The World Bank just backed the China-led development bank

 
Jessica Morris
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World Bank President Jim Yong Kim voiced support for the AIIB (Source: Getty)

The World Bank has become the latest global figure to throw its weight behind the Asian Infrastructure Investment Bank (AIIB) despite the fact its ascendance has ruffled a few feathers over in the United States.

The official line for its objection is the bank's projects won't necessarily safeguard people and the environment. But beneath this there's a concern that the new institution could reduce the country's global economic influence.

Right now the United States' has the largest voting bloc in the IMF/World Bank structure.

Despite its concerns over fifty countries including traditional allies like Britain, France and Germany have banded behind the new $50bn (£34bn) Chinese-led multilateral institution.

And today president of the World Bank Jim Yong Kim voiced even more international support for the AIIB, saying the group looked forward to working with it as a partner.

"With the right environment, labour and procurement standards, the AIIB and the New Development Bank, established by the BRICS countries, have the potential to become great new forces in the economic development of poor countries and emerging markets," Kim said in a speech at the Washington-based Center for Strategic and International Studies.

His comments challenge some of the recent commentary surrounding the China-led Asian development bank, which pitted it as a rival to the World Bank and IMF.

Former US treasury secretary Larry Summers wrote in a column for the Financial Times "this past month may be remembered as the moment the United States lost its role as the underwriter of the global economic system."

Summers blamed competing pressures from the left and right which has created a dysfunctional political landscape. This has meant the United States is alone in failing to approve governance reforms to the International Monetary Fund, and has receded on commitments to projects financed through existing development banks. Summers said all of this has cleared the way for the AIIB.

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