China rejects Taiwan as AIIB founding member

China has rejected Taiwan's application to join its new Asian Infrastructure Investment Bank as a founding member, while signalling that the door is still open for the self-ruled island to join under a different name.

"We believe that a solution can be found regarding Taiwan's participation in AIIB in a proper capacity through pragmatic consultation," China's Taiwan Affairs Office said on Monday.

Taiwan participates in the Asian Development Bank as "Taipei, China" and in other international organisations - as well as the Olympic Games - as "Chinese Taipei". Presidential spokesman Charles I-Hsin Chen would not comment on whether Ma Ying-jeou's administration would consider joining the bank under "other names or other scenarios".

Mr Ma's last-minute decision to apply to join the AIIB was the first test of how the bank might be influenced by China's political priorities. The multilateral lender is partly modelled on the US-dominated World Bank and the ADB, which though based in Manila is heavily influenced by Japan.

A total of 47 countries applied to join the bank before the March 31 deadline for founding members, in spite of US efforts to dissuade its allies from joining.

Although the AIIB has proclaimed its multilateral aspirations, the statement from the Taiwan Affairs Office made it clear the rejection had been made in Beijing.

However, even if the decision had been made by all the founding members, the outcome might have been the same. Most nations maintain diplomatic relations with China and not Taiwan, which is regarded by Beijing as a renegade province.

"We are willing to take into consideration all opinions so that the issue of Taiwan's participation can be solved properly," the Taiwan Affairs Office said.

"But if the future of Taiwan's accession fails to meet the precondition of 'dignity and equality'," Mr Chen said, "then Taiwan would prefer not to participate."

Beyond the tricky politics in establishing the AIIB, the rush to join it highlights the new development bank's potential to fund infrastructure such as power generation or coal transport - projects that the World Bank, for instance, no longer has a mandate to fund.

That could help create new business for the developed world's engineering and heavy industrial companies, because China has pledged that AIIB funding will not be tied to contracts for Chinese groups.

Funding projects through a multilateral bank could also help China avoid risk. A decade of aggressive bilateral lending by its policy banks has left Beijing painfully exposed to economic downturns or political shifts in countries such as Venezuela, Sri Lanka or Zimbabwe.

© The Financial Times Limited 2015. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation