China's ASEAN infrastructure fund shrinks for now

BEIJING (Reuters) - China's promised $10 billion in development funds for Southeast Asia is going to be closer to $1 billion for the time being, diplomats said on Wednesday ahead of a regional meeting later this week in Thailand.

In April, Chinese Premier Wen Jiabao announced China planned to set up a $10 billion China-ASEAN Fund on Investment Cooperation to support infrastructure development in the region.

Details were vague at the time, and little has been heard of the scheme until now.

"The first phase of the fund will be $1 billion and the plan for the total fund will be $10 billion," Assistant Foreign Minister Hu Zhengyue told reporters.

"China welcomes other countries, including those in ASEAN, and institutions to join in the raising of these funds."

Wen will be travelling to Thailand for a second Association of South East Asian Nations summit, after the first one, in April, was called off when protesters stormed the venue in the coastal resort of Pattaya.

This time, the meeting is in the much smaller town of Hua Hin, with China eager to expand its influence in a region with deep historic and cultural ties.

Foreign Minister Yang Jiechi, Trade Minister Chen Deming and Finance Minister Xie Xuren will all accompany Wen, such is China's interest in the event.

Xue Hanqin, China's ambassador to ASEAN, said that the $1 billion had already been raised for the fund, which will be disbursed through the China Import-Export Bank.