China denies seeking veto power in new multilateral bank

AFP-JIJI

China has not sought veto power over a new multilateral bank, a top finance ministry official said Wednesday, after a report Beijing enticed major European countries to join by offering to give up control over decisions.

Britain, Germany, France and Italy have in the last two weeks announced their intention to sign up for the China-led Asian Infrastructure Investment Bank (AIIB), despite skepticism in Washington.

The new lender is viewed as a potential competitor to the U.S.-led World Bank and the Japan-led Asian Development Bank, although China has denied any such intention and says 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 the European countries to sign up over Washington’s opposition, Beijing 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 U.S. has the final say on some decisions despite holding less than 20 percent of its shares.

“It is an unfounded proposition that China seeks or foregoes veto power,” vice finance minister Shi Yaobin said in a statement.

“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,” were welcome to join.

China and 20 other countries signed a memorandum of understanding in October to establish the Beijing-headquartered $50 billion bank.

France is one of the European countries applying to join the bank, and a Paris source told AFP that the AIIB’s founding treaty was 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 process,” the source said.

On Monday International Monetary Fund head Christine Lagarde welcomed the bank’s creation, and Australian Prime Minister Tony Abbott said Wednesday that his country will join if conditions such as multilateral and transparent governance are met.