BEIJING, March 31 (UPI) -- North Korea applied to join the China-led Asian Infrastructure Investment Bank but its membership was denied in February.
The reclusive regime sent a message to the bank's inaugural president, Jin Liqun, through diplomatic channels indicating its interest, but according to the online British publication Emerging Markets, China refused to meet North Korea's request.
North Korea reportedly expressed shock at China's rejection of its request. Chinese authorities replied through diplomatic channels to explain North Korea's economic fundamentals and financial condition disqualify Pyongyang from membership in a new bank poised to become one of Asia's largest financial institutions.
Nicholas Eberstadt, an economist at the American Enterprise Institute, a politically conservative think tank in Washington, said China could not accept North Korean membership in AIIB, given U.S. concerns about the bank's standards of governance.
Yonhap reported Eberstadt said the recent development is similar to the 1997 case of North Korea's failed attempt to join the International Monetary Fund.
But North Korea's disqualification from AIIB membership will not make a significant impact on the country's economy, economists told South Korean newspaper Donga Ilbo.
According to a source at the World Bank, North Korea lacks a proper financial system, and ordinary North Koreans choose not to deposit their holdings in banks.
Tough U.N. sanctions against North Korea have also isolated the country's banking, travel and trade industries.
On March 26, South Korea said it is interested in joining AIIB. Through membership, Seoul can partake in new projects in the Asia-Pacific region.
China is South Korea's top trading partner.