China bank exposes cabinet rift: Labor

The Abbott government should not be slamming the door on a new Asian infrastructure bank because of cabinet infighting, Labor says.

Last week, 20 countries joined with China to sign a memorandum of understanding to set up the $54 billion Asian Infrastructure Investment Bank.

The bank is aimed at addressing a multi-billion-dollar funding gap for dams, ports, roads and other capital works across Asia.

Australia, the United States, Japan and Korea declined to be among the founders because of concerns the bank lacks the same levels of governance and accountability as other bodies such as the World Bank and the Asian Development Bank.

It's believed Treasurer Joe Hockey wanted to sign on but was overruled after Foreign Minister Julie Bishop raised concerns in the national security committee China might use the bank to advance its strategic goals in the region.

Opposition Leader Bill Shorten said the cabinet was "hopelessly divided" and this was putting key decisions at risk.

"It is wrong just to slam the door in terms of this proposition because of infighting in the Abbott government," Mr Shorten said.

"The prime minister needs to show some leadership and pull his feuding treasurer and foreign minister into line."

Prime Minister Tony Abbott said there were ongoing discussions with the Chinese government about taking part in the bank.

He hopes the bank can go ahead because there was need for more infrastructure and funding.

It was appropriate that China led the bank, but it must be a "multilateral institution".

"We would like to join but it's got to be a multilateral jurisdiction with the kind of transparency and the kind of governance arrangements that, for argument's sake, the World Bank has," Mr Abbott said.

Australia would be happy to join up with that sort of transparency and governance.

"I imagine Korea and Japan and the United States would also be happy to join and that would mean we would have a maximally-funded infrastructure bank here in Asia."

Mr Shorten said the bank's proponents needed to ensure not only governance and transparency arrangements, but environmental, social and labour issues are properly managed.

"There is an enormous need for increased infrastructure investment in the Asia-Pacific and we welcome additional investment from China," he said.

Mr Abbott said he did not believe it would affect Australia's talks with China on a free-trade agreement, which is expected to be signed in mid-November.

"I'm expecting China to sign the FTA because it's in their national interest."