Australia is backing the $100 billion Asian Infrastructure Investment Bank

Joe Hockey and Tony Abbott. Photo: Getty / Stefan Postles

The Australian government is getting on board the Chinese-led plans for the $100 billion Asian Infrastructure Investment Bank (AIIB).

Prime minister Tony Abbott announced on Sunday that he will sign a Memorandum of Understanding on the AIIB, as the government plays catch up with a number of key Western nations who’ve recently agreed to sign up.

Britain, France, Germany and Italy have already pledged their support and in the last few days, the Russia, the Netherlands and China’s biggest trading partner Brazil, also accepted China’s invitations to join the institution.

More than 20 countries are now founding members. News that Australia would join has been flagged in recent weeks, but there had been concerns in Cabinet over the plan.

China set up the Beijing-based bank last year, which is seen as a potential rival to the Asian Development Bank and World Bank, and giving the Communist government more financial clout in what’s been dubbed chequebook diplomacy.

Last week International Monetary Fund boss Christine Lagardewill said the IMF would be “delighted” to cooperate with the AIIB. But the US is wary of the project, which it sees as diluting its influence in the region, and Australia still has major concerns about it too.

In a joint statement with treasurer Joe Hockey and foreign minister Julie Bishop, the prime minister said there are stil “key matters” to be resolved before Australian became a founding member, including the AIIB’s board of directors having authority over key investment decisions, and that no one country control the bank.

“Good progress has been made on the bank’s design, governance and transparency over the past few months, but we still have issues that we will address through ongoing consultations,” Abbott said in the statement.

Some reports have Australia tipping up to $3 billion into the bank, which us used to fund infrastructure development in Asia-Pacific region.

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