China’s Silk Road Fund ‘seeking investment projects in Europe’

PUBLISHED : Wednesday, 22 March, 2017, 9:27am
UPDATED : Wednesday, 22 March, 2017, 10:05pm

China’s Silk Road Fund is looking for investment projects in Europe, according to a senior bank official.

The fund, which provides financing for China’s “One Belt, One Road” trade initiative to forge closer commercial ties with Asia and beyond, is seeking investment opportunities with a unit of the European Investment Bank, the European lender’s vice-president Jonathan Taylor said.

“Cooperations between the European Investment Fund, a subsidiary of the EIB, and the Silk Road Fund are under discussion,” Taylor said at the start of a five-day trip to China. “Discussions between the EIF and the Silk Road Fund are centering on investment in Europe,” he told a press conference.

China pledged to contribute U$S40 billion to set up Silk Road Fund three years ago.

The capital came from the country’s foreign exchange reserves, the China Investment Corporation, which manages the sovereign wealth fund; the Export-Import Bank of China and the China Development Bank.

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The fund has cooperation agreements with lenders in European countries such as France and Russia.

China launched the “One Belt, One Road” initiative in 2013 and the push to extend the nation’s influence encompasses over 60 counties, stretching through Southeast and West Asia to the Middle East and central Europe.

Beijing will hold a high-level summit on the initiative in the middle of May and leaders from over 20 countries have agreed to attend. The European Commission will send representatives to the summit, said Taylor, without elaborating.

The European Investment Bank invested 298 million euros (US$320 million) in China to support climate-related projects last year.

The lender is aiming to invest 500 million euros in the country this year with “a strong pipeline” of new projects expected in the coming months, including urban transport, forestry and energy efficiency, Taylor said.

The European Investment Bank will seek joint funding with Chinese policy lenders.

Strict emission standards at the bank will rule out most coal investment projects the lender funds in China unless they are strongly linked to carbon capture and storage, he said.

The bank has a very good relationship with the Asian Infrastructure Investment Bank and is actively discussing cooperation on funding projects with the China-backed lender, Taylor said.

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During his trip, Taylor will meet senior officials at the Ministry of Finance, the National Development and Reform Commission and the central bank to discuss cooperation financing green initiatives.

The European Investment Bank and China’s central bank will also hold a high-level workshop with institutional investors and regulators to develop an integrated approach in green financing.

Britain holds a more than 16 per cent of stake in European Investment Bank, which will be one issue in Brexit talks as the UK negotiates to leave the European Union in the coming two years, but it will not affect the lender’s ability to fund itself, said Taylor.

“I am very confident that the EIB will continue to have a robust presence in the market and continue to fund itself very widely, as it always does,” he said.