Jim Yong Kim, president of the World Bank Group, has lent his support to China’s proposal for a new multilateral infrastructure bank and said there was a ‘massive need’ for new investment in this area.
China first floated the idea of creating the Asian Infrastructure Investment Bank to fund projects in the region last October, indicating that it would likely be the largest shareholder in the bank with a stake of as much as 50%.
Kim, who is visiting China, said a new bank made good business sense. “Any estimate of the infrastructure needs in the developing countries start at about US$1 trillion (£580bn) a year,” he told reporters at a briefing, adding that the figure greatly surpassed annual private sector investment of about US$150bn.
“So we welcome any new organisations. We think the need for new investment in infrastructure is massive.” The World Bank would be able to work with any new infrastructure bank once it became a reality, be it a bank led by the emerging ‘BRICS’ (Brazil, Russia, India, China and South Africa) nations or the Asian Infrastructure Investment Bank, Kim added.
The BRICS group is also in talks to create a US$100bn development bank and has reached broad agreement on the project, a senior Chinese diplomat said.
Kim also took the opportunity to praise China’s progress in financial reforms and reiterated the World Bank’s forecast for its economy to grow 7.6% this year and by 7.5% in 2015. China reported a slightly lower rate, of 7.4%, for the first quarter of 2014.
“We are very encouraged about the fact that, despite a lower growth rate, the Chinese government continues on the path of these reforms,” Kim said.
“To be able to sustain high-quality growth in China, they are going to need to stick to the reform agenda. So far so good and that’s exactly what they are doing.”
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