Beijing –China and India have thrown their weight behind a 21-country $100 billion Asian Infrastructure Investment Bank (AIIB) to challenge to the World Bank and Asian Development Bank.

This followed the signing of a memorandum of understanding with 21 Asian countries in Beijing on Friday.

The development bank was proposed a year ago by Chinese president Xi Jinping, and will offer financing for infrastructure projects in underdeveloped Asian countries.

Headquartered in Beijing, former chairman of the China International Capital Corporation investment bank Jim Liqun, is expected to take a leading role.

The bank will initially be capitalised with $50 billion, most of it contributed by China. The country is planning to increase authorissed capital to $100 billion. With that amount, AIIB would be two-thirds the size of the $175 billion Asian Development Bank.

Chinese Finance Minister Lou Jiwei said the AIIB will set high standards, safeguard policies and improve on bureaucratic, unrealistic and irrelevant policies, according to the Xinhua news agency.

India will be the second largest bank shareholder though Kuwait, Qatar, Mongolia, Kazakhstan, Pakistan, Nepal, Oman, and all the countries of the Association of Southeast Asia, except Indonesia are involved.

Australia, Indonesia and South Korea did not participate following US claims of ‘concerns’ about a rival to Western-dominated multilateral lenders.

Japan, China’s main rival in Asia, which dominates the Asian Development Bank along with the United States, did not attend but had not been expected to do so.

Indonesia refused to participate claiming it needs time to discuss China’s proposal.

But Chinese officials are convinced the American opposition is an attempt to contain the global rise of China and its ambition to remain the dominant power in Asia.