Beijing visit: IMF head welcomes China-backed bank

AIIB has drawn mixed responses since being established.

BEIJING: The International Monetary Fund (IMF) head Christine Lagarde said she welcomed Beijing’s creation of a new infrastructure bank – an institution that has drawn support from Europe and scepticism from Washington.

Lagarde made the comments as she wrapped up a five-day visit to China and after a host of European countries announced their intention to sign up for the China-led Asian Infrastructure Investment Bank (AIIB).

The moves by Britain, Germany, France, Italy and others have caused consternation in the United States and Japan, which lead the World Bank and the Manila-based Asian Development Bank respectively. Some view the new bank as a competitor to the two institutions.

In a statement issued after she met Premier Li Keqiang, Lagarde hailed Beijing’s “impressive efforts” to reform in areas including combating corruption, controlling pollution and “clearing the path to even more engagement with the world”.

“I welcomed China’s various initiatives in this area, including through the newly established Asian Infrastructure Investment Bank,” she said.

Lagarde earlier stated that the IMF would be delighted to cooperate with the new bank, according to China’s Xinhua.

World Bank Managing Director Mulyani Indrawati has also hailed the AIIB. “Any new initiative that will mobilise funding in order to fill the infrastructure gap is certainly welcome,” said the MD.

China has embraced the European eagerness to take part in the new body, with state media claiming that the US risks being sidelined.

Beijing touts the $50-billion institution as a tool to help meet gaps in financing needs for regional development in Asia.

But, US officials have expressed caution amid worries that the institution could undermine the WB.

Lagarde also said that the IMF welcomed Beijing’s longstanding drive to include its yuan in the IMF’s basket of reserve currencies, adding that they will work closely with the Chinese authorities.

Lagarde’s visit comes amid mounting concern over slowing growth in the world’s second-largest economy. Top Chinese leaders have said the economy is in a delicate transition from decades of double-digit annual growth to a new, slower and more sustainable model, a stage they have branded as the ‘new normal’.

Lagarde referenced the phrase and offered praise for the structural reforms pledged by the ruling Communist Party at its top meeting in late 2013.

“This should lead to slower, safer, and more sustainable growth – with a focus on innovation and entrepreneurship – which will be good for China and its people, and good for the world,” said Lagarde.

Published in The Express Tribune, March 24^th, 2015.

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