US Hurt As UK Supports China World Bank Rival

The United States is said to be annoyed by British support for a new China-backed bank that could potentially rival top institutions like the World Bank.

The Financial Times quoted a senior US official saying there had been "virtually no consultation" on the UK's participation in the set-up of the Asian Infrastructure Investment Bank (AIIB).

The source also said the decision appeared to be part of a trend towards "constant accommodation" of China by the UK.

Washington is worried the project risks undercutting institutions such as the World Bank and International Monetary Fund - both based in the US - and President Obama has previously spoken of his concerns about governance and transparency.

The UK Treasury confirmed it was to join talks on AIIB's creation this month and would try to ensure it "embodies the best standards in accountability, transparency and governance".

Downing St also later moved to dismiss talk of a row with the US.

A spokesman said: "The Chancellor has discussed this with his US opposite number Jack Lew, and UK senior officials have discussed this with their counterparts in the US and elsewhere."

China proposed the bank in 2013 to finance construction of roads and other infrastructure.

It has pledged to put up most of its initial $50bn (£33.6bn) in capital.

There are 21 other governments including India, New Zealand and Thailand supporting the proposed entity while the US, Japan, South Korea and Australia are among those currently on the sidelines.

The bank is one of a series of initiatives by Beijing to increase its influence in global finance and expand trade links.

George Osborne has argued that joining will help Britain promote commercial ties with Asia.

"Joining the AIIB at the founding stage will create an unrivalled opportunity for the UK and Asia to invest and grow together," he said.

China has moved to dismiss any suggestion that the new bank is part of any strategic ambition.

In May, Chinese President Xi Jinping called for the creation of a new Asian structure for security co-operation based on a 24-nation group that excludes the US.