China’s top legislature, National People's Congress Standing Committee, approved an agreement regarding the establishment of BRICS New Development Bank (NDP), the Chinese official Xinhua agency reported on Wednesday.
The NDP project had launched in July 2014 when the leaders of BRICS countries met in Brazil and the Bank will be completely materialized after the other participants ratified the proposed agreement.
“The bank's establishment will be an important achievement for financial cooperation among BRICS members,” Chinese Finance Minister Lou Jiwei said according to the Xinhua.
“The Bank will promote infrastructure construction and sustainable development of the emerging and developing economies and also help promotion of reform of global economic governance” Jiwei added.
BRICS is the acronym for an association of five major emerging national markets, Brazil, Russia, India, China and South Africa which corresponds to almost 42 percent of the world’s population in more than a quarter of the world’s surface area together with 20 percent of the world’s total GDP.
The BRICS countries are expected to start the Bank with a capital of $50 billion, that will be completed to a goal $100 billion in capitalization.
China will contribute the biggest financial aid with $41 billion into the BRICS Bank while Brazil, Russia and India have each committed to put $18 billion. South Africa also pledged to contribute $5 billion to the monetary pool.
China is said to put $10 billion into the bank in the very beginning following approval of the agreement which was already ratified by both Indian and Russian parliaments in April.
China’s lion-share contribution to the bank will enable it to have the largest voting rights at 39.5 percent, a proportion that would also provide a leading role for Beijing’s economic governance over the BRICS policies.
The BRICS countries aim to decrease their economic dependency on Western international creditors like IMF and World Bank through the establishment of those cooperation which also enable them to give loan money to less developed countries.
Russia had taken the BRICS’ rotating presidency in April and pledged to materialise the NDB together with a reserve pool.
One of the main purposes of the reserve pool is to protect national currencies of the BRICS countries from volatility of the global markets which were overwhelmingly controlled by the Western-backed international institutions.
Chinese Foreign Ministry spokeswoman Hua Chunying said that economic and financial officials from the BRICS countries would meet in Moscow next week in order to chose an Indian president to the Bank as well as define a five years road map to the new financial institution.
China’s move towards vitalizing the BRICS NDP came just two days after its inauguration of Asian Infrastructure and Investment Bank (AIIB), another Chinese-led economic venture which is also regarded as a financial challenger to the Western-backed business and finance institutions.
As a long-anticipated Chinese blueprint project presented by the Chinese President Xi Jinping, the AIIB will also give a financial-economic supremacy to Beijing over the West despite the essential opposition of the US and its major allies, including Australia, Britain, Germany, Italy, the Philippines and South Korea.
Delegates from 57 countries gathered in Beijing on Monday to witness the signing of the articles of agreement for the Chinese-led AIIB, which is expected to be a main rival for some international institutions, such as the World Bank and the Asian Development Bank.