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 Despite opposition from Washington, U.S. allies including Australia,
Britain, German, Italy, the Philippines and South Korea have agreed
to join the Asian Infrastructure Investment Bank (AIIB) in
recognition of China's growing economic clout.
"Asia's financing needs for basic infrastructure are absolutely
enormous," Xi said in a speech at the launch, adding the bank would
aim to invest in projects that were "high-quality, low-cost".
In order for Asia to continue to be the most dynamic region for
global growth, it needs to invest in infrastructure and
connectivity, Premier Li Keqiang said, during the afternoon session
of the opening ceremony.
The AIIB is expected to lend $10 billion-$15 billion a year for the
first five or six years and will start operations in the second
quarter of 2016.
Even so, no specific infrastructure projects would be announced "for
the time being", AIIB President Jin Liqun told Reuters on the
sidelines of the launch.
DIPLOMATIC COUP
Luxembourg Finance Minister Pierre Gramegna said the establishment
of the AIIB was "further proof of the rebalancing of the world
economy".
A successful AIIB that sets itself apart from the World Bank and the
International Monetary Fund (IMF) would be a diplomatic triumph for
China, which opposes a global financial order it says is dominated
by the United States and does not adequately represent developing
nations.
The AIIB will require projects to be legally transparent and protect
social and environmental interests, but it will not force borrowers
to adopt the kind of free-market practices favored by the IMF,
sources told Reuters in September.
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By not insisting on some free market economic policies recommended
by the World Bank, the AIIB is likely to avoid the criticism leveled
against its rivals, which some say impose unreasonable demands on
borrowers.
It could also help Beijing stamp its mark on a bank regarded by some
in the government as a political as much as an economic project.
Baikuntha Aryal, joint secretary at Nepal's Ministry of Finance,
said the Himalayan country was hoping the AIIB would fund roads,
hydropower and urban development projects.
"The AIIB is specifically for infrastructure so we see it as a
supplement to projects in Nepal funded by the ADB (Asian Development
Bank) and World Bank," he said.
China has an initial subscription of $29.78 billion in authorized
capital stock in the AIIB, out of a total of $100 billion. It
invested another $50 million on Saturday.
(Additional reporting by Nathaniel Taplin; Editing by Stephen Coates
and Mark Potter)
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