Australia will join Asian Infrastructure Investment Bank (AIIB) by contributing 930m Australian dollars equivalent to USD $718.5m over five years.
This will make Australia the sixth biggest shareholder of the China led Infrastructure Bank.
AIIB is widely seen as a rival of US led World Bank and now more than 50 members have signed up for it.
The US and Japan have refused to join raising concerns over the bank’s standards of governance. The US is also concerned that China could use AIIB to extend its political influence.
Australia’s Treasurer Joey Hockey said that this decision of joining AIIB is coming after extensive discussions between the government, China and other key partners around the world.
AIIB, which will have its headquarters in Beijing, is designed to finance infrastructure construction in the continent. The bank already has 57 prospective members.
AIIB would have paid-in capital of $20bn, with total authorised capital of US$100bn.
It will help finance construction of roads, ports, railways and other infrastructure projects in Asia. The UK, France, Germany and Iran are among its members.
AIIB is considered as a rival for IMF and World Bank which are dominated by US and Asian Development Bank (ADB) which is dominated by Japan. That is why both the nations are reluctant in joining the China led AIIB.