BEIJING (Reuters) - World Bank Group President Jim Yong Kim on Tuesday welcomed a new multilateral infrastructure bank proposed by China, saying there was a “massive need” for new investment in this area.
China, which aired the idea of creating the Asian Infrastructure Investment Bank in October to fund projects in Asia, has said it would likely be the largest shareholder in the bank, with a stake of as much as 50 percent.
The initiative is one of a growing list from China and which experts say is part of the country’s attempt to influence Asia’s security and financial architecture.
Chinese leaders have sought to downplay the politics behind the proposed infrastructure bank and Kim, who is visiting China, said a new bank made good business sense.
“Any estimate of the infrastructure needs in the developing countries start at about $1 trillion a year,” Kim told reporters at a briefing, adding that the figure greatly exceeded private-sector investment of about $150 billion a year.
“So we welcome any new organizations. We think the need for new investment in infrastructure is massive.”
The World Bank can work with any new infrastructure bank once it becomes a reality, be it a bank led by the emerging BRICS nations or the Asian Infrastructure Investment Bank, Kim said.
The BRICS group, comprised of Brazil, Russia, India, China and South Africa, is also in talks to create a $100-billion development bank and has reached broad agreement on the project, a senior Chinese diplomat said on Monday.
Praising China’s progress in financial reforms, Kim reiterated the World Bank’s forecast for its economy to grow 7.6 percent this year before cooling a little to expand 7.5 percent in 2015.
Faced with a maturing economy likely to cool in the next few years, China is trying to re-orient itself and cut its reliance on exports and heavy investment for growth.
Authorities also want to scale back central planning and let markets play a bigger role, changes that analysts say could weigh on economic expansion in the near term.
Indeed, China’s economic growth drooped to an 18-month low of 7.4 percent in the first quarter as investment slowed, though there are signs a recovery may be nigh.
“We are very encouraged about the fact that, despite a lower growth rate, the Chinese government continues on the path of these reforms,” Kim said.
“To be able to sustain high-quality growth in China, they are going to need to stick to the reform agenda,” he added. “So far so good and that’s exactly what they are doing.”
Although China has not carried out any big-bang reforms, it has taken small steps in some areas, including allowing private investment in some sectors, and giving some regional governments the right to raise and repay their own debt.
Reporting by Aileen Wang and Koh Gui Qing; Editing by Miral Fahmy