China and delegates from 20 Asian countries met Friday in Beijing to create a development bank that is intended to help fund infrastructure projects in Asia and is set to rival Western-dominated multilateral lenders.

Twenty-one countries signed a memorandum of agreement for the formal establishment of the Asian Infrastructure Investment Bank (AIIB), an initiative proposed by President Xi Jinping last year to channel infrastructure funds for underdeveloped Asian countries.

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China has pledged US$50 billion to the bank's capital, making it the largest contributor so far. The other founding members are set to pitch in the rest of the US$100 billion capital, an amount that is two-thirds the size of Asian Development Bank's US$175 and half of the World Bank's US$200 billion.  

Both international lenders have the United States and its allies as their biggest financial backers, according to Reuters.

The China-driven initiative has the support of mostly developing countries, including economically dynamic Vietnam, Mongolia, Philippines and China's rival economic giant, India.

Among the founding members as well are Brunei, Malaysia, Oman, Laos, Pakistan, Thailand and Cambodia.  

Singapore, the only advanced Asian economy in the group and a close ally of the United States, also signed up for membership. Singaporean officials said it seeks to positively influence the way the bank will do business, Associated Press reported.

In a speech to the shareholders after the bank's inauguration, President Xi announced AIIB will follow the international standards set by its predecessors, amid public warnings the United States has made against China's capability to adhere to international governance standards.

The U.S. is concerned that the Chinese-led bank would introduce laxer lending measures that would fail to satisfy environmental and labor protection, appropriate bidding practices, and protection for human rights.

Multiple reports claim that the U.S. has pressured some of its regional partners, including Australia, to steer clear of AIIB.

Japan and South Korea, two of U.S.'s strongest Asian diplomatic allies, were also not present in the inauguration, although the latter has expressed interest in future involvement with the bank. Japan, meanwhile, was not expected to attend since it dominates and runs the Manila-based Asian Development Bank.

The launching of the AIIB is seen as China's attempt at flexing its growing economic power in the region. Despite being the second largest world economic power, China has very limited voting rights among the world's biggest development banks, Reuters said.

AIIB is expected to start operating in Beijing by the end of 2015, with former chairman of the China International Capital Corporation, Jin Liqun, a leading Chinese banker, at the helm.  

TagsAsian Infrastructure Investment Bank (AIIB)