Beijing, China (BBN) - China on Wednesday dismissed reports that it is seeking or willing to forego its veto power in order to attract more European countries to join the Asian Infrastructure Investment Bank (AIIB), saying that the new multilateral bank will be a "transparent and efficient" organization.
"It is an unfounded proposition that China seeks or foregoes veto power," said Vice Finance Minister Shi Yaobin in a statement, according to the Sino-US.com report.
Britain, Germany, France and Italy have in the last two weeks announced their intention to sign up for the China-led AIIB, despite scepticism in Washington.
The new bank is viewed as a potential competitor to the US-led World Bank and the Japan-led Asian Development Bank, although China has denied any such intention and says the region's burgeoning infrastructure needs mean there is plenty of room for it.
"Every member's share will decline commensurately with the gradual increase in the number of the member countries," said Shi, reiterating Beijing's position that "all interested countries, either inside or outside the region" were welcome to join.
Shi's comment came after a Tuesday report by the Wall Street Journal, which said that as part of its efforts to persuade the European countries to sign up over Washington's opposition, Beijing offered to give up authority over the bank's decisions. It cited Chinese and European officials negotiating its establishment, and contrasted the position with the IMF, where the US has the final say on some decisions despite holding less than 20 percent of its shares.
Experts said that Shi's statement showed China's desire to take an innovative approach to governance issues in multilateral institutions without overstressing the power of the largest shareholder.
"Having veto power could empower China in deciding on the AIIB's investment projects and minimizing potential risks, but such a move would go against the bank's principles, which stress negotiations among all members," said Tu Xinquan, a professor at the University of International Business and Economics in Beijing.
There have long been complaints that the US has the power to veto important decisions at the IMF. The AIIB, however, will seek to make decisions on the basis of unanimous agreement rather than voting share, Jin Liqun, secretary-general of the Multilateral Interim Secretariat for Establishing the AIIB, told a forum held Sunday in Beijing.
"China has made the right decision not to seek veto power at the AIIB, because if it did so, it would repeat the US approach of seeking to dominate the IMF," said Zhao Changhui, a senior research fellow with the Chongyang Institute for Financial Studies at the Renmin University of China.
"But being the largest shareholder in the bank, China is also unlikely to totally give up its influence in it," Zhao said.
A total of 35 economies have so far either joined the bank or announced their intention to join it as founding members.
China has also invited the US, Australia and Japan to be a part of the new bank.
"Prospective founding members are deliberating on the AIIB agreement, including its decision-making mechanism and share distribution," Shi was quoted as saying by state-run news agency.
"As a proposition aimed at mutual benefit and win-win results, the AIIB will be an open, transparent and efficient multilateral organization," said he.
China and 20 other countries signed a memorandum of understanding in October to establish the Beijing-headquartered US$50 billion bank.
On Monday IMF chief Christine Lagarde welcomed the bank's creation, and Australian Prime Minister Tony Abbott said on Wednesday that his country will join if conditions such as multilateral and transparent governance are met.
BBN/SSR/AD-26Mar15-5:25 pm (BST)