World Bank President Jim Yong Kim said today that he welcomed the setting up of the China-backed Asian Infrastructure Investment Bank (AIIB), a day after Britain became the first Western nation to embrace the institution.
With US interest rates likely to rise later this year, capital flows to emerging markets and low-income countries will face greater challenges over time, Jim Yong Kim told a news conference.
"From the perspective simply of the need for more infrastructure spending, there's no doubt that from our perspective, we welcome the entry of the Asian Infrastructure Investment Bank," he said.
Kim's remarks came after Britain said it has sought to become a founding member of the AIIB.
"As the UK just announced today in their statement, they were very clear in saying that they were going to insist that the standards of any new bank that they are part of would be equal to the World Bank and the Asian Development Bank," Kim said.
All of the multilateral development banks together contribute only about 5 to 10 per cent of the overall annual spending in infrastructure, he added.
The AIIB was launched in Beijing last year to spur investment in Asia in transportation, energy, telecommunications and other infrastructure.
China said earlier this year a total of 26 countries are founder members, mostly from Asia and the Middle East.
"Generally speaking, the international reaction has been positive," Chinese foreign ministry spokesman Hong Lei said in Beijing.
"The AIIB will abide by the principles of openness, inclusivity, transparency, responsibility and equality ... and fully reference the good practices of multilateral banks to avoid some of the detours they have taken," he added.
While Hong did not respond directly to US concerns about the bank, China's official Xinhua news agency took a stronger line.
"The response of the US government exhibited nothing but a childish paranoia towards China," it said in an English-language commentary, slamming what it called "reflective scepticism".
Vice Finance Minister Joo Hyung-hwan told reporters on Thursday that South Korea was still in discussions with China and other countries about its possible participation.