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    Knowledge creation on China, from proven China experts.

  • Faculty & Research

    Knowledge creation on China, from proven China experts.

  • Faculty & Research

    Knowledge creation on China, from proven China experts.

Friday, August 25, 2017

Explainer: What the Belt & Road Initiative Means for Investment in Poland

An interview with Jiang Jianqing,
Head of the SINO-CEEF Holding Company, former Chairman of ICBC, Adjunct Professor of Finance at CEIBS & Director of CEIBS Lujiazui Institute of International Finance

When will the SINO-CEE Fund launch its investment operations in Poland?
The Fund’s inauguration was announced in Latvia in November 2016, during the Summit of China and Central and Eastern European Countries (China-CEEC Summit). Fundraising has been progressing smoothly, and there has been an especially active response from investors from both China and the rest of Asia. At the same time, the Fund has clearly communicated – and engaged in discussions about potential collaboration – with governments, organizations and enterprises of Central and Eastern European countries, including Poland. The Fund has also identified a batch of potential investment projects, and these are now being actively promoted.

We understand that the SINO-CEE Fund has been preparing to begin its investments, but has not reached a consensus on the investment with the Polish government. When will the Polish government make the investment? Will there be any change in the investment amount of 300 million euros?
The Polish government has appointed its state-owned financial institutions to invest in the SINO-CEE Fund. The two sides signed a memorandum of understanding last June, and the intended investment amounts to 300 million euros. At present, the two sides are still going through negotiations about the investment details, including the related articles of the agreement. Given the longstanding and strong relationship between China and Poland, we are convinced that the two sides will reach an agreement about the details as soon as possible. We would also be happy to see the Polish side join the Fund through project recommendations and government services, so as to establish an extensive and sustainable partnership.

How much does the SINO–CEE Fund plan to invest in Poland?
As proposed by all parties, the SINO-CEE Fund will strictly adhere to market-oriented and business-oriented principles in its investment decision-making, and actively focus on investment opportunities that not only meet the shared interests of China and the countries of Central and Eastern Europe but also make sense from a business perspective. Poland, as an important country in Central and Eastern Europe, boasts clear geographical advantages, abundant resources, a relatively high-quality population and a good investment climate. We have every reason to believe Poland will become one of the important markets of relatively large investment potential. The economies of Poland and China are highly complementary, especially in their industrial structures. The two economies have an innate motivating force for cooperation that will help realize mutual development as well as gain mutual benefit and produce a win-win result. As for the specific investment amount, it depends on different projects and final investment decisions.

What kind of investment opportunities are preferred by the SINO-CEE Fund? Why?
The SINO-CEE Fund will place emphasis on investment opportunities in the following fields:

First, infrastructure construction.
Central and Eastern Europe connects the European and Asian markets and plays a significant role as a hub. Through transformation and upgrading, as well as interconnection and interweaving of transportation-related infrastructure projects, the region’s growth potential as a logistics channel between Europe and Asia will be fully tapped.

Second, cooperation on international capacity.
Central and Eastern Europe is in need of an adjustment to its industrial systems and structures, meanwhile China has abundant high-quality capacity available for export, a huge market, as well as strong capabilities in engineering construction and overall support. There are numerous opportunities for collaboration.

Third, investment in industries such as high-tech manufacturing and mass consumption.
As an important emerging market, the countries within Central and Eastern Europe are proactively developing export-oriented economies and – in their investments in the fields of manufacturing and consumer goods – have shown signs of a growing market, which bodes well for the two-way multi-channel industrial and capital flows. In addition, through effective communication in the early stages, our investment model has been fully accepted by our partners from Central and Eastern Europe, as well as the rest of the world.

Is the SINO-CEE Fund headquartered in Poland? How can Poland control, or take part, in specific investments?
In line with EU market practices and in light of the commercial nature of its operation, the SINO-CEE Fund was registered in Luxemburg. The fund manager, SINO-CEEF Capital Management Company, was registered in Hong Kong. This is mainly because Hong Kong, as an international financial center, will facilitate the Fund’s connection to China’s capital markets as well as to countries along the Belt and Road, and can play a pivotal role in the interconnection between China and Central and Eastern Europe. So far, the SINO-CEEF Capital Management Company has set up a European subsidiary in Munich and it is responsible for business promotion across the entire continent – including Central and Eastern Europe. In future, with further development of the Central and Eastern European market, the SINO-CEE Fund will consider further expansion of its network in countries with abundant business opportunities and great market potential. The Polish side will join the Fund as a limited partner (LP) and the relationship, in terms of rights and obligations, will be defined through related agreements. As mentioned above, we would also like to see the Polish side join the Fund via project recommendations and supporting policies, and play a more positive role overall.

This is an edited transcript of a May 2017 interview with Polish newspaper Puls Biznesu.