China today said its USD 40 billion Silk Road fund which will start investments soon is not an "aid agency" and will only finance projects with "reasonable returns", playing down expectations especially among small countries looking to obtain cheap funding for their ventures.
"The fund is not an aid agency," Jin Qi who heads the Silk Road fund said on the sidelines of the legislature, the National People Congress annual session here.
The board of directors and the senior management team has been formed which will start investment soon, Jin said.
He said he expects application of market-oriented principles in operation and reasonable returns for shareholders, including China's foreign exchange reserves, China Investment Corp, Export-Import Bank of China, and China Development Bank.
The fund will comply with market rules and the international order of finance, welcome participation by domestic and overseas investors, such as the China-Africa Development Fund and the Asian Infrastructure Investment Bank (AIIB), state-run Xinhua news agency quoted Jin as saying.
The fund is a limited liability company, according to a February statement by China's central bank.
The fund will invest mainly in infrastructure and resources, as well as industrial and financial cooperation, in an effort to achieve common development and prosperity, Jin said.
It is designed to finance the China-proposed Belt and Road initiatives, which refers to the Silk Road Economic Belt and the 21st century Maritime Silk Road (MSR) which aims to revive China's ancient trade links with Asia, Europe and Africa.
"The priority (of the Silk Road Fund) is to seek investment opportunities and provide monetary services throughout the Belt and Road initiatives," according to the February statement, the Xinhua report said.
The fund which was announced by President Xi Jinping at the neighbourhood leaders summit held here in November last ahead of the Asia Pacific Economic Cooperation (APEC) leaders meeting sparked off expectations among Asian countries for access to cheap and easy finance for projects.
The fund, coupled with AIIB having USD 50 billion subscribed capital besides BRICS Development Bank with USD 50 billion starting capital, is expected to fuel widespread investment opportunities especially for infrastructure financing in Asia.
While China looks to make strategic gains from its Silk Road projects to be funded from its nearly USD four trillion foreign exchange reserves its steep lending rates also drew concerns.
While India is part of AIIB and BRICS Bank, it will be taking part in a limited way in the Silk Road projects.
India is currently taking part in the meetings of the Bangladesh, China, India, Myanmar (BCIM) corridor but not on MSR over concerns of Chinese hegemony in the Indian Ocean.
The other Silk Road projects included revival of the ancient 'silk road' connecting China with Europe through Central Asia and China-Pakistan Economic Corridor to be built through Pakistan-occupied Kashmir (PoK).
