The United Kingdom announced that it would join the Asian Infrastructure Investment Bank (AIIB), thus becoming the first of the major western economies to apply for membership in the China’s investment bank.
“Joining the AIIB at the founding stage will create an unrivaled opportunity for the U.K. and Asia to invest and grow together,” Osborne said.
A decision to launch the Asian Infrastructure Investment Bank was proposed by the Chinese government in 2013 and launched in October 2014. Founding members of the AIIB include China, India, Indonesia, Kazakhstan, Mongolia, etc. They are typically all rapidly growing and/or resource-rich emerging nations that can dilute US control of the global banking system.
The bank plans to fund infrastructure projects such as new roads, telecommunication networks and other sectors in Asia. The fact that it has large investment capital is the main attractive point. However, Asia has a big creditor, Asian Development Bank, and the establishment of the AIIB would fuel competition.
The new banking system will be led by China and will be officially launched by the end of 2015.
Promoting the creation of the bank, China virtually hopes to strengthen its influence in the region. The very idea of establishing the bank raised concerns among the US officials. US allies came under pressure from Washington to stay out of the new institution.
The primary goal of the AIIB is to construct new ‘Silk Road’, the network of trade routes between China and its neighbors. Thus, a railway between China and Bagdad is one of the projects planned to be financed.
