By Jonathan Davies

A row has broken out between the UK and the US over the UK's plans to become a founder member of a major China-backed bank that could rival the World Bank.

The UK is the first major western country to apply for membership of the Asian Infrastructure Investment Bank (AIIB), which will fund major energy, transport and infrastructure projects in Asia.

In a statement, UK Chancellor George Osborne said the UK had "actively promoted closer political and economic engagement with the Asia-Pacific region". He added that involvement with the AIIB would create "an unrivalled opportunity for the UK and Asia to invest and grow together".

Asian markets, particularly China, are among the fastest growing in the world. And the hope is that by investing in the AIB, there will be greater opportunities for British businesses to invest in the area.

But the US is not as keen, nowhere near it in fact. It sees the bank as a move by China to reduce US control of the banking system. Such is the US' stance against the bank that it has persuaded allies in the region, like Japan, South Korea and Australia not to get involved.

US National Security Council spokesperson Patrick Ventrell said: "We believe any new multilateral institution should incorporate the high standards of the World Bank and the regional development banks."

"Based on many discussions, we have concerns about whether the AIIB will meet these high standards, particularly related to governance, and environmental and social safeguards," he added.

Twenty-one nations came together last year to sign a memorandum on the bank. In November, Australia Prime Minister Tony Abbott offered considered support to the AIIB, but stressed that it must be transparent.

US President Barack Obama met Mr Abbott in Beijing last year and agreed that the bank had to be transparent.

At the time, Mr Obama said to Mr Abbott: "Those are the same rules by which the World Bank or IMF (International Monetary Fund) or Asian Development Bank or any other international institution needs to abide by."

Complaint

According to a report by the Financial Times on Thursday, US officials have complained about the UK's decision.

An unnamed senior US administration official said there was "virtually no consultation with the US" and that "We are wary about a trend toward constant accommodation of China".

The official Chinese news agency Xinhua over Washington's criticisms.

It said the US has "exhibited nothing but a childish paranoia towards China".

"The US government needs to be reminded that bias and a deep-rooted strategic distrust towards China are by no means helpful in forging a healthy relationship with the country," Xinhua said.