25 October 2016
President Xi Jinping (center, right) meets delegates at the signing of the articles of agreement in Beijing Monday. Photo: Reuters
President Xi Jinping (center, right) meets delegates at the signing of the articles of agreement in Beijing Monday. Photo: Reuters

China to hold 30% stake in AIIB, have limited veto for now

China will hold a 30.34 percent stake in the Asian Infrastructure Investment Bank (AIIB), the Finance Ministry said Monday.

Beijing will be the largest shareholder in a multilateral institution that will project the country’s growing soft power.

China will have 26.06 percent of the voting rights in the development bank, which will rival institutions such as the World Bank and the Asian Development Bank, Reuters reported.

This would effectively give the country a veto on votes requiring a “super majority”, which need to be approved by 75 percent of votes and two-thirds of all member countries.

A super majority vote is needed to choose the president of the bank, provide funding outside the region and allocate the bank’s income, among other decisions.

The United States, which initially cautioned countries against joining the AIIB, has expressed concern over how much influence China will wield in the new institution.

China has maintained it will not have veto powers, unlike the World Bank where Washington has a limited veto.

The official Xinhua news agency quoted vice finance minister Shi Yaobin as saying that China did not seek a veto in the bank, describing its stake and voting share in the initial stage as a “natural result” of current rules.

The ministry said the initial stakes and voting rights of China and other founding members will be gradually diluted as other members join.

Countries defined as “within the region” will hold a 75 percent stake, the ministry said in a statement on its website, as delegates from 57 countries gathered in Beijing to witness the signing of the articles of agreement for the bank.

Fifty countries signed the agreement, the ministry said, as the remaining seven — Denmark, Kuwait, Malaysia, the Netherlands, the Philippines, South Africa and Thailand — had not yet won domestic approval for their participation.

India will have the second-largest share in the bank, followed by Russia, Germany and South Korea, based on their capital subscriptions.

The AIIB’s authorized capital stock will be US$100 billion, which will be divided into shares that have a value of US$100,000.

After getting approval from the majority of the board, the AIIB can increase its legal share capital and lower the share of countries within the region, but not lower than 70 percent, it said.

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