Another US ally seeking to join China-led bank
Print Edition
SOUTH Korea says it is seeking to be a founding member of the Asian Infrastructure Investment Bank, another key US ally joining the China-led institution despite Washington’s misgivings.
South Korea’s finance ministry said the AIIB has been promoted to help funnel more investment money into the region while maintaining supplementary relationships with existing multilateral development banks.
“The government will make efforts in close cooperation with the major countries to help the AIIB possess a high level of standards in the areas of responsibility, transparency, governing structure and debt sustainability,” it said.
The ministry said the decision to sign up as a founder member came after China had addressed a number of outstanding governance issues regarding the new lender.
South Korea has demanded improvements in relation to the governing structure of the bank and other safeguards and there has been considerable progress on these issues, the ministry said, without elaborating.
“GDP will be an important factor in deciding each member country’s stake,” it said.
Some prospective members have worried that China’s shareholding in the bank may allow it to exercise veto power.
However, the Wall Street Journal said this week China had proposed to forgo veto power at the bank to encourage more countries to join.
Chinese foreign ministry spokeswoman Hua Chunying has dismissed the notion that Beijing sought — or gave up — veto power as an “impossible proposition.”
The United States had warned against the new institution but Britain, France, Germany and Italy announced this month they would join, leading the Obama administration to reassess its stance.
Although South Korea is a major US ally, it has deep economic ties with China. China is South Korea’s largest trading partner and the two countries aim to sign a free trade agreement this year.
The AIIB has been seen as a significant setback to US efforts to extend its influence in the Asia Pacific region.
Although Australia is a vital part of Washington’s strategic “pivot” toward Asia, it is close to joining as well. Japan says it “does not need to sign in” on joining the bank unless China lays out clear rules on when and what conditions it will provide loans.
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