President Maithripala Sirisena meets with China’s President Xi Jinping during his State Visit to China in March last year

The Asian Infrastructure Investment Bank (AIIB) has been formally established in China with operations expected to begin early next year, foreign media reports said last week.

The bank’s establishment came after 17 funding members of the AIIB, which account for just over 50 percent of its share capital, ratified an agreement on the bank, state television in China quoted Finance Minister Lou Jiwei as saying. The bank, which will hold its opening ceremony in mid-January and formally elect its president, will initially focus on financing projects in power, transportation, and urban infrastructure in Asia.

Founded on the lines of the World Bank and Asian Development Bank, the AIIB will focus on financing infrastructure construction across Asia.

The AIIB has 57 developed and developing nations as prospective founding members, including Australia, Britain, Germany, Italy, the Philippines and South Korea.

However, the US and Japan, two of the world’s largest economies, have decided not to join the bank.

According to reports, China holds 30.34% of the bank’s stake, while India holds 8.52%, followed by Russia with 6.66% ownership.

Asia-Pacific Finance and Development Center executive deputy director-general Zhou Qiangwu was quoted by Xinhua news agency as saying that the AIIB has progressed partly due to China’s growing national strength and rising global influence.

“On the other hand, it also shows that the government’s goal of building the AIIB into an open, transparent and highly-efficient multilateral institution as well as the high standards it is upholding have garnered extensive recognition and strong support across the world.

“It is in line with the best interests, and meets the practical needs of various parties.” Zhou added.

With authorized capital of US $100 billion, the bank is expected to use international, normative standards in its governance structure, operational policies and human resource management.

October 2013: Chinese President Xi Jinping initially proposes the bank. The idea is for the AIIB to finance infrastructure construction and promote regional interconnectivity and economic integration.

October 2014: Twenty-one Asian nations including China, India, Malaysia, Pakistan and Singapore sign an agreement to establish the bank. It’s the first China-proposed multi-lateral financial institution that has included developing nations as members.
March 12, 2015: Britain applies to join as a prospective founding member, the first major western country to do so. France, Italy and Germany quickly follow suit.

March 31, 2015: China announces that 57 countries have joined or have applied to join as prospective founding members before the deadline. By the month of May, five rounds of talks are held, and a consensus is reached on all key elements, such as the bank’s purpose, membership, capital subscription, voting powers and decision-making structures.

June 29, 2015: Delegates of the 57 prospective founding countries gather in Beijing for the signing ceremony of an agreement to lay the legal framework and management structure for the bank.

The launch comes just six months after the articles of agreement were signed. After the bank becomes operational, countries can still apply for membership and join the bank, as long as the board of governors approves the application.

At a convention in January, a president will be elected. Rules on the banks operation, finance and human resources will also be discussed.

China’s President Xi Jinping meets with former Sri Lankan President Mahinda Rajapaksa in 2014
China’s President Xi Jinping meets with former Sri Lankan President Mahinda Rajapaksa in 2014