Britain seeks to join China-backed infrastructure bank
Britain announced hopes to become the first major Western country to join a Chinese-led development bank on Thursday, drawing a concerned response from Washington.
The $50 billion Asian Infrastructure Investment Bank (AIIB) has been feted by Beijing as a way of financing regional development, and is seen as a potential rival to US-based institutions such as the World Bank.
Finance minister George Osborne said Britain would join discussions with other founding members to set out the institution’s governance and accountability structures later this month, in a move to bolster relations with China.
“Joining the AIIB at the founding stage will create an unrivalled opportunity for the UK and Asia to invest and grow together,” Osborne said in a statement.
The move drew a cautious response from Washington, a rare note of discord in the special relationship that follows criticism from the US about Britain’s falling defence spending.
“We believe any new multilateral institution should incorporate the high standards of the World Bank and the regional development banks,” said US National Security Council spokesman Patrick Ventrell.
“Based on many discussions, we have concerns about whether the AIIB will meet these high standards, particularly related to governance, and environmental and social safeguards.”
China and 20 other countries signed a memorandum of understanding to establish the Beijing-headquartered bank in October.
The bank has support from countries including India, Singapore, Malaysia, Cambodia, Pakistan, the Philippines, Uzbekistan and Vietnam.
However several major economies allied to the United States including Japan, South Korea and Australia have declined to become founding members.
UK announces plans to join Asian Infrastructure Investment Bank
From:HM Treasury and The Rt Hon George Osborne M
© Crown copyright
UK intends to become a prospective founding member of the Asian Infrastructure Investment Bank (AIIB).
The Chancellor of the Exchequer, George Osborne is announcing today (12 March 2015) that the UK intends to become a prospective founding member of the Asian Infrastructure Investment Bank (AIIB). In doing so, the UK is the first major Western country to seek to join the AIIB.
Once fully operational the AIIB will support access to finance for infrastructure projects across Asia, using a variety of support measures – including loans, equity investments, and guarantees – to boost investment across a range of sectors including transportation, energy, telecommunication, agriculture and urban development. This support can complement the work already done in the region by existing Multilateral Development Banks such as the World Bank and Asian Development Bank.
As the first major Western country to apply to become a prospective member of the AIIB, the UK will join discussions later this month with other founding members to agree the Bank’s prospective Articles of Agreement, setting out the governance and accountability arrangements that underpin the AIIB’s operating practices.
As part of these discussions the UK will play a key role in ensuring that the AIIB embodies the best standards in accountability, transparency and governance, which will be essential to ensuring the success of the initiative and to unlocking the potential benefits for the wider global economy.
The Chancellor of the Exchequer, George Osborne said:
I am delighted to announce today that the UK will be the first major Western country to become a prospective founder member of the Asian Infrastructure Investment Bank, which has already received significant support in the region.
This government has actively promoted closer political and economic engagement with the Asia-Pacific region and forging links between the UK and Asian economies to give our companies the best opportunity to work and invest in the world’s fastest growing markets is a key part of our long term economic plan. Joining the AIIB at the founding stage will create an unrivalled opportunity for the UK and Asia to invest and grow together.