(Adds c.bank statement, paragraphs 3 and 4)
SHANGHAI, Feb 16 (Reuters) - China’s $40 billion Silk Road infrastructure fund has started work along the lines of a long-term private equity (PE) venture to boost businesses in countries and regions along the road, China’s central bank governor was quoted saying on Monday.
“The fund has already started operations, with registration on Dec. 29 and the first board meeting on Jan. 6,” Zhou Xiaochuan, governor of the People’s Bank of China (PBOC), told the semi-official China Business News.
The fund is partially financed by China’s foreign exchange reserves, with investors including China Investment Corp, the country’s sovereign fund, the PBOC said in a statement published later on Monday, confirming the news.
Other investors were China’s Development Bank and The Export-Import Bank of China, two leading Chinese policy banks, which lend in line with government instructions, the central bank said in the statement, without giving further details.
China has dangled financial and trade incentives, mostly to Central Asia but also to countries in South Asia, backing efforts to resurrect the old Silk Road trading route that once carried treasures between China and the Mediterranean.
Zhou said that the fund is not a state-owned sovereign fund, but was similar to a PE fund, although it planned longer-term investment than other PE funds.
“As for how it will be similar to global funds, it is somewhat like the World Bank’s IFC (International Finance Corp), the African Development Bank’s mutual development fund and the China Africa Development Fund,” Zhou said.
“What is different is that those funds are financed by a handful of investors instead of raising funds from the public.”
China has said that the Silk Road Fund will be “open” and welcome investors from Asia and beyond, focusing on China’s Silk Road Economic Belt and the 21st Century Maritime Silk Road initiative, which aim to build roads, railways, ports and airports across Central Asia and South Asia.
Zhou said that China would not aim to develop the fund into a multi-party development organisation, although it would consider setting up subsidiaries and branches in various industries and regions.
He added that the fund would be mainly denominated in foreign currencies, instead of Chinese yuan, and rejected the speculation that the fund is the Chinese-style Marshall Plan.
“In its essence, the Silk Road fund is not similar to the Marshall Plan,” Zhou said, referring to the U.S. programme to help reconstruct Europe after the World War II. (Reporting by Lu Jianxin and Sue-Lin Wong)