The fifty founding members of the AIIB have signed a historical Articles of Agreement (AoA) on important functional aspects, including the governing structure of the Asian Infrastructure Investment Bank.
Articles of Agreement of the AIIB looks close to that of the twenty-four Articles of Agreement of the IMF that was signed seventy years back. China, the lead state has a veto power and 26% vote and 30 % capital contribution to the AIIB. It seems that China in the AIIB, is like the US in the IMF.
India expectedly got the second largest voting power and capital share. India’s shareholding is 8.52% with a voting right of 7.5%.
It was estimated that India’s voting power at around ten percent. But the allocation of shares to non Asian countries has caused a decrease in India’s voting rights.
The Articles of Agreement seems astonishingly similar to the IMF AoA.
It is interesting the China has always expressed serious dissatisfaction about the governance structure of the IMF and the other BWS institution- the World Bank.
Most importantly, the difference between the firs and the second, China’s 26% and India’s 7.5% is so wide that China can have a more comfortable say in the bank. It situation is similar to that of the historical position of the US in the IMF.
About the veto power, Vice Finance Minister Shi Yaobin told that China doesn’t seek veto power in the AIIB. He revealed that the veto power is natural because of the high capital contribution.
The Vice Finance Minister said the country’s stake and voting shares in the initial stage are natural results of current rules, and may be diluted as more members join.
It is clear that non entry of Japan has caused rise in China’s share. More entry into the AIIB will see reduced share for China.
But a key Chinese official told Global times that the AIIB is not likely to approve a larger number of new members in its initial stage. The implication is that China will continue to enjoy veto power for long.
China does not seek veto powers in the AIIB, Vice Finance Minister Shi Yaobin told the Xinhua News Agency Monday. He said the country’s stake and voting shares in the initial stage are natural results of current rules, and may be diluted as more members join.
In the meeting held at Beijing, where the bank will have its head quarters, seven willing states including Denmark, Thailand and Philippines doesn’t turned out for signing the agreement.
The first head of the AIIB is not determined. But the expectation is that Mr Jin Liqun who is the brain behind the AIIB will become the first Director of the institution. He is currently the Chairman of the Board of Supervisors of the titanic China Investment Corporation – the Chinese Sovereign Wealth Fund. Similarly, in the AIIB, Mr Liqun is the Secretary General of the Interim Secretariat.
Voting shares in the AIIB