Government Agreements

China Investment Research Volume 24 China Outbound Investments Q4 2014

In Q4, there were 8 Government Agreements signed, 5 with specific values disclosed, totaling USD 25.9 billion. Volume declined by 50%, while the aggregate values decreased by 56%.

All 8 of these larger Agreements were signed as part of a State Visit either by President Xi to Oceania (Australia, New Zealand and Fiji) in November or Premier Li's visits to Europe (Germany, Italy) and Russia in October and to CEE, Kazakhstan, Thailand and Myanmar.

Also during Q4, China announced two major vehicles sponsored by China and designed to help fund international /Asian infrastructure projects. Since neither of these vehicles are to become operational until 2015, we did not include these funds/amounts in Q4 data.

Asian Infrastructure Investment Bank (AIIB) - In October, China announced the official launch of the AIIB. AIIB has been designed to give project loans to developing Asian nations, filling in funding gaps amoung existing development banks. China is expected to contribute USD 50 billion into the Fund, while 21 other nations infuse the remaining USD 50 million funds. Australia, Indonesia and South Korea have yet to join for various reasons.

Silk Route Fund - in November, China announced plans to build a fund to finance infrastructure along the Silk Route, one which will pass overland through Kazakhstan, Krgystan and Iran and end in Austria while the sea route will link Chinese ports with European ports. State Council will contribute 65% of this fund, CIC will contribute 15%, while CDB and China Ex-Im will contribute 15% and 5% respectively. China plans to launch this during Q1 2015. This fund's role is to provide seed capital to facilitate early commitment of construction loans in Southeast Asia and as such is different from the AIIB which provides loans.

China Investment Research Volume 23 China Outbound Investments Q3 2014

During Q3, there were Government Agreements signed between China and 16 other countries (only 10 of these actually involved specific investment amounts). Virtually all of these agreements involved extension of credit and / or aircraft purchases. However, 6 other countries experienced state visits without receiving any specific investment amounts. This is a first in the history of our research.

This quarter saw USD58.6bn in aggregate amounts of Government Agreements. The largest of these agreements were focused in Venezuela, India, Brazil and Argentina, which collectively represented USD48.8bn or 83.2% of aggregate value.

China Investment Research Volume 22 China Outbound Investments Q2 2014

This quarter saw USD 55.0bn in Government Agreements. This activity was focused in Russia, the UK and Greece.

In Greece, China has made considerable investments both prior to and during the financial crisis including purchasing Greek debt throughout the crisis and extending nearly USD 3bn credit to the Greek shipping industry since 2010. During this most recent visit by Premier Li, he and Prime Minister Samaras launched the 17 kilometre railway linking the Piraeus port (managed by COSCO) to Athens, then to the Balkans and subsequently into Central and Eastern Europe. This is significant in that it represents a second step in linking maritime with railway assets to help transform Greece into a Southern European equivalent of Rotterdam. Airport investment has also commenced and is likely to strengthen in the future.

In addition to the Russia and Greece agreements, China entered into significant agreements with the UK (primarily energy related) and Pakistan (infrastructure related).

China Investment Research Volume 21 China Outbound Investments Q1 2014

During late March, President Xi visited the Netherlands, France, Germany and Belgium, in the process signing a number of agreements in each country. With the exception of the USD 19.2bn French agreements, aggregate value for the agreements with other countries on this trip have not yet been disclosed (although Grisons Peak’s total includes USD 2bn calculation for the Netherlands).

In February, the President of Pakistan signed agreeents whereby China agreed to invest a further USD 900m in development of infrastructure projects related to the important port city of Gwadar.

In January, the President of Belarus visited Beijing. This visit was followed by additional meetings in early March where numerous agreements were signed to develop infrastructure, centered around Minsk. Belarus also includes an important link in the railway linking Chongqing to Duisburg in Germany (a component of the German agreements).