China Launches a New International Development Bank

The Chinese president Xi Jinping launched a new international development bank at a lavish ceremony today. The bank will serve as a rival to the U.S.-led World Bank as Beijing seeks to change the unwritten rules of global development finance.

Despite opposition from Washington, U.S. allies including Australia, Britain, German, Italy, the Philippines and South Korea have agreed to join the Asian Infrastructure Investment Bank (AIIB) in recognition of China's growing economic clout.

"Asia's financing needs for basic infrastructure are absolutely enormous," Xi said in a speech at the launch, adding the bank would aim to invest in projects that were "high-quality, low-cost".

In order for Asia to continue to be the most dynamic region for global growth, it needs to invest in infrastructure and connectivity, Premier Li Keqiang said, during the afternoon session of the opening ceremony.

The AIIB is expected to lend $10 billion-$15 billion a year for the first five or six years and will start operations in the second quarter of 2016.

Even so, no specific infrastructure projects would be announced "for the time being", AIIB President Jin Liqun told Reuters on the sidelines of the launch.

Luxembourg Finance Minister Pierre Gramegna said the establishment of the AIIB was "further proof of the rebalancing of the world economy".

Asuccessful AIIB that sets itself apart from the World Bank and the International Monetary Fund (IMF) would be a diplomatic triumph for China,which opposes a global financial order it says is dominated by the United States and does not adequately represent developing nations.