State-backed entities in China and Pakistan are setting up a 20-billion-yuan ($2.76 billion) fund-of-funds (FOF) to invest in areas such as new energy and modern agriculture as the two countries look to revive economic and trade ties.
The National Bank of Pakistan (NBP), a Pakistani government-owned multinational commercial bank affiliated with the country’s central bank, recently signed a memorandum of understanding (MoU) with China-Pakistan International Silk Road Industry Investment Management to facilitate investment in key projects and promote industrial cooperation between the two countries, according to an official statement.
As part of the MoU signed on June 1, the two parties launched the FOF to invest in six main areas: housing industrialisation (including smart housing solutions), intelligent manufacturing, new energy, modern agriculture, commodity trades, and talent cultivation to explore growth opportunities in both countries.
The fund’s signing ceremony was completed just a few days ahead of Pakistani Prime Minister Shehbaz Sharif’s scheduled visit to China from June 4 to 8 on the invitation of President Xi Jinping. Sharif’s China visit, which covers cities including Beijing, Xi’an, and Shenzhen, is viewed as a renewed push by the recently elected Pakistani government to strengthen its connection with the world’s second-biggest economy.
The FOF will finance the first batch of eight projects across the six sectors to promote “industry synergies” and “cultural exchange” between China and Pakistan, according to the statement quoting Ma Hongyu, vice chairwoman and president of China-Pakistan International Silk Road Industry Investment Management.
The partnership seeks to enhance the China-Pakistan Economic Corridor (CPEC) by investing in key projects, including the construction of four industrial parks in the two countries.
Officially launched in 2015, the $62-billion CPEC is a key component of China’s ambitious Belt and Road Initiative (BRI), a massive network of roads, bridges, and ports spread across almost 100 countries that Beijing hopes will recreate the ancient Silk Road trade routes linking Asia and Europe. However, critics say that the BRI is a tool for China to expand its geopolitical influence by lending money to poorer countries such as Pakistan for infrastructure.