community. To optimists, China’s recent efforts in creating high-profile international development banks shows that it is gradually embracing that role.

China signed an agreement in July with the four other BRICS countries – Brazil, Russia, India and South Africa – to create the New Development Bank (NDB) to provide loans and liquidity to member nations. Just three months later, Beijing pioneered the effort to create an Asian Infrastructure Investment Bank (AIIB) to finance development projects in the region. Twenty nations as diverse as Qatar, India, Singapore and Thailand signed on as founding members. China plans to provide the majority of the capital required to finance the new bank’s operations, with the headquarters located in Beijing.

The US and its allies view the China-backed AIIB with deep suspicion. It is an open secret that Washington has successfully pressured Australia and South Korea to refrain from joining the new development bank. What explains such hostility toward the Chinese effort to take a larger role in regional and global governance?

China and 20 other countries sign MOU on regional bank

BEIJING, China, Oct 24 – China and 20 other countries moved forward on Friday towards setting up an Asian infrastructure lender seen as a counterweight to Western-backed international development banks.

The signatories put their names to a memorandum of understanding to establish the Asian Infrastructure Investment Bank (AIIB) at a ceremony in the Great Hall of the People in Beijing.

The institution, whose development has been driven by China and which is widely expected to have initial capital of $50 billion, it intended to address the region’s burgeoning demand for transportation, dams, ports and other facilities, officials say.