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 However, other top officials in Tokyo were more sceptical,
reflecting a split in the government of Prime Minister Shinzo Abe
over whether joining an institution launched by Japan's main rival
would help or hinder its interests.
The Sydney Morning Herald newspaper reported that Canberra could
formally decide to sign up to the AIIB when the full cabinet meets
on Monday.
Japan, Australia and the South Korea, all major U.S. allies, are the
notable regional absentees from the AIIB. The United States, worried
about China's growing diplomatic clout, has questioned whether the
AIIB will have sufficient standards of governance and environmental
and social safeguards.
But the opposition to the AIIB began crumbling after Britain said
earlier this month that it would join the institution, maintaining
it was in its national interest. France, Germany and Italy swiftly
followed suit.
Australia now appears close to joining, although no formal decision
has been made, and Beijing said Japan and South Korea were also
considering the possibility.
Asked about the three countries joining the bank, China's Foreign
Ministry said it was "open" to it.
"They have all already expressed that they are contemplating the
issue at hand," ministry spokesman Hong Lei told a daily briefing.
"We are open to them making the relevant decision."
Japanese Finance Minister Taro Aso said Tokyo could consider joining
the China-led bank if it could guarantee a credible mechanism for
providing loans.
"We have been asking to ensure debt sustainability taking into
account its impact on environment and society," he told reporters
after a cabinet meeting.
"We could (consider to participate) if these issues are guaranteed.
There could be a chance that we would go inside and discuss. But so
far we have not heard any responses."
Other officials were more leery, reflecting Tokyo's concern over
China-led lending practices, its relations with major ally
Washington and the AIIB's potential rivalry with the Asian
Development Bank (ADB), the Manila-based multilateral institution
dominated by Japan and the United States.
"We have a cautious position about participation," said top
government spokesman Yoshihide Suga.
But a source familiar with Japan's policy-making said Tokyo should
get involved to help ensure best practices and to avoid being left
out. "Now it has become awkward as Europe joins but the U.S. and
Japan stay out," the source said.
According to one senior official in the ruling coalition, the result
of the differences is that Japan's participation "is not going to
happen under the Abe administration".
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Australian Treasurer Joe Hockey said no final decision had been made
on Australia's involvement but the matter had been under careful
consideration.
"More than 30 countries have already signed up. This is going to
operate in our region, in our neighbourhood," he told a radio
station in Brisbane.
"There is a lot of merit in it, but we want to make sure there are
proper governance procedures. That there's transparency, that no one
country is able to control the entity."
The Sydney Morning Herald said Canberra could invest as much as A$3
billion ($2.3 billion) in the bank and that the National Security
Committee has cleared the way for the investment.
South Korean government officials denied a newspaper report that
Seoul had decided to join in exchange for a five percent stake in
the AIIB and the position of deputy chief.
The finance ministry said in a statement South Korea will make a
decision on whether to join the bank "through close consultation
with major countries and after considering various factors such as
economic advantages and disadvantages".
Hockey said joining the AIIB would not affect Australia's close
relationship with the United States and also referred to the gains
that Australian companies could reap.
"The United States understands that this is a bank that's going to
be operating in our region. It's going to be using contractors in
our region. We want Australian contractors involved, we want work
for Australians out of this bank," he said.
"And because it's operating in our region, in our neighbourhood, it
is important that Australia fully understand and look at
participating in this Bank."
($1 = 1.3067 Australian dollars)
(Additional reporting by Leika Kihara, Yuko Yoshikawa and Kaori
Kaneko in TOKYO and Megha Rajagopalan in BEIJING, Editing by Raju
Gopalakrishnan)
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