The Government has formally agreed to become a founding member of the Asian Infrastructure Investment Bank - an initiative led by China because it wanted more influence in the world's banking systems to reflect its importance in the world economy.
The bank will have initial capital of close to $139 billion to invest in infrastructure projects in Asia, and New Zealand's paid contribution will be about $125 million over five years.
Finance Minister Bill English said New Zealand was the first western developed country to join negotiations with China to set up the bank.
"Our membership will enhance our already strong economic, trade and investment links with the Asian region."
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He said the bank would address a significant gap in infrastructure investment in the Asian region.
New Zealand will formally join the bank in a signing ceremony in Beijing this month.
Prime Minister John Key has previously expressed the hope that New Zealand businesses would benefit from a boost to infrastructure spending in the region.
Trade Negotiations Minister Tim Groser at the weekend said the AIIB was a consequence of the failure of the United States Congress to give China more influence in institutions such as the World Bank and International Monetary Fund by agreeing to quota expansions on the bodies.
So China set up its own institution in which another 57 countries have shown an interest in joining.