Canada considers investing in new Asian infrastructure bank in China
Canada would join 57 countries at bank giving loans to build infrastructure in Asia-Pacific nations
Canada is keen to get involved with a new international infrastructure bank in China, Prime Minister Justin Trudeau indicated Tuesday — a move that would help the east Asian country's economic credibility around the world.
China founded the Asian Infrastructure Investment Bank late last year to provide other countries in the region access to capital for investments in things such as transportation, power and telecommunications projects.
The bank has already invested more than US$500 million in Bangladesh, Indonesia, Pakistan and Tajikistan, and Chinese officials have said it plans to loan out US$10-15 billion over the next five years.
"My government believes very, very much in the importance of investing in infrastructure," Trudeau said Tuesday during a roundtable discussion with business leaders.
"That's one of the reasons why we're looking very favourably at the possibility of joining the AIIB)."
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Should Canada announce Wednesday that it's joining, it would be among 57 other member countries, including Australia, the United Kingdom, France, Germany and South Korea, which signed on last year in the face of opposition from the U.S.
In order to join, countries agree to contribute funds in the form of shares. Australia agreed to contribute $930 million over five years, which the Australian Broadcasting Corp. has said would make that country the sixth-largest shareholder.
American officials warned that the new bank would provide loans to developing countries without requiring any caveats about the environment, labour rights or anti-corruption reforms, as are typically included in loans from the World Bank and International Monetary Fund.
China's growing global economic influence
Former Canadian diplomat Charles Burton of Brock University in St. Catharines, Ont., said a Canadian decision to join the bank would signal that Canada is prepared to see China take a seat at the table in terms of having input on the global economic landscape.
"Certainly we're trying to show that we are prepared to see China take an important in the global economy," he said.
"And by supporting this institution that's primarily initiated by China indicates that we're trying to build trust that China will use this institution for the greater good in a liberal, internationalist way and not simply as a device to expand its geopolitical reach."
There is still some wariness in official Ottawa about supporting China's global influence, particularly with its recent actions the South China Sea, said Paul Evans of the University of British Columbia's Institute for Asian Research. But he said most officials feel Canada made a mistake by not joining the bank last year.
The four projects approved earlier this year addressed many of the concerns western countries had about the new bank, he said, including that China would use it to advance its own strategic and commercial interests.
Evans said the Liberal government's decision to sign on would be symbolically important in terms of Canada-China relations.
While the cost — which he estimated will be as much as $1 billion — is high, he said Canadian companies could benefit from the billions of dollars in projects the bank will finance.