21 August 2019
Joe Hockey says members can form a block to counter any attempt by China to use the AIIB as a tool to aggressively pursue its strategic interests. Photo: WSJ
Joe Hockey says members can form a block to counter any attempt by China to use the AIIB as a tool to aggressively pursue its strategic interests. Photo: WSJ

Australia, New Zealand soothe fears over China-led Asia bank

Australia and New Zealand, two of Washington’s main Asia-Pacific allies, are confident and a proposed infrastructure bank being organized by China will not be a geopolitical tool for Beijing.

Australian Treasurer Joe Hockey said that even though China is likely to have the single largest shareholding in the Asian Infrastructure Investment Bank (AIIB), other countries could group together to form a majority bloc, helping prevent China from using the regional lender to aggressively pursue its own strategic interests.

Separately, new Zealand Finance Minister Bill English his country and others, including Singapore, are continuing to work toward ensuring the independence of the AIIB and Beijing’s attitude has “so far been encouraging”, Reuters reported Friday.

Afer months of hesitation, Australia applied last month to become a founding member of the AIIB.

The allocation of shares and voting rights in the bank is still being discussed but  China has said that with more countries participating, each country’s share will decline.

“Whatever the case, China will have a very significant shareholding. Other countries combined will have a majority shareholding,” Hockey said.

Chinese officials have said founder status would grant more influence over the way the bank will function.

According to European and Chinese officials, China has said it would forgo veto power at the bank as a measure to gain support, particularly from European countries, including Germany, France, Italy and Britain.

“We have found the Chinese government open to the notion of a more broadly multilateral institution so we have stayed at the table,” English said.

“The issue is that it not just be a Chinese state-owned enterprise.”

Chinese negotiators also showed no signs of wanting to place restrictions on AIIB membership based on political considerations, Hockey said.

There remains some concern, particularly in Washington, that the bank may be used to further China’s interests against rivals like Japan, or against Taiwan, which Beijing considers a rebel province.

“It hasn’t in any way drawn any lines in the sand or suggested that no one is able to participate,” Hockey said.

“We in fact sought out their views on the participation in particular of Japan and the United States, and they were warmly welcomed. Quite frankly, I think China genuinely wants it to be a multilateral bank.”

Australia and New Zealand are among dozens of countries China had invited to become prospective founding members of the new institution, which will help finance road, rail, port and other construction projects across Asia.

State news agency Xinhua said that by March 31, a total of 47 countries had applied to be founding members of which 30 had been approved and others were awaiting approval, including Australia.

Among other nations seeking membership are Russia, Turkey, Georgia and Egypt. A formal announcement of membership is expected on April 15.

Australia is urging China and other nations that have shown interest in joining to limit AIIB’s activities to Asia.

Hockey said there was already demand for as much as US$7 trillion in unfunded projects that could boost growth in the region.

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