The agreement was struck last week during World Bank president Jim Yong Kim’s two-day visit to China. China is already the World Bank’s third largest shareholder and the new fund, expected to start later this year, will finance investment projects, operations and knowledge development across developing countries.

Kim said: “China is a strong partner in development and a strong partner for the World Bank Group and we share the commitment to ending poverty and boosting shared prosperity.”

China’s finance minister Lou Jiwei added: “The establishment of this trust fund signals that our partnership with existing multilateral development banks is growing, even as we support new ones. We will continue to partner with the World Bank in fighting poverty and promoting development around the world.”

China’s decision to take a lead in the establishment the new Asian Infrastructure Investment Bank stirred controversy about how it would work alongside existing development institutions.

However, Kim praised the “great progress” that had been made in setting up the AIIB. “More funding for infrastructure will help the poor, and we are pleased to be working with China and others to help the AIIB hit the ground running,” he added.

Meanwhile, AIIB president designate Jin Liqun paid tribute to the World Bank saying it had been very generous in sharing its expertise.

“We plan to identify projects for possible co-financing in the fall. Based on my time at the World Bank as an alternate executive director, I am fully confident that such close cooperation between the banks will lead to improved lives for citizens of our member countries,” Jin said.