b. China-backed development funds

China has also pioneered a host of bilateral and regional development funds. These funds combine to add upwards of $178 billion in development finance provided by the Chinese in recent years and are exhibited in Table 5.1.

A major portion of these investments are in Asia as part of China’s broader Belt Road Initiative, with the largest being the $54 billion Silk Road Fund established in 2014 with investment from state institutions including the CHEXIM and CDB and replenished in May 2017. The fund is open to investors from other countries as well and has provisions to expand maritime connectivity between China and the rest of Asia (Central, South and Southeast Asia, the Middle East), North and Northeast Africa, and Europe. A related fund is the Green Ecological Silk Road Investment Fund, a private equity fund for improving the ecological environment in the region.

In the larger Eurasian region, investments include the China—Central and Eastern European (China-CEE) Fund—set up to facilitate financing of projects to enhance inter-connectivity in the region, specifically in Eastern Europe— and the bilateral Russia-China Investment Fund (RCIF) established by two government-backed investment vehicles, the Russian Direct Investment Fund and China Investment Corporation (CIC). The RCIF will invest 70% of its capital in Russia and other CIS countries (currently Azerbaijan, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Uzbekistan, and Ukraine) and 30% in China.

TABLE 5.1 China’s global funds

Chinese development funds in the world economy



Silk Road Fund


The Green Silk Road Fund


China—ASEAN Fund (with ADB)



China—Central and Eastern Europe Investment Fund


Russia-China Investment Fund


China—Russia Regional Cooperation Development Investment Fund


Russia Direct Investment Fund


China—VEB Innovation Fund


The China—Kazakhstan Production Capacity Cooperation Fund


Latin America and Caribbean

CELAC—China Investment Fund


China—LAC Industrial Cooperation Fund


China-LAC Investment Fund (with IADB)


China—Mexico Investment Fund


China—Portuguese Speaking Countries Cooperation Fund


China—Brazil Investment Fund



China—Africa Development Fund


Africa Growing Together Fund (with AfD)


China—Africa Production Capacity/Industrial Cooperation Fund


Global South

South—South Climate Fund


South—South Cooperation Fund




Source: Gallagher and Chin (2017).

Over the last decade China has created a significant platform of public and private investments in Africa. To date the largest of such initiatives is the China-Africa Industrial Capacity Cooperation Fund Company Limited (CAICCF), jointly established by the China Foreign Exchange Reserves and Export-Import Bank of China. With S10 billion in pledges, the fund would support infrastructure development, particularly in the transit sector, as well as provide financing for manufacturing and agriculture projects. Among the state-backed funds is the China—Africa Development Fund (CAD Fund), a Chinese private equity fund financed by the CDB, set up in order to stimulate investment in Africa by

Chinese companies in power generation, transportation infrastructure, natural resources, and manufacturing. This fund has $10 billion in pledges and has disbursed upwards of $2 billion. The Africa Growing Together Fund (AGTF), is a fund inside the African Development Bank financed by the People’s Bank of China, is to finance eligible sovereign and non-sovereign guaranteed development projects in Africa.

In the larger arena China seeks to strengthen South-South relations and contribute to global development. To this end, China announced the creation of the $3.1 billion South—South Climate Cooperation Fund in a China—U.S. joint presidential statement on climate change in September 2015, to be used to finance initiatives in developing countries worldwide to combat climate change. China also pledged S2 billion in the creation of a South—South Cooperation Fund aimed to assist developing countries in implementing their post-2015 development agenda, as announced last year at the United Nations Sustainable Development Summit at the UN headquarters in New York. Plans to create an Academy of South—South Cooperation and Development was also announced, with the aim to facilitate studies and exchanges by developing countries on theories and practices of development suited to their respective national conditions.

Chinese finance also plays a prominent role in the Latin America and the Caribbean—with $58.4 billion in funds in the region. The largest are the $20 billion CELAC-China Investment Fund for infrastructure projects, the China-Brazil Investment Fund, and the S10 billion dollar China—LAC Industrial Cooperation Fund for medium- and long-term financing for industrial investments. Investments in the region further include the China—LAC Cooperation Fund, initiated by the Chinese Government to finance projects in LAC region in areas including education, water conservancy, and energy. The Fund is housed at the Inter-American Development Bank and includes a private equity (PE) fund administered by the Export-Import Bank of China. In addition to these, the China-Mexico Investment Fund was set up to support Chinese and Mexican companies investing in infrastructure, mining, and energy projects in both countries.

c. New multilaterals

In addition to making stepwise contributions in paid in capital to its two global policy banks, China recently helped found two global development banks, the New Development Bank (NDB) and the Asian Infrastructure Investment Bank (AIIB). The NDB was launched in July 2015 by Brazil, Russia, India, China and South Africa—collectively known as BRICS countries. The NDB provides financing to developing countries to help finance sustainable infrastructure projects, releasing its first set of financing packages for clean energy and largely financed from green bond issuances in the Chinese market, in the spring of 2016. Each BRICS member is expected to put an equal share into establishing the startup capital ofS50 billion with a goal of reaching $100 billion. Under the current arrangement membership will be limited to BRICS nations, though future members will eventually be added—with the BRICS countries always holding a minimum of 55% voting power.

The Asian Infrastructure Investment Bank (AIIB) was created to support infrastructure construction in the Asia-Pacific region. The AIIB was proposed by China in 2013 and formally started operations in December 2015 after the Articles of Agreement (AoA) entered into force with ratification from 17 member states holding 50.1% of the shares. This is in accordance with the AoA that requires ratification from 10 member states holding a total number of 50% of the initial subscriptions of the authorized capital stock. By July of 2017 the AIIB had 80 members and prospective members, including six from Latin America in Argentina, Bolivia, Brazil, Chile, Peru, and Venezuela. The Memorandum of Understanding (MoU) specifies that the authorized capital of AIIB is $100 billion and the initial subscribed capital is expected to be around $50 billion. AIIB’s investment capacity could reach S250 billion by the end of 2020 in accordance with provisions made in its AoA. The Bank will largely co-finance projects with the World Bank (WB) and Asian Development Bank (AsDB), particularly in the first years of its operations.

d. China and the MDBs

China now has a stake in all the major MDBs, including the World Bank (WB), Asian Development Bank (ADB), African Development Bank (AfDB), InterAmerican Development Bank (IADB), the European Bank for Reconstruction and Development (EBRD), and the European Investment Bank (EIB). The Chinese have contributed USS22.92 billion to these institutions. China’s largest contribution is to the ADB, at US$11.32 billion, or 6.47% of the capital and with a voting share of 5.47% (voting share consisting of the sum of a members’ basic votes and proportional votes as a percentage of the total). China also contributed US$10.94 billion contribution to the WB—or 4.9% of capital stock and with a voting share of 4.42%. China’s capital in the IADB is the smallest, at USS3.74 million.

China’s capital contributions, and thus its voting share in these institutions, are still relatively small. At the World Bank, despite being the second largest economy in the world China has the 3rd in IBRD rank in terms of voting shares and the 3rd at the ADB, at 4.42 and 5.57% respectively. Conversely, the United States enjoys much larger voting shares in these institutions. Indeed, the US holds 15.02% of the vote at the WB and 12.75% of the vote (behind Japan) at the ADB.

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