New Zealand to invest over $87 mn in China-led Bank

New Zealand to invest over $87 mn in China-led Bank
June 15, 2015, 6:47 am

China’s Finance Minister Lou Jiwei (C) signs a document, with the guests of the signing ceremony of the Asian Infrastructure Investment Bank at the Great Hall of the People in Beijing October 24, 2014 [Xinhua]

Despite Washington’s suspicions about the new China-led financial entity, the New Zealand government on Monday said that the country will invest 125 million NZ dollars ($87.27 million) in the Asian Infrastructure Investment Bank (AIIB) paid over five years.

“New Zealand was the first Western developed nation to join negotiations to set up the bank and our membership will enhance our already strong economic, trade and investment links with the Asian region,” Finance Minister Bill English said in a statement.

New Zealand’s decision would count as reflecting improvements in the governance structure China was proposing. New Zealand is a founding member of the AIIB.

The bank aimed to address a significant gap in infrastructure investment in the Asian region, which would enhance the Asian region’s growth and in turn be good for New Zealand, English said.

The new China-led bank would have an initial capital of $100 billion to invest, which would be financed by individual country contributions proportionate to their economic size.

The new lender is seen by the US as posing a challenge to the establishments controlled by Washington, such as the World Bank.

Asia was important to New Zealand’s future so it made sense to contribute to infrastructure investment in the region, New Zealand’s Foreign Minister Murray McCully said in statement on Monday.

“Asia is driving global growth and it is full of opportunities for New Zealand,” McCully said.

“This new bank will be a welcome addition to existing institutions and it stands to make a significant contribution to infrastructure in the region,” he said.

“New Zealand is benefiting from the rapid and sustained development across Asia. To ensure we achieve further growth and that more people in the region are lifted out of poverty, Asia needs to address continuing constraints posed by infrastructure bottlenecks.”

The next step would be a formal signing ceremony in Beijing later this month.

China is also a major player in the New Development Bank being set up by the BRICS nations and is also providing $40bn for the new Silk Road Fund to improve connectivity across Asia.