Major US allies set to join new China-led global lender

Major European allies of the United States, including France, Germany and Italy, have agreed to join the China-led Asian Infrastructure Investment Bank (AIIB).

This comes close on the heels of US special ally Britain announcing its decision to join the emerging economy institution (See: UK wants to join China-backed Asian Infrastructure Investment Bank)

The development, which will contribute to the global spread of China's "soft power", could also mean a weakening of America's financial powers.

While media reports pointed to a growing number of close US allies flocking to join the China-led institution, US officials tried to underplay the development saying that it was for individual countries to decide whether to join a China-led international development bank.

China's state-run Xinhua news agency said South Korea, Switzerland and Luxembourg were also considering joining the new bank.

China expects to finalise the articles of agreement for setting up the AIIB by 31 March, with a total of 26 countries, mostly from Asia and the Middle East, joining as founder members.

While many expected Japan, Australia and South Korea to remain out of the new bank, Australian Prime Minister Tony Abbott said over the weekend that he would make a final decision on AIIB membership soon.

South Korea has said it is still in discussions with China and other countries about its possible participation.

Japan, which has the biggest shareholding in the Manila-based Asian Development Bank (ADB) along with the United States, is unlikely to join the China-backed bank, but the head of the ADB, Takehiko Nakao, told the Nikkei Asian Review that the two institutions were in discussions and could cooperate.

"We've begun sharing our experience and know-how," Nakao was quoted as saying.

"Once the AIIB has actually been established, it's conceivable that we would cooperate," he said.

China has said nations could join as founder-members of the AIIB until 31 March, and that Japan was included in the invitation.

Martin Schulz, president of the EU Parliament, said he welcomed the four European nations joining the AIIB, but added the bank must conform to internationally-accepted standards.

"I find it good that they join," he told reporters while on a visit to Beijing. "If more member states would join I would find it even better.

"There is one additional element. Such new organisations must answer to the requirements of international standards. That is quite important."

Meanwhile, Washington's top diplomat for East Asia has signalled that US concerns about the AIIB remained.

"Our messaging to the Chinese consistently has been to welcome investment in infrastructure but to seek unmistakable evidence that this bank...takes as its starting point the high watermark of what other multilateral development banks have done in terms of governance," US assistant secretary of state for East Asian and Pacific affairs Daniel Russel said in Seoul.

"Every government can make its own decision about whether the way to achieve that goal is by joining before the articles of agreement are clarified or by waiting to see what the evidence looks like as the bank starts to operate," he told reporters.

The AIIB was launched in Beijing last year to spur investment in Asia in transportation, energy, telecommunications and other infrastructure. It was seen as a rival to the Western-dominated World Bank and the Asian Development Bank.