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The Public Investment Fund (PIF) inked six MoUs valued at up to USD 50 bn with major Chinese banks, it said in a statement last week. The move comes in a bid to spur “two-way capital flows through both debt and equity, and come as part of PIF’s strategy to foster institutional partnerships globally,” the press release reads. PIF governor Yasir Al Rumayyan was in China last month where Beijing singled-out priority areas including infrastructure and energy as well as the digital and green economies for investments by the wealth fund.
The statement doesn’t make clear who’s providing financing to whom — or for what. Given the profiles of the Chinese lenders, we expect the agreements will largely (but not exclusively) see Chinese lenders providing finance for Chinese companies doing business in Saudi as well as for Saudi companies investing in or sourcing from China.
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Which Chinese lenders are involved?
- Agricultural Bank of China (ABC)
- Bank of China (BoC)
- China Construction Bank (CCB)
- China Export & Credit Insurance Corporation (SINOSURE)
- Export-Import Bank of China (CEXIM)
- Industrial and Commercial Bank of China (ICBC)
Priority sectors? Look for trade finance, infrastructure, manufacturing, as well as petchems and manufacturing to be among the priority sectors.
IN CONTEXT- The government is taking steps to significantly deepen Kingdom’s relationship with China even as we wait for news of a series of agreements with the United States on security, nuclear power, and advanced technologies. We have background here.
