China has launched its Asian Infrastructure Investment Bank with the support of 50 nations, in a bid to increase its international financial clout.
China, India and Russia are the biggest shareholders in bank, which begins life with $50 billion US in capital to invest. It is projected to grow to $100 billion.
Japan and the U.S., which wield much of the power in the World Bank and Asian Development Bank, opted not to invest. Canada also demurred.
The U.S. government had objected that the bank would undercut existing institutions such as the World Bank and might allow looser lending standards.
But much of the West and Southeast Asia ignored U.S. objections and is on board, including Australia, Britain, Germany and South Korea.
Representatives of 50 countries took part in a signing ceremony for the AIIB in Beijing on Monday, while an additional seven nations, such as the Philippines and Thailand, attended as they are still negotiating on the issue.
Hope for growing stature
China, which believes its weight on the international stage does not match its economic importance, hopes the new bank will grow to the stature of the Asian Development Bank and World Bank.
The plan is that money from the AIIB will be loaned to build ports, roads and cities throughout Asia, and that China's engineering firms will bid on the work, expanding their global expertise.
Lou Jiwei, China's minister of finance, called the launch of the AIIB a "win-win for Asia" at the bank's signing ceremony, saying he thought the bank would start operating toward the end of the year.
China has the largest voting share on the bank's board — 20.06 per cent – giving it potential veto power on projects.
India will be the second-biggest shareholder with a possible 10-15 per cent stake, while Russia and Germany are the third and fourth biggest member states.
Can China hold back on threats?
The AIIB will be a test of China's ability to run a multilateral organization
Until now, China has tried to build its sphere of influence by throwing money around, as in Africa, or using threats, as in Southeast Asia.
But running a transparent, socially conscious development bank that promises to meet the shortfall in Asian infrastructure funding will take a more subtle approach.
China will have to work with many other institutions and levels of government and create approvals processes that aren't hampered by bureaucracy.
Jin Liqun, a former Chinese deputy finance minister, is to lead the bank until a CEO is formally appointed.