03/22/2015 09:48 pm ET Updated Mar 22, 2015

U.S. Proposes Cooperation Between New China-Led Development Bank And Western Institutions

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WASHINGTON, March 22 (Reuters) - President Barack Obama's administration is proposing that a new Chinese-led development bank over which Washington has voiced concerns work collaboratively with Western development groups like the World Bank, The Wall Street Journal reported on Sunday.

The United States, worried about China's growing diplomatic clout, has been urging countries to think twice about joining the Asian Infrastructure Investment Bank, or AIIB, considered by some as a challenge to the World Bank and the Manila-based Asian Development Bank.

Despite U.S. misgivings, Britain said earlier this month it would join the AIIB. France, Germany and Italy quickly followed.

Chinese Finance Minister Lou Jiwei said on Sunday that 27 countries had now signed up to participate in the new bank, a $50 billion fund set to begin operations at the end of the year providing project loans to developing countries.

The Journal reported that the U.S. Treasury undersecretary for international affairs, Nathan Sheets, said: "The U.S. would welcome new multilateral institutions that strengthen the international financial architecture."

He told the Journal that co-financing projects with existing institutions like the World Bank or the Asian Development Bank would help ensure the new bank complements rather than competes with existing institutions.

The U.S. Treasury Department had no immediate comment.

World Bank President Jim Yong Kim said in a statement on Sunday that his institution was discussing with the AIIB "how we can closely work together. We have every intention of sharing knowledge and co-investing in projects throughout Asia."

U.S. allies Japan, Australia and South Korea are still absent from the AIIB's list of members.

Leaders of the International Monetary Fund and the Asian Development Bank told a conference in Beijing on Sunday they were in talks with or happy to cooperate with the AIIB. (Reporting by Peter Cooney; Additional reporting by Jason Lange; Editing by Jonathan Oatis and Leslie Adler)