Treasurer Joe Hockey has formally signed up Australia to the $US100 billion ($A131 billion) Asian Infrastructure Investment Bank.
Mr Hockey was in Beijing earlier this week for the official signing ceremony with other foundation countries.
The Beijing-based investment fund is designed to help finance infrastructure projects across Asia, using a mix of public and private funding.
It is planned to operate broadly in the same manner as existing multilateral development banks such as the World Bank and the Asian Development Bank.
It will start with an authorised capital base of $US1 billion.
A total of 57 countries have been approved to be signed on as founding members of the bank since it was first floated by China's president Xi Jinping in October 2013.
The world's largest and third largest economies, US and Japan, have so far declined to join.
"Australia becomes the first nation to sign the Articles of Agreement of the #AIIB in Beijing's Great Hall of People," Mr Hockey tweeted yesterday.
The Chinese initiative aims to satisfy an estimated $US8 trillion ($A10.50 trillion) infrastructure shortfall in Asia over the next 10 years.
Australia will contribute about $930 million in upfront capital to the bank over the five years and be the sixth-largest shareholder.
China will hold a 30.34 per cent stake and 20.06 per cent of voting rights.
Mr Hockey said last week that after intense negotiations the government had been able to clear up its outstanding concerns over the structure of the China-based bank and was satisfied that governance arrangements would ensure there was appropriate transparency and accountability.
He believes joining the Asian Infrastructure Investment Bank will provide “massive new opportunities” for Australia.
Greater trade and economic development
Australia could get its raw produce into these markets if there were more ports, railways and essential infrastructure in Asia, he said.
The Australian Industry Group, the peak body for Australian industry, welcomed the initiative.
“The AIIB’s objective of financing infrastructure development in the Asia-Pacific region will foster greater trade and economic development in the region of Australia’s closest and most important economic partners,” AiGroup Chief Executive Innes Willox said.
“Given our national ambitions to be more thoroughly engaged in the Asian region, it makes clear sense for Australia to become a founding member of the AIIB and to work to ensure its success.”