World Bank chief welcomes China's AIIB

The World Bank's US-appointed president has vowed to find "innovative" ways to work with a new Chinese-led Asian infrastructure bank, welcoming it as a "major new player" in the world of development.

The overture by Jim Yong Kim comes ahead of next week's World Bank and International Monetary Fund spring meetings in Washington. It also marks a split with the administration of US President Barack Obama which nominated the medical doctor and former university president to head the World Bank in 2012.

With geopolitical imperatives and its competition with China for influence in the Pacific Rim firmly in mind the US unsuccessfully lobbied allies such as Australia, Japan and the UK not to join the nascent Asian Infrastructure Investment Bank.

Behind that push by Washington has also been a desire to protect the Bretton Woods institutions over which the US and Europe now wield veto power. So the move by one of those institutions' heads to break from the US and set out a vision for co-operation with the new institution marks another blow to Washington's diplomatic efforts.

Dr Kim has said he was willing to work with the AIIB before. But in a speech on Tuesday in Washington he went further, offering his strongest endorsement yet of the AIIB and putting it high on the agenda for next week's meetings.

Calling the AIIB and its fellow start-up, the Brics-backed New Development Bank, "potentially strong allies" for the World Bank that could become "great new forces" to help the world's poor, he pledged to quickly find ways to collaborate with the new institutions.

"If the world's multilateral banks, including the new ones, can form alliances, work together, and support development . . . we all benefit - especially the poor and most vulnerable," he said. "I will do everything in my power to find innovative ways to work with these banks."

One of those potentially innovative ways would be encouraging the AIIB to help finance projects run by the World Bank and subject to its environmental, labour and social standards, Dr Kim said ahead of the speech.

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Dr Kim is due to meet Lou Jiwei, the Chinese finance minister, during next week's meetings in Washington and he said he was looking forward to a "long session" with Mr Lou to discuss the future of the AIIB and its collaboration with the World Bank.

To generate economic growth and meet the needs of rising populations the developing world needs an additional $1tn-1.5tn each year to be invested in bridges, roads, railways and other infrastructure, Dr Kim said.

The world's existing development banks combined lacked the resources to meet those needs, he said. To succeed, he said, more funding for development projects needed to come from the private sector and new entrants such as the AIIB, which so far has a capital base of less than $100bn.

"These goals are ambitious - there's more than enough work to go around," Dr Kim said. "We're no longer talking about billions of dollars for economic development. We're talking about trillions of dollars - which means that we must be creative and use all of our resources."

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