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Australia to Join Regional Development Bank Led by China Australia to Join Regional Development Bank Led by China
(about 9 hours later)
BEIJING — Australia plans to join an Asian infrastructure bank led by China, the government announced on Sunday, reversing an earlier decision taken at the behest of the United States not to become a member. BEIJING — Australia plans to join an Asian infrastructure bank led by China, the government announced on Sunday, reversing an earlier decision taken at the urging of the United States not to become a member. The move made Australia the latest of a list of major American allies to sign up.
The office of Prime Minister Tony Abbott said in a statement that Australia still had concerns about the management of the bank but recognized the pressing needs for infrastructure in the Asian region. The office of Prime Minister Tony Abbott said in a statement that Australia still had concerns about the management of the bank but recognized the pressing needs for infrastructure in Asia. The decision will allow Australia to “participate as a prospective founding member in negotiations to set up the bank,” the statement said.
“The government is today announcing it intends to sign a memorandum of understanding on the Asian Infrastructure Investment Bank, which would allow Australia to participate as a prospective founding member in negotiations to set up the bank,” the statement said. Australia said it wanted to ensure that the board of directors had authority over crucial investment decisions and that “no one country,” a reference to China, controls the bank.
Australia said it wanted to ensure the board of directors had authority over crucial investment decisions, and that ”no one country,” a reference to China, controls the bank. Among Washington’s main objections to the China-led bank have been concerns that it would seek to undermine the authority of the World Bank and the International Monetary Fund, established after World War II with the United States in the leadership role.
The decision to join the bank is an about-face for the government, which, with South Korea, agreed to go along with the Obama administration’s requests last year that major Asian allies stay aloof from the bank. The administration has also suggested that, given China’s record on the environment and lack of transparency, the new bank would not meet the standards of existing institutions. The Chinese have countered that bureaucracy at the World Bank and the Asian Development Bank, which is based in Manila and led by Japan, has slowed their capacity to meet demand.
The Obama administration publicly criticized Britain for joining earlier this month, saying it was a sign of “accommodation” with China. The Obama administration publicly criticized Britain for joining this month, saying it was a sign of “accommodation” with China.
But when Britain and then France, Italy and Germany announced plans to join the bank this month, Australia, which counts China as its biggest trading partner, came under increased pressure to sign on. But as allies including Britain and then France, Italy and Germany announced plans to join the bank this month, Australia — which counts China as its biggest trading partner — came under increased pressure to sign on. South Korea, another major trading partner with China, said last week that it would join the Beijing-based bank, reversing its decision last year to go along with the United States’ requests that major Asian allies stay aloof from the plan.
Another major trading partner with China, South Korea, said last week it would join the Beijing-based bank. Australia’s move leaves the major Asia Pacific allies, the United States and Japan, China’s biggest competitor in Asia, outside the bank. While some in Washington have said the United States should consider joining, that is an unlikely prospect.
Washington eased its opposition slightly as members of the G20 group of advanced economies joined the bank, saying last week that it would encourage the World Bank and the Asian Development Bank to cooperate with the new institution. After expressing doubts, the Obama administration would be unlikely to reverse course, and Congress would almost certainly oppose the United States’ participating in an institution founded and primarily run by China.
A chief justification for the new bank is the failure of the World Bank and the Asian Development Bank, which is based in Manila and led by Japan, to keep up with the huge needs for roads, rail and power in large areas of fast-developing Asia. The turnaround by Australia showed that the United States’ “friends and allies are quite willing to accommodate China’s growing power despite America’s objections,” said Hugh White, a professor of strategic studies at the Australian National University.
Japan, China’s biggest competitor in Asia, remains outside the bank, although the Japanese finance minister, Taro Aso, who leads a faction inside the government in favor of joining, said Tokyo would consider entering talks about membership. “Australia of course worries about China’s growing power, but it is also eager to be part of Asia’s economic and political future and simply cannot afford to become isolated from the new Asia China is building,” Mr. White said.
Washington eased its opposition slightly as members of the G-20 group of advanced economies joined the bank, saying last week that it would encourage the World Bank and the Asian Development Bank to cooperate with the new institution.
A chief justification for the new bank is the failure of the World Bank and the Asian Development Bank to keep up with the huge needs for roads, railways and power in large areas of fast-developing Asia.
In a speech at the annual Boao Forum for Asia in southern China on Saturday, President Xi Jinping of China said the new bank would supplement the work of the World Bank and other international financial institutions.In a speech at the annual Boao Forum for Asia in southern China on Saturday, President Xi Jinping of China said the new bank would supplement the work of the World Bank and other international financial institutions.
“Being a big country means shouldering greater responsibilities for the region, as opposed to seeking greater monopoly over regional and world affairs,” Mr. Xi told the forum.“Being a big country means shouldering greater responsibilities for the region, as opposed to seeking greater monopoly over regional and world affairs,” Mr. Xi told the forum.
Among Washington’s main objections to the China-led bank have been concerns that it would seek to undermine the authority of the World Bank and the International Monetary Fund, established after World War II with the United States in the leadership. Nearly 40 countries have said they would join the new bank. The Chinese set a deadline for the end of March for founding members to join. The bank will be led by a Chinese official in Beijing and have a starting capital of between $50 billion and $100 billion, Chinese officials say. It is expected to start operations at the end of the year.
The administration has also expressed concerns that, given China’s record on the environment and lack of transparency, the new bank would not meet the high standards of existing institutions. But the Chinese have retorted that bureaucracy at the World Bank and the Asian Development Bank has slowed those institutions’ capacity to meet demand.
Nearly 40 countries have said they would join the new bank. The Chinese set a deadline for the end of March for founding members to join.
The bank will be led by a Chinese official in Beijing and have a starting capital of between $50 billion and $100 billion, Chinese officials say. It is expected to start operations at the end of the year.