Asian Infrastructure Investment Bank will guide capital

BEIJING - The proposed Asian Infrastructure Investment Bank will bring benefits to all parties involved, Chinese finance minister Lou Jiwei declared.

"The global economy remains short of investment. Investment in infrastructure in Asia will expand demand and support global recovery," Lou said in an interview with Xinhua this week.

As infrastructure in Asia remains relatively weak, the region needs investment, said the minister.

"Quantitative easing and low interest rates in developed countries mean capital is abundant in Asia," he said, but Asia lacks a mechanism to guide capital toward infrastructure projects.

Asia will face a huge capital shortfall in the next 10 years and to maintain current growth, at least $8 trillion needs to be spent on infrastructure, according to the Asian Development Bank. "In such a context, the proposed bank will be of real significance," Lou said.

Many countries have voiced interest in the bank since President Xi Jinping made the a proposal during a visit to Southeast Asia in October 2013.

China has held three rounds of talks with interested Asian countries so far, and a memo on setting up the bank is due to be signed this autumn.

"We are actively discussing a founders list, basic framework and regulations to put the bank into operation as soon as possible," Lou said.

The size of the bank's capital and investment ratios are yet to be discussed and confirmed.

China could contribute 50 percent of the bank's capital. "This shows China's determination to establish the bank," he said, but the final investment is open to adjustment, depending on how many countries participate.

"By economic weight, China is still expected to hold the biggest share," he said.

Lou said he would welcome participation from Japan, the United State and Europe, even though the bank's global agenda will be set at a later date.

As a new comer, the Asian Infrastructure Investment Bank will complement and cooperate with the World Bank and the Asian Development Bank, with the latter two focusing on poverty alleviation, but infrastructure also helps alleviate poverty, Lou said.

"The bank can cooperate with the World Bank and Asian Development Bank on joint financing," he said.

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