MUMBAI, India — A developing nation version of the World Bank was formally agreed this week two years after India proposed the idea to Brazil, Russia, China and South Africa. Yet even as the five governments hailed its formation, there were questions about whether four of them might simply be paying to move from US financial hegemony to dominance by another economic superpower: China.

India ensured a sense of parity with its insistence that each of the countries behind the New Development Bank contribute equal shares of US$10 billion to its initial US$50 billion capital. Like the World Bank, the new institution plans to fund development projects in poor countries.

But India failed in its bid to host the new bank’s headquarters in New Delhi. It will be located in Shanghai instead.

The headquarters skirmish was part of a larger struggle to keep China, the world’s second-biggest economy, from dominating the new bank the way the United States has dominated the World Bank and International Monetary Fund. Losing out to Shanghai set off a flurry of concern in Indian media that instead of the consensual approach that India originally envisioned, the new institution could be used to promote China’s priorities.

India has long been suspicious of its giant neighbour to the north and border disputes still fester. Plus, for about a decade, India hoped to match or even outpace the Chinese economic juggernaut when its own economy was growing at 8-9 per cent. That dream has crumbled in recent years. India’s economy slowed to less than five per cent growth in the last two years and China, while also slowing, continued to outpace it.

In another concession to parity, the New Development Bank will have a rotating presidency shared among the member nations. But there is no doubting that China’s priorities will carry significant weight.

The Chinese economy is four times the size of India’s and larger than the combined economies of India, Russia, Brazil and South Africa. Take the C out of BRICS as the five are known, and it becomes a much less muscular grouping.

Still, some economists argue that the significance of the development bank and the Contingent Reserve Arrangement, a US$100 billion financial safety net similar to the International Monetary Fund, also agreed at the summit in Brazil, is useful as an alternative to the US-dominated global economic system.

“It really is a historic development,” said Biswajit Dhar, an economist and professor at Jawaharlal Nehru University in New Delhi.

Some even compared the significance of the BRICS bank to the Bretton Woods summit in 1944, which provided the basis for the modern system of central banking and foreign exchange as well as the creation of the World Bank, then called the International Bank for Reconstruction and Development, and the IMF.

China’s official Xinhua news agency said in an editorial that the agreement ushers in a long-awaited alternative to the “Western-dominated institutes in global finance.”

For decades, the World Bank and the IMF, along with the Asian Development Bank that is led by Japan, have been the only games in town for developing countries in financial trouble or seeking outside funds for big projects. The World Bank and especially the IMF have used that pre-eminence to advance a philosophy of free markets and limited government intervention in the economy.

The BRICS countries have long shared a desire for a bigger voice in global economic policy. Many developing nations had painful experiences with Western financial dominance. They’ve contended with economic sanctions imposed by Western powers. Or they’ve been forced to make painful budget cuts and meet other strict conditions to qualify for emergency IMF loans.