China to have ‘veto power’ over in­fra­struc­ture bank: re­port

The China Post - - FRONT PAGE -

China will ul­ti­mately have “veto power” over ma­jor de­ci­sions of the new Bei­jing-led Asian In­fra­struc­ture In­vest­ment Bank, the Wall Street Jour­nal re­ported on Tues­day.

The AIIB, which will be based in the Chi­nese cap­i­tal, has 57 prospec­tive mem­bers, but the United States and Ja­pan — the world’s largest and third-largest economies, re­spec­tively — no­tably have de­clined to join.

The Jour­nal quoted peo­ple close to the bank as say­ing its vot­ing struc­ture will give China the “up­per hand” as the largest share­holder, ef­fec­tively grant­ing it veto power.

Ac­cord­ing to the bank’s ar­ti­cles of in­cor­po­ra­tion, China is pro­vid­ing nearly US$30 bil­lion of the in­sti­tu­tion’s US$100 bil­lion cap­i­tal base, giv­ing Bei­jing be­tween 25 to 30 per­cent of to­tal votes, it said.

The bank’s lean struc­ture will be over­seen by an un­paid, non­res­i­dent board of di­rec­tors, the news­pa­per said.

The AIIB, which is ex­pected to be op­er­a­tional later this year, has been viewed by some as a ri­val to the World Bank and Asian Devel­op­ment Bank.

But there are con­cerns over trans­parency of the lender, which will fund in­fra­struc­ture in Asia, as well as wor­ries that Bei­jing will use it to push its own geopo­lit­i­cal and eco­nomic in­ter­ests as a ris­ing power.

Last week for­mer Fed­eral Re­serve Chair­man Ben Ber- nanke re­buked U. S. law­mak­ers for al­low­ing China to steal a march with the new bank, which threat­ens to up­end Wash­ing­ton’s over­sight of the world eco­nomic or­der.

He said law­mak­ers were to blame be­cause they re­fused to agree 2010 re­forms that would have given greater clout to China and other emerg­ing pow­ers in the In­ter­na­tional Mon­e­tary Fund.

Un­der Pres­i­dent Xi Jin­ping, China is push­ing to build on the an­cient Silk Road trade routes on land and sea, through its “One Belt, One Road” ini­tia­tive ex­pected to be partly funded by the AIIB.

But sup­port­ers say fears over un­due Chi­nese in­flu­ence are overblown, and that the par­tic­i­pa­tion by more than 50 coun­tries, in­clud­ing ones as di­verse as the United King­dom and Iran, will di­lute Bei­jing’s power.

The United States led a high­pro­file, and ul­ti­mately un­suc­cess­ful, at­tempt to dis­suade al­lies from tak­ing part in the bank.

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