World Bank chief Jim Yong Kim says lender 'ready to work' with AIIB

World Bank president Jim Yong Kim yesterday underscored his organisation's readiness to cooperate with the Beijing-led Asian Infrastructure Investment Bank (AIIB), while downplaying concerns over Chinese financial reform efforts in the wake of weeks of stock volatility.

"We welcome the AIIB, and we welcome especially China's leadership in establishing this new multilateral institution," Kim said at the end of his three-day trip to China.

"We need new investors in infrastructure, and we think that the AIIB will be an important new partner."

The planned establishment of the AIIB later this year with 57 founding members has been seen by many observers as an effort by Beijing to try to diminish the influence of established development banks like the World Bank and the Asian Development Bank on the international financial system. Kim said he discussed collaboration with the AIIB, including co-financing specific projects such as those involving bridges, roads and water treatment plants.

"The AIIB will join us and other development banks in addressing huge infrastructure needs that are critical to ending poverty," he said.

Kim also commented on China's economy and reform measures, including efforts by the government to calm the country's volatile stock markets.

"In light of the stock market fluctuations recently, I'd like to emphasise that we believe China's economy is strong and its fundamentals are sound," he said. "The country's leaders are moving forward resolutely on their ambitious programme of economic and social reforms."

Asked about actions taken by China in the wake of the recent market chaos, including such efforts as buying shares to control prices, he said he was convinced that Beijing's "resolve and commitment to the reforms are as strong as ever".

The hearty vote of confidence differed sharply from an assessment of China's financial system released by the bank earlier this month in the midst of the country's stock rout. The report, which was subsequently redacted, slammed the country for "distorted incentives and poor governance structures" and called for China to make "fundamental reforms" including reducing its ownership stake in state-run enterprises.

The report was removed from the bank's website within days of its release and replaced with a shorter, expurgated version.

Kim said the release of the original report was "simply an error" and it had not gone through regular clearance channels.