China has already chosen a site for the future Shanghai headquarters of the development bank for the BRICS group of emerging powers, state media said yesterday just two days after its creation.
At a summit in Brazil, the BRICS group — which also includes Russia, India, China and South Africa — on Tuesday created the New Development Bank to finance infrastructure projects.
After drawn-out negotiations about the bank’s location, BRICS leaders agreed to put the headquarters in Shanghai, which is seeking to become an international financial center.
Shanghai is set to place the headquarters in the former site of the 2010 World Expo in the city’s Pudong development zone, in the section where the old China Pavilion — now an art museum — was located, along with those of several Asian and Middle Eastern countries, television reports in China said.
The city cleared a 5km2 site for the six-month expo and large plots are now unused, though some of the area has been redeveloped.
Chinese state media said the BRICS bank aims to reduce the West’s dominance of the global financial system, while criticizing multilateral agencies like the World Bank and the IMF.
“The old pattern in which the World Bank and the International Monetary Fund dominated the field will face competition from now on,” the Global Times newspaper said in an editorial yesterday.
“The launch of the BRICS bank with Shanghai as its headquarters is a testament to China’s national strength, diplomatic capabilities and strategic position,” said the newspaper, known for its nationalistic editorial stance.
The Chinese government took a less strident tone. China’s finance ministry said the bank would help the global recovery and drive long-term economic growth, according to a report by Xinhua news agency.
The US$50 billon bank is set to fund infrastructure projects in developing countries while the US$100 billion reserve fund, dubbed the “mini-IMF,” is to help the BRICS withstand currency crises, BRICS leaders said.
Brazilian President Dilma Rousseff said that the BRICS were not seeking to distance themselves from the Washington-based IMF.
“On the contrary, we wish to democratize it and make it as representative as possible,” she told reporters following talks with Indian Prime Minister Narendra Modi before the summit.
Meanwhile, Argentine President Cristina Fernandez used the occasion to rally neighbors behind Buenos Aires as it negotiates with hedge funds to resolve a debt dispute after her country lost a court battle in the US.
“We believe we must put an end to this international pillaging in finance that they are trying to do against Argentina, and that they will certainly try to do against other countries,” Fernandez said.
A senior Brazilian official, speaking on condition of anonymity, said leaders voiced concern that Argentina’s situation could compromise the debt negotiations of other countries in the future.
“The Argentine case and the way it has been dealt with is an irrational, unheard of situation, and here every country expressed its support for Argentina and a practical solution to this problem caused by a New York judge,” Colombian President Juan Manuel Santos said.
Rousseff has left open the possibility of using the new BRICS financial institutions to aid debt-ridden Argentina.
It could take two years, however, for the institutions to become operational because they have to be ratified by the legislatures of each BRICS nation, Brazilian officials say.
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