Chinese President Xi Jinping greeted 300 delegates from the bank’s fifty-seven founding-member countries where they would later determine the total share capital, each member’s voting share of capital, the governance structure, decision-making mechanism, and operational business procedures.
“The founding countries have reached a high-quality agreement today. As long as all parties stick to the spirit of multilateral cooperation, we can make the AIIB a new platform that features openness, inclusiveness and mutual benefits, and contribute to Asian infrastructure development,” Xi said.
Fifty of the fifty-seven countries formally signed the bank’s charter on Monday, according to a statement published on China’s Finance Ministry website.
Denmark, Kuwait, Malaysia, Philippines, Holland, South Africa, and Thailand refrained from signing as they had not yet received domestic approval, but are likely to sign on later in the year.
“China’s development would not have been possible without Asia and the world,” Xi said.
“As China grows stronger, we are willing to make our due contribution to world development,” he said.
“We will continue to support existing multilateral banks, and by proposing the AIIB, we also hope to promote current institutions to better meet the requirement of their member countries and global economic system changes,” Xi added.
The bank will launch with a authorized capital of $100 billion, with 75 percent of the total capital coming from within Asia. China, India, and Russia will be the three largest shareholders.
Leading up to the March 31 deadline, in the U.S., the Obama administration openly lobbied to prevent its allies from joining the AIIB.
However, U.S. efforts failed, and much to its embarrassment, they got burned after Western allies flocked to join the bank, despite pleas from the White House to stand back amid concerns that Beijing will extend its influence in the region.
In a winning strategy, China agreed to forgo veto power over AIIB decisions in a proposal that helped to attract European countries to break away from Washington and line up as founding members.
However, on Monday, China’s Finance Ministry said that China would have 26.06 percent of the voting rights in the bank, this would effectively give China such power to veto on votes requiring a “super majority” (despite Beijing insisting it will not have such powers), which need to be approved by 75 percent of votes and two-thirds of all member countries.
Vice Finance Minister Shi Yaobin said in an interview with Xinhua, that China does not seek a veto power in the bank and that the country’s stake and voting share in the initial stage are “natural results” of current rules, and may be diluted as more members join.
Second to China, India will have a 7.5 percent voting share, whereas Russia would hold the third largest voting share at 5.92 percent.
In terms of the bank’s share, China received a 30.34 percent stake, India with 8.52 percent stake, and Russia with 7.5 percent.
“It is within expectations given China’s huge economy, and it also means China needs to shoulder more responsibility in building the AIIB into a high-quality bank,” Ruan Zongze, Vice President of the China Institute of International Studies, told the Global Times on Monday.
Russia’s share in the authorized capital of the bank will total $6.5 billion, Deputy Finance Minister Sergey Storchak told Russia’s TASS news agency on Monday.
The U.S. and Japan were the most prominent nations whom did not attend the ceremony. However, China has said that it has left the door open for them to join.
In May, Japan said that it would dedicate around $110 billion in funding for Asian infrastructure development projects in a competitive slap to the AIIB.
However, despite the lack of support from the U.S. and Japan, officials at other development banks have widely welcomed the AIIB.
The AIIB and ADB agreed In May to team up to jointly bankroll infrastructure development projects in Asia.
The AIIB will complement China’s broader regional infrastructure plan, known as “One Belt, One Road” initiative, or the New Silk Road project, which aims to increase connectivity by building infrastructure such as a network of railways, highways, oil and gas pipelines, power grids, internet networks, maritime, and other infrastructure links across Asia, Europe, the Middle East, Africa, and even as far as South America.
“This proposal was designed to meet Asia’s infrastructure development and promote Asia’s connectivity and also deepen regional cooperation for the sake of development,” President Xi told delegates at the signing ceremony.
“China will make joint efforts with various founding countries to build a professional, efficient and clean multilateral bank, and jointly contribute to Asia and world economic prosperity,” Xi said.
“In a relatively short period of time we have been able to reach agreement on the articles of agreement of the AIIB…This testifies to the solemn commitment of all the AIIB’s countries to setting up the bank,” Xi added.
Following the ceremony, Chinese Premier Li Keqiang said that the AIIB is a good recipe for tackling global economic downturn and boosting growth and prosperity.
China’s Finance Minister Lou Jiwei also said on Monday that he was confident that the AIIB will start functioning before the end of 2015.
Established in 2014, the AIIB, China’s alternative and potential rival to the Asian Development Bank (ADB) and the western-led International Monetary Fund (IMF) and World Bank is aimed to finance much-needed Asian infrastructure projects such as construction of roads, railways, and airports. The bank’s headquarters will be located in Beijing and English will be its working language.
According to the Philippines-based ADB, Asia needs $8.22 trillion worth of infrastructure investment in the current decade to address the region’s fast population growth and its high pace of urbanization.