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Joint strategic investment fund worth $10bn to be set up by UAE

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A joint fund worth US$10 billion is to be set up by Mubadala and two Chinese state institutions, it was announced on Monday. Mubadala is Abu Dhabi’s strategic investment company which will collaborate with China Development Bank Capital and China’s State Administration of Foreign Exchange to manage the UAE-China Joint Investment Cooperation Fund. Mubadala aims to invest in assets that promote Abu Dhabi’s development and has already launched similar joint investment ventures. The fund has prominent political backing.

The Crown Prince of Abu Dhabi, Sheikh Mohammed bin Zayed is on a three-day state visit to China.

According to government sources, UAE and Chinese governments will each contribute $5bn, or Dh18.3bn, to the fund, which will invest in “sectors of strategic importance for the UAE and China”.

Sheikh Mohammed said, “This investment fund is a reflection of the growing partnership between the UAE and the People’s Republic of China”. “The launch of this strategic, commercially driven fund represents the next stage of our partnership as we seek to work more closely in developing our economies and contributing to global growth.”

The Chinese president, Xi Jinping, said: “This dynamic investment fund will serve to further strengthen and deepen the strategic and economic relationship between China and the UAE. “This fund will also play a critical role in supporting the One Belt, One Road initiative, as we work towards improving connectivity and cooperation with our regional partners across Eurasia.”

Mubadala had launched $2bn fund with Russian Direct Investment Fund, a state-backed asset manager in the year 2013. It has similar investment cooperation with GE Capital and Trafigura.

China follows a policy of infrastructure project investment encouragement on the historical Silk Road trade route under its One Belt, One Road strategy. According to Chang Liu of Capital Economics, China attaches importance to foreign investment for developing projects along the route. He said, “It’s symbolically important for China to have foreign investment partners in South-East Asia and the Middle East”. “Part of the purpose of One Belt, One Road is symbolically to connect these countries. It’s politically important.”

The $100bn Asian Infrastructure Investment Bank, a rival of the International Monetary Fund in leading the world economy has UAE as one of the founding members.

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Paul

The author Paul