China-led Asian Infrastructure Investment Bank takes shape

Last week saw the deadline to become a founding member of the Asian Infrastructure Investment Bank (AIIB), a China-led lender aiming to provide loans to fund infrastructure projects in developing Asian countries.

As we mentioned last week, the bank has become a key factor in deciding whether Beijing or Washington will hold the upper hand in deciding economic and trade issues in Asia in the coming decades.

Beijing argues that China and other developing countries do not have enough of a say in what goes in US-led institutions such as the World Bank, the International Monetary Fund and the Asian Development Bank.

So far, 46 countries have applied to join and the AIIB is expected to kick off by the end of this year.

China, which is the world's second largest economy, first floated the idea at the Apec summit in Indonesia in 2013 and invited other countries to participate. It was launched at last year's Apec summit in Beijing

The bank currently has about €95 billion of registered capital, but the more members who join, the more capital it is likely to have at its disposal.

For its part, Washington has been trying to persuade allies against joining the AIIB, saying western nations needed to stay out because of governance issues, as well as environmental and social safeguards. It seems rattled by the way Beijing has taken the initiative to set up the lender and the manner in which its own allies have lined up to join.

Last Tuesday was the deadline for applications to become a founding member of the bank. Key US allies among that number include Britain, France, Germany and Italy, while, in the region, both Australia and South Korea have signed up. Japan has opted not to be a member, but has made noises that it might join further down the road.

Britain's decision to join angered the US, with President Barack Obama slamming the UK's "constant accommodation" of China.

Ireland has not applied to join the Asian Infrastructure Investment Bank , although Government sources have refused to rule out Irish participation before the end of the year.

It is intriguing to see who is lining up to be part of the venture and is evidence of Beijing’s growing sway in wooing international goodwill, especially among countries eager to improve trade ties.

Norway, one of China's least-favoured nations – blamed for awarding the Nobel Prize to jailed dissident Liu Xiaobo – has confirmed its intention to join the bank.

"Norway is a substantial contributor to global development efforts and wishes to join countries from Asia and other parts of the world in further refining the structure and mission of the AIIB," said foreign minister Børge Brende.

This has been hotly debated in Norway, but trade with China has been so badly affected by the Nobel Prize row that the government is keen to normalise links again.

Then there is Taiwan, the self-ruled island that China sees as an historical irritant to be taken back by force if it ever tries for independence, but with which trade links are growing under the stewardship of President Ma Ying-jeou.

Despite a lack of formal diplomatic relations, Taiwan has submitted to join the AIIB, although it looks like a tough call, with protests in Taiwan and likely calls from Beijing for it to join as Chinese Taipei.