China is considering a proposal to set up a regional bank to help its small and medium enterprises (SMEs) invest in Southeast Asian neighbors, fund infrastructure projects and promote development in southwestern China
, two independent sources said.
After approval by the State Council, or cabinet, China would formally invite members of the Association of Southeast Asian Nations (ASEAN), Japan and South Korea to each take a stake in the ASEAN Bank
, said the sources, who have direct knowledge of the proposal.
China, the world's second biggest economy, is likely to be the bank's biggest single shareholder with an initial investment of up to 30 billion yuan ($4.7 billion), the sources said, requesting anonymity because they are not authorized to speak to reporters. The other countries' stakes still must be negotiated.
"ASEAN Bank will be a commercial bank and at the same time a policy bank," the first source told Reuters. "It will be a mini Asian Development Bank (ADB)."
The ADB was founded in 1966 to help fight poverty in Asia. The Manila-headquartered bank is owned and financed by its 67 member countries. Its president is traditionally from Japan, the lender's biggest donor along with the United States.
China hopes the ASEAN Bank will buy it some goodwill in Southeast Asia, providing low interest loans to infrastructure projects and Chinese SMEs investing there, the sources said.
The bank will also settle China-ASEAN trade in yuan, a step in China's long campaign to make the yuan, also known as renminbi or people's currency, a regional currency.