Oh, Canada.

The Obama administration increasingly finds itself on the outside looking in as Canadian officials announced Thursday plans to apply for membership in the Asian Infrastructure Investment Bank, the first North American country to join the China-founded development bank.

Chinese President Xi Jinping hailed the announcement, made as Canadian Prime Minister Justin Trudeau was making his first official trip to Beijing since his election in November.

Canadian Finance Minister Bill Morneau revealed the plan to apply for AIIB membership at a Wednesday press conference in the Chinese capital.

China proposed and provided much of the seed money for the AIIB, designed to meet what officials said was a huge financing gap for infrastructure projects across Asia. But the move raised fears that Mr. Xi was trying to challenge existing, Western-dominated international institutions such as the World Bank and the Asian Development Bank, while expanding Beijing’s financial and political clout.

President Obama has denied that Washington opposed the Chinese initiative, but the U.S. has pointedly refused to join the AIIB and was clearly taken aback last year when a slew of European, Middle East and Asian allies signed on. The rush by countries such as Britain, Germany and South Korea to join was widely seen as a diplomatic embarrassment for Mr. Obama.

The AIIB opened its doors in December with a capital base of $100 billion. It now has 57 members, and in June the bank’s board said another 24 countries were considering membership.

“The decision of Canada to apply to join AIIBis very welcome and shows its confidence in the strong foundations the bank has built in our first few months,” Jin Liqun, the former Chinese Finance Ministry official who now serves as the AIIB’s first president, said Wednesday.

U.S. officials have publicly expressed fears that the new bank would undercut international lending standards and weaken labor, environmental and anti-corruption protections.

In a speech this summer, U.S. Treasury Secretary Jacob Lew signaled that Washington’s reservations about the AIIB were softening, saying the bank was much more likely to uphold existing standards “as a result of our shared dialogue and our support for co-financing and cooperation with institutions like the World Bank and the Asian Development Bank.”

Mr. Trudeau hailed what he said was a new era in Chinese-Canadian relations, announcing plans to meet annually with Chinese Premier Li Keqiang to discuss issues ranging from national security and climate change to women’s and children’s rights.

“Until now, the China-Canada relationship has somewhat lacked in stability and regularity,” Mr. Trudeau said in a joint news conference with Mr. Li, according to an Associated Press dispatch.