Obama says AIIB could be 'positive' for Asia

President Barack Obama said the new China-led Asian Infrastructure Investment Bank could be a "good thing" for the region if it adopts high standards for lending projects.

The Obama administration has come in for intense criticism for the way it has handled the AIIB, with some former officials warning that it represented a blow to American leadership in the international economy.

The US initially urged its allies not to join as founding members of the bank, which is in the process of being established in Beijing with initial capital of $50bn, arguing that they could have more influence over the standards it adopts by staying on the outside and lobbying the Chinese as a group.

Speaking at a White House press conference with Japanese prime minister Shinzo Abe on Tuesday, Mr Obama said that the US was not opposed to the new bank but warned that money could be "misused" if there was little transparency in the way the AIIB was managed.

"This could be a positive thing," he said. "But if it's not run well, then it could be a negative thing."

However, after Britain announced in March that it intended to become a member, a rush of European and Asian countries signed up to the AIIB. Earlier this month, China said it had received 47 applications to join. The only two major economies which have so far not asked to join are the US and Japan.

Mr Obama said that it was natural for China to play a much larger role in development finance in the region. "Asia needs infrastructure," he said. "And China's got a lot of money. It's been running a big surplus for quite some time. So, to the extent that China wants to put capital into development projects around the region, that is a good thing."

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Mr Obama renewed his case in favour of the Trans-Pacific Partnership, the 12 country trade deal that includes both the US and Japan and which is nearing completion. Congress is moving towards giving the president the special negotiating authority that will be needed to conclude the agreement, despite strong opposition from some Democrats.

"This will end up being the most progressive bill in trade history," Mr Obama said. "It will have the kinds of labour and environmental and human rights protections that have been absent in previous agreements."

Mr Abe said that the TPP was not about containing China, which is not involved in the talks, but about stimulating growth across the region.

"This is not something that we create out of consciousness about China," he said. "The economic growth of the region will be positive . . . and will create a new economic sphere in which people, goods and money will flow freely within the Asia-Pacific region."

Referring to the series of territorial disputes in the South China Sea and East China Sea that Beijing has with its neighbours, Mr Obama said that the rest of Asia was worried that the Chinese "are flexing their muscles".

"We've said to China what we would say to any country in that circumstance: That's the wrong way to go about it," he said, urging that "basic international norms continue to be observed".

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