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China sets up €10bn Central and Eastern Europe fund

ICBC, the country’s biggest lender, will count among the vehicle’s largest investors thanks to a €1bn commitment.

The Chinese government has set up a €10 billion vehicle to invest in projects in Central and Eastern Europe, according to the Industrial and Commercial Bank of China.

ICBC said it has been looking at a number of opportunities on behalf of the market-oriented China-CEE Fund spanning the transportation, logistics, clean energy, technology, pharmaceuticals and food processing sectors across the region. The fund aims to mobilise up to €50 billion in project financing. 

Sino-CEEF Holding Company, a Hong Kong-based subsidiary of ICBC headed by Jiang Jiangqing, the bank’s former chairman, has been appointed to manage the fund. In May, ICBC said it would invest €1 billion in the scheme.

According to a memorandum of cooperation signed by the Czech Republic and ICBC in June, the Eastern European country will commit €200 million to the fund and support its investments in the country. Poland’s state development bank, Bank Gospodarstwa Krajowego, has also agreed to invest €300 million in the fund in June.   

The vehicle aims to raise capital from corporates and financial institutions from China and CEE countries. China Life, China’s largest insurer, as well as conglomerates Fosun Group and Golden Eagle Group are also involved in managing the fund, according to ICBC. It is unclear whether these will invest in the fund. ICBC had not responded to queries by press time. 

China’s Ministry of Foreign Affairs said that Chinese financial institutions, including the $40 billion Silk Road Fund, were encouraged to provide financial support to projects covered by the China-CEE venture.

The fund, proposed by Chinese Premier Li Keqiang last November, is an initiative that comes under a multilateral partnership established between China and 16 countries from the CEE region. It is also part of Beijing’s efforts to promote its “One Belt One Road” infrastructure plan.