Sign-up to Chinese infrastructure bank did not defy the US - officials

Phil Goff. Photo / Mark Mitchell

New Zealand told a wary United States of its involvement in a new Chinese infrastructure bank from the start and those conversations were never tense, officials say.

But the commitment to the Asian Infrastructure Investment Bank does reflect "changing geopolitical tectonic plates", the Ministry of Foreign Affairs and Trade says.

"China has got big, Brazil has got big, and India is getting bigger," said John Whitehead, Mfat's chief negotiator on the agreement.

The AIIB is expected to begin operations by the end of the year. New Zealand is a founding member and was one of the first Western countries involved.

The United States, which leads the World Bank, reportedly lobbied countries not to join.
In a Parliamentary select committee today, Labour's Phil Goff congratulated Mfat officials on the decision to commit early, but asked how the US had reacted to that.

Mr Goff said he presumed the US had discouraged New Zealand and other countries' involvement with the new bank.

"The conversations I was involved in with the US and for that matter the Japanese people were never tense, in that sense," Mr Whitehead said.

Rupert Holborow, manager of Mfat's economic division, said that from the earliest stages of negotiations, New Zealand "swapped notes" with the US and others to let them know what was happening.

"We were talking to the Chinese and said, 'we'd like to talk to people about this', and they blessed it and said, 'go for it'.

"We let our partners, our friends, know of our likely direction - we didn't want to catch them by surprise....whilst we recognised the US was cautious about the bank, more cautious than ourselves, although they now accept and see a place for it, they didn't, actually, ask us formally or informally in terms of discouraging us.

"To a degree, conversely in a way I think they recognised the bank was going to happen and recognised that we saw issues through a very similar prism and were quite pleased to see a country like New Zealand advocating for those."

Mr Holborow said involvement with the bank "hardwires us into the region", and New Zealand's early involvement was appreciated by China and other Association of Southeast Asian Nations (Asean) members.

New Zealand will invest capital of $125 million over five years. Mfat acknowledged that investments by similar initiatives had sometimes not gone well in the past, but played down any risks.

"This is quite a significant play by China, it has been the sponsor and the driver of this and it is the first time they have really led...in a major international initiative," Mr Holborow said.

"So our expectation is that they will be very keen to see this be successful, and therefore they are going to be quite careful, as are other members, about that investment portfolio."