Date
21 November 2017
Japanese Finance Minister Taro Aso said Tokyo could consider joining the bank if it could guarantee a credible mechanism for providing loans. Photo: Bloomberg
Japanese Finance Minister Taro Aso said Tokyo could consider joining the bank if it could guarantee a credible mechanism for providing loans. Photo: Bloomberg

Japan, Australia signal nod for China-led development bank

Japan and Australia have signaled approval of the China-led Asian Infrastructure Investment Bank (AIIB).

Both are allies of the United States, which is worried about China’s growing diplomatic clout and has questioned whether the AIIB will have sufficient standards of governance as well as environmental and social safeguards, Reuters said.

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.”

Australian Treasurer Joe Hockey said there was “a lot of merit” in the bank and the Sydney Morning Herald newspaper reported that Canberra could formally decide to sign up when the full cabinet meets on Monday.

Japan, Australia and the South Korea are the notable regional absentees from the AIIB.

But after Britain broke ranks with Western nations and said earlier this month that it would join the AIIB, other major EU members have followed suit.

Australia now appears close to joining, although no formal decision has been made, and South Korea may be as well.

Although China and Japan, the world’s second- and third-largest economies, have deep trade and business relations, their diplomatic ties are tense over a territorial dispute and they compete for influence across Asia.

The AIIB could emerge as a rival to the Asian Development Bank, the Manila-based regional financial institution that Japan dominates along with the US.

Bank of Japan governor Haruhiko Kuroda, former ADB president and vice finance minister, responded cautiously when asked about the AIIB.

“There are huge needs, demands for infrastructure investment in Asia,” he said at a news conference on Friday.

“On the other hand, the World Bank and ADB have been helping developing countries in Asia to improve infrastructure for the last 50 years,” Kuroda said. “They have accumulated know-how and experience … That may be the most I can say.”

Australia’s 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 neighborhood,” 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 (US$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 5 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”.

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CG

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