Chinese media on Wednesday hailed the creation of the BRICS development bank, to be based in Shanghai, blaming Western countries and multilateral agencies for flaws in the global financial system.

At a summit in Brazil, the BRICS group of emerging economic powers -- which also includes Russia, India, China and South Africa -- on Tuesday created the New Development Bank to finance infrastructure projects.

China's official news agency Xinhua cited Western dominance of the international financial system as the motivation.

"The plans of the emerging-market bloc of BRICS to establish a development bank usher in a long-awaited and helpful alternative to the Western-dominated institutes in global finance," Xinhua said in an editorial.

An opinion piece in the Global Times newspaper, known for its nationalistic editorial stance, said competition from the BRICS bank could prompt the World Bank and the International Monetary Fund (IMF) to carry out much-needed internal reforms.

"BRICS countries have to blaze a new trail to reduce losses as well as safeguard interests," wrote Liu Zongyi, a research fellow at the government-linked Shanghai Institute for International Studies.

"Loans from the World Bank are not able to meet the demands of the developing nations... The IMF also failed to play an active role in stabilising the turbulent emerging financial markets during the global financial crisis," he said.

Developing countries were at the mercy of the United States during the recent economic crisis, he said, given the dominance of the dollar and Washington's timing of its quantitative easing policy.

Hong Kong's pro-China Wen Wei Po newspaper said BRICS members selection of China's commercial hub for the headquarters symbolised the rise of the country, now the world's second largest economy.

"Setting up the headquarters of the BRICS development bank in Shanghai shows the image of China becoming a great power on the international stage," the newspaper said.

"Shanghai has the best conditions as the first choice location for the BRICS bank headquarters," it added.

Last year, Shanghai established China's first free trade zone to pilot financial reforms. The city is seeking to become an international financial centre but lack of free convertibility of China's yuan currency is a major obstacle, analysts say.