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OECD chief welcomes European participation in China-backed bank

[BEIJING] The head of the OECD on Friday welcomed major European countries' participation in a new China-backed infrastructure bank, saying it would ensure the institution was run under existing global standards.

Britain, Germany, France and Italy have announced their intention to sign up for the Asian Infrastructure Investment Bank, to the consternation of the United States and Japan, which lead the World Bank and the Manila-based Asian Development Bank respectively.

Angel Gurria, secretary-general of the Organisation for Economic Co-Operation and Development, said: "The fact that some of the European countries are now associating with the project makes me even more convinced that it is going to be run in a very professional, transparent way.

"I don't see that these countries would be joining an institution that would be run otherwise.

"I don't think anybody's going around with a chequebook just giving cheques," he added. "This is not foreign policy, this is a bank."

China has welcomed the European eagerness to participate in the new body, with state media claiming that the US risks being sidelined.

Beijing touts the US$50 billion institution as a tool to help meet gaps in financing needs for regional development in Asia.

There was "a very important deficit in medium- and long-term investment for infrastructure in particular", Mr Gurria said. "Any mechanism that is set up in order to cover the shortfall, of course, is welcome."

Details on the AIIB's financing and participation remain to be worked out, but Mr Gurria said: "The severity, the rigour, the analytical detail and the feasibility of both the projects and the policies are going to be very much comparable to those of the other development banks."

Mr Gurria was speaking to reporters ahead of the launch of the OECD's latest economic survey for China, in which it forecast that the world's second-largest economy will grow seven per cent this year, in line with the government's own target announced earlier this month.

China's economy has embarked on what its leaders have taken to calling the "new normal", meaning that the growth trajectory is slowing, with more sustainable expansion based on a growing consumer class, as in other major countries.

"We like the 'new normal'", Mr Gurria said.

"We think seven per cent is more sustainable," he added, calling it "cruising speed" that can "avoid distortions and bubbles".

The OECD, a policy analysis body made up of 34 countries with advanced economies, sees growth of 6.9 per cent in China next year.