BRITAIN'S PLAN TO JOIN CHINA'S 'WORLD BANK' ANGERS WASHINGTON

The $50bn (£33.6bn) Asian Infrastructure Investment Bank is seen as a potential rival to US-based institutions such as the World Bank

China and 20 other countries signed a memorandum of understanding to establish the Beijing-headquartered bank in October

March 12, 2015: Britain has announced plans to become the first major Western country to join a Chinese-led development bank, drawing a concerned response from the US.

The $50bn (£33.6bn) Asian Infrastructure Investment Bank (AIIB) has been feted by Beijing as a way of financing regional development, and is seen as a potential rival to US-based institutions such as the World Bank.

Chancellor George Osborne said Britain would join discussions with other founding members to set out the institution’s governance and accountability structures later this month, in a move to bolster relations with China.

“Forging links between the UK and Asian economies to give our companies the best opportunity to work and invest in the world’s fastest growing markets is a key part of our long-term economic plan,” Mr Osborne said in a statement.

“Joining the AIIB at the founding stage will create an unrivalled opportunity for the UK and Asia to invest and grow together.”

The move drew a cautious response from Washington, a rare note of discord in the special relationship that follows criticism from the US about Britain’s falling defence spending.

“We believe any new multilateral institution should incorporate the high standards of the World Bank and the regional development banks,” said US National Security Council spokesman Patrick Ventrell.

“Based on many discussions, we have concerns about whether the AIIB will meet these high standards, particularly related to governance, and environmental and social safeguards.”

China and 20 other countries signed a memorandum of understanding to establish the Beijing-headquartered bank in October.

The bank has support from countries including India, Singapore, Malaysia, Cambodia, Pakistan, the Philippines, Uzbekistan and Vietnam. However, several major economies allied to the US, including Japan, South Korea and Australia, have declined to become founding members.

The Telegraph