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World Ottawa looks to reclaim ‘lost opportunity’ in Beijing bank

The logo of Asian Infrastructure Investment Bank (AIIB) is seen at its headquarter building in Beijing January 17, 2016.

Kim Kyung Hoon/Reuters

China's big-money bid to assert a more dominant spot in the financial world order is opening up for new members. And Canada, one of the few holdouts among major nations, is invited.

The Asian Infrastructure Investment Bank will soon begin accepting applications for countries that want to join its 57 existing members. The Beijing-based bank has set Sept. 30 as a deadline, a date that matches with a planned visit to China by prime minister Justin Trudeau in early September.

Mr. Trudeau's government has said Canada erred by not joining the bank when it was founded last year.

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The call for applications provides an opportunity to reverse that decision — made while Stephen Harper was prime minister — although Canada will forfeit some founding member benefits, including additional voting rights and an ability to shape the bank's governance.

Joining would bring Canada into line with many of its peers, including the UK, Australia and Germany. (The U.S. and Japan have not joined.)

For China, Canada's participation would bring into the fold one of the last large nations still on the sidelines, as Beijing seeks to expand the first major international institution it has created.

"Canada is very welcome to apply to join the bank — and if they did so we would be very pleased to take the necessary steps" to consider the application, Danny Alexander, the bank's corporate secretary and one of its five vice presidents, said in an interview.

Canada and the AIIB have not yet begun formal talks, and unlike 24 other nations interested in joining, Canada did not send a delegate to the bank's opening annual meeting in Beijing this weekend. At that meeting, the bank announced $509-million in funding for its four projects, including improvements to a highway between Tajikistan and Uzbekistan.

Beijing conceived the AIIB as a way to claim the influence it felt denied by U.S., European and Japanese-led institutions. But it has sought to position it as an international body: It speaks publicly in English and denominates its currency in U.S. dollars.

"This is not China's bank. AIIB certainly was born with the birthmark of China. But its upbringing will be in the international community," said bank president Jin Liqun on Saturday.

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The bank, he said, will use universal procurement, which means companies from any country — including non-members — can bid on contracts.

With a planned $100-billion in total capitalization, the AIIB will challenge the World Bank, the European Bank for Reconstruction and Development  and the Asian Development Bank as an investor in Asia's concrete and steel arteries. In choosing which roads, bridges and rail lines to fund, the AIIB, and China as its largest shareholder, will find new ways to exert its own influence across the region.

Canada's Minister for International Trade Chrystia Freeland has called abstaining from the bank "a lost opportunity." Late last year, she told Bloomberg that joining is something Mr. Trudeau's Liberals "are looking at closely, with interest."

Support for joining the bank has come from Canadian academics, business leaders and opposition politicians.

The NDP, for example, sees the AIIB as "a positive, competitive counterweight to the World Bank. We urge the Liberal government to pursue joining the AIIB as a priority," said Don Davies, who was the party's trade critic under the Harper government.

The timing for new applications, too, is fortuitous, said Sarah Kutulakos, executive director of the Canada China Business Council, as Mr. Trudeau prepares to attend the G20 summit in Hangzhou and conduct his first state visit in September.

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"Certainly, it would be a very good news story if Canada were able to confirm that it were applying," she said. Bank membership might also help dispel some of the skepticism that has built up between Beijing and Ottawa, she said.

"We have come off as an incredibly reticent, slow-to-move country in many bilateral opportunities with China," she said. "Given how many really sensitive issues there are in the relationship, the ones that are less sensitive we should really make sure we go for them."

Canada and China have tussled on human rights issues, amid an ideological tightening by Beijing.

In China, the AIIB is seen as a salve.

Mr. Trudeau "is a new prime minister. He has to show some goodwill as well," said Wang Huiyao, director of the Center for China and Globalization, a Beijing thinktank.

Canada's abstention from the bank has led to head-scratching in China, he said.

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"Economically, it doesn't make sense," he said. "I don't think Canada has any reason not to join. It's really ridiculous that they have held off on this for so long."

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