ANKARA
The China-sponsored Asian Infrastructure and Investment Bank to be established by the end of the year will be the peer of the Asian Development Bank, analysts said Thursday.
So far, 27 countries including Asian large economies China, India, Indonesia, and Malaysia, New Zealand and Singapore have been admitted to membership and seven Western countries, England, Germany, France, Italy, Switzerland, Luxemburg have applied join the project, although the U.S. has made clear it does not approve.
The White House issued a statement in early March warning prospective members about standards in the project. "It is important to note that countries that become prospective members of the AIIB will be responsible for the standards adopted in the articles of agreement and their implementation," a presidential spokesman said, after the U.K. joined the project.
Turkey became the most-recent applicant for membership. The Turkish Treasury announced Thursday that Turkey has applied to join the China-sponsored Asian Infrastructure and Investment Bank as of March 25.
The new bank, which is to begin operations at the end of the year, could upset the status of other international development institutions like the World Bank and the International Money Fund, in which Western nations hold a majority of the voting rights.
"Although this is a significant development it would be more accurate to compare the new bank with the Japan- and U.S.-dominated Asian Development Bank, rather than with the International Monetary Fund and the World Bank," said Sant Manukyan, head of Investment International Markets Department with the Turkish lender Is Bank.
"Currently the new bank is far from challenging the authority of the IMF and World Bank. Through this bank, China will be able to boost its influence in many countries not funded by the U.S. due to political, environmental and other issues."
China is not represented at a level which it finds coherent with its economic power in any of the international institutes cited.
China has sought to increase its influence at the World Bank and the International Monetary Fund, demanding changes that would allow emerging markets a greater voice in decisions. China has 4 percent of the voting power at the two institutions while the U.S. has 18 percent. In the Asian Development Bank, Japan’s vote is twice the size of China’s. But there have so far been any changes to the voting structure at either institution.
Manukyan said that China would increase its influence in international organizations like the UN.
Bosphorus University Asia Studies Application and Research Center Coordinator Dr. Altay Atli said that international institutions like the IMF and World Bank were founded in the 1950s and now have dated aspects.
"I see this China-sponsored bank as a positive development. But if it were to be positioned as an opponent or alternative to international institutions, such as World Bank and IMF, it won't be that successful," Atli said.
"I think the most important thing is that these institutions in a complementary manner. Contributing to each other where other failed to reach. I think global economy sorely needs this," he commented.
China began efforts to establish a bank dedicated to development in Asia in October of last year. Since then, U.K., France, Germany and Italy have joined the project.
There is a gap in Asian development that will require $8 trillion in projects, according to the Asian Development Bank.
- Twenty-five nations to found bank
In a speech last July, Chinese President Xi Jinping explained that the bank would establish a "new type of more equal and balanced global development partnership."
He also discussed ways to strengthen coordination and cooperation within international and multilateral mechanisms "so as to win institutional power and rights of voice for developing countries."
On Oct. 24 last year, 21 nations agreed to found the new bank. Since then, four more have joined, including the U.K.
Xi has said the bank would begin operations by the end of 2015. The bank is mandated to address what the Chinese government calls a massive infrastructure gap in Asia, valued at $8 trillion. Chinese government officials point out that the Asian Development Bank, which is capitalized at about $160 billion, cannot address all necessary development.
The Asian Development Bank will start life with $50 billion in capital but its founders hope that more countries will join and help to build its budget. Turkey is well-positioned to provide a boost in capital.
Jin Liqun, the Chinese official who will head the bank, has been lobbying countries to persuade them to sign up although there are reports that U.S. lobbying against the bank has kept some away.
Jin has stated that the new bank will be rigorous in maintaining the kinds of standards that the U.S. has expressed concern over.
