China expected to hold veto power in AIIB

China is expected to hold veto power over important decisions at the Asian Infrastructure Investment Bank (AIIB), according to Caixin.

The current structure of the bank will likely give China 26% of the voting rights, a person with knowledge of the matter told the Chinese news service. The source added that “China was not seeking veto power and was willing to reduce its voting rights to less than one-quarter if countries such as Japan and the US wanted to join.”

The AIIB is a multilateral investment institution proposed by China to support infrastructure development in Asia. It has 57 founding countries and plans to start with registered capital of $100 billion. China is expected to contribute $29.8 billion, more than the combined investment of India, Russia, South Korea and Australia, reported The Wall Street Journal.

AIIB launch

AIIB launch

The secretariat in charge of preparing for the establishment of the AIIB declined to comment, reported Caixin.

“Michael Clauss, Germany’s ambassador to China, said a 26% stake will give China veto power over important decisions that require a “super majority” of at least 75% of votes and approval of two-thirds of all member countries. But using the power will be against China’s interests, he said,” according to Caixin.

Germany is the biggest non-Asian contributor of capital. It’s expected to take a 4.1% stake with an initial investment of $900 million, and another $3.6 billion contributed through 2019.

The AIIB’s articles of incorporation are expected to be signed in Beijing next week by representatives from the founding countries. The bank is expected to open by the end of the year.



Categories: Asia Unhedged, China

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  • KSC

    I don’t know what journalism has come to. Article says China expected to hold veto power but in the next sentence says China not seeking veto power. So does the writer know something we don’t from this article? Is China playing a game? Are we expecting China to insist on a veto vote in the last minute? Or is it just bad English? Meaning China will effectively have a veto vote since it is impossible to all the others to vote against China?

  • Kenington

    How does 26% be regarded as a veto?

  • Mr. Bernard Wijeyasingha

    In addition China has designated Russia as an “Asian Power”. this gives Russia a strong veto power within the Asian Infrastructure and Investment Bank (AIIB). Russia is a unique nation. She is both a major “Western power” and a major “Eastern power” simply due to her geography that straddles both Europe and Asia. Since the days of Napoleon Russia has played a crucial role in European politics. When it comes to Asia it was Japan who by defeating Russia in the turn of the century, help make Russia a key player in Asia as well.

  • Qiaobao

    There are still a half dozen countries intending to join, so a present 26% stake for decisions requiring 75% of the vote is unlikely to be enough, ultimately, for de facto veto power. Besides, that 75% is only required for major decisions involving the structural organization of the bank, not for everyday, run o’ the mill decisions. Besides…heck! This “veto power” issue has already been obsessing Wall Street for months. Much paranoia about nothing

  • floodWALLSTREET

    WOW! Germany the Same [Catholic Church] DEUTCH’s whom Perpetrated WW1 and WW2 and Working on WW2.5+ have came-up with a [Secret] Fund To Promote $5-Billion (via EURO; nay Deutschmarks?) while DENY the GREEKS their FREEDOM via Austerity and by Many names..??? BIG-SHAME! really.