Canada to Join China-Led Bank, Signaling Readiness to Bolster Ties
BEIJING — Canada said on Wednesday that it had applied to join China’s version of the World Bank, breaking with previous leaders who had shared United States officials’ skepticism of the new Beijing-led lender.
The move came during a five-day trip to China by the prime minister of Canada, Justin Trudeau, who is seeking to burnish trade, business and political ties with Beijing. China’s relationship with the previous Canadian government had been lukewarm.
The membership would provide a lift for the lender, the Asian Infrastructure Investment Bank, a Chinese-led organization that counts 57 countries as members and that is looking to expand by about an additional 30. The bank — founded last year to fund roads, power lines and other needed infrastructure projects in Asia — is widely seen as an extension of China’s growing economic and political heft and as a counterweight to the World Bank and other institutions dominated by Western countries.
The previous Canadian government, led by Stephen Harper, hesitated in joining the bank, saying that it wanted to ensure that the institution’s financial and environmental standards were sound. The Obama administration expressed similar reservations, and during the genesis of the bank, it advised several allies, including Australia and South Korea, not to join.
Both countries eventually ignored Washington and became founding members of the bank that is intended to both compete and cooperate with existing lending institutions. Britain also broke with the United States over the new bank and became an inaugural member along with France, Germany and Italy.
American officials have since softened their criticism and have encouraged the Chinese to finance projects with the World Bank and the Asian Development Bank as a way of ensuring what they consider acceptable standards of environmental and lending practices.
China is Canada’s second-largest single trading partner, after the United States, and it is a major buyer of Canadian timber, paper, metals and fertilizer. China, in turn, has become a major investor in Canada, buying up oil and natural gas reserves and high-end homes in Vancouver.
For Canada, joining the bank could help strengthen its relationship with a country that is increasingly important to its economy. “Canada’s membership will create commercial opportunities for Canadian companies and create jobs for the middle class,” said Canada’s finance minister, Bill Morneau, at a news conference with the bank’s president, Jin Liqun.
Mr. Jin said he interpreted Canada’s application for membership as a “vote of confidence.” Canada is a leader in environmental matters and had a record as a “clean” government, attributes that match the bank’s efforts to be “lean, green and clean,” he said. “We have zero tolerance of corruption,” he said.
Mr. Jin acknowledged that one of the bank’s five vice presidents, Hong Kyttack, a former finance official in South Korea, had taken a six-month leave after allegations that he had been negligent in giving loans to Daewoo Shipbuilding & Marine Engineering during his tenure at the Korean Development Bank.
Mr. Hong had served as the chief risk officer for the Asian Infrastructure Investment Bank, and the bank was now seeking a replacement, Mr. Jin said.
At its first annual meeting in June, the bank announced $509 million in loans for four modest projects in Bangladesh, Indonesia, Pakistan and Tajikistan. Three of the projects are being financed with other institutions — the Asian Development Bank, the World Bank and the European Bank for Reconstruction and Development — a cautious approach that has helped build the bank’s credibility.
The bank said Canada and other new members are expected to join early next year.