波士頓大學(xué)全球發(fā)展政策研究中心（BU）：中國實收資本：中國海外發(fā)展投資基金的識別與分析 Chinas Paid-In Capital -Identifying and Analyzing Chinas Overseas Development Investment Funds

GlobalDevelopmentPolicyCenter

GCIWORKINGPAPER025?11/2022

GLOBALCHINAINITIATIVE

Oyintarelado(Tarela)Moses

istheDataAnalystandDatabaseManagerfortheGlobalChinaInitiativeattheBostonUniver-sityGlobalDevelopmentPolicyCenter.Previously,sheworkedontheinternationalrelationsteamoftheExport-ImportBankoftheUnitedStatesasapolicyanalyst.ShehasalsoworkedattheChinaAfricaResearchInitiativeattheJohnsHopkinsUniversitySchoolofAdvancedInternationalStud-iesandinternedattheUSDevel-opmentFinanceCorporation.

www.du.9bu\3bq

China’sPaid-InCapital

IdentifyingandAnalyzing

China’sOverseasDevelopmentInvestmentFunds

OYIMTAH3JAaOMO232、JAUHAoOHMJ3Y、D3DIJIA2qHIMo3H

ABSTRACT

China’s‘GoingOut’strategyandBeltandRoadInitiative(BRI)launchedChinatobetheworld’slargestsourceofcumulativebilateralofficialdevelopmentfinance.However,inrecentyears,overseasdevelopmentfinancefromChina’spolicybankshasdeclinedandChina’soutwardfinancehasdiversifiedtowardsotherchannels.Oneemergingandunder-studiedareaofChina’soverseasdevelopmentactivityarespecialinvestmentfunds,whichwetermoverseasdevelopmentinvestmentfunds(ODIFs)basedontheirdevelopment-ori-entedmandatesandfocusontheprovisionofequity.Thisworkingpapertracksanddevel-opsatypologyforChina’sODIFs,distinguishingthemfrompriorconceptualizationsofChi-na’soverseasequityinvestmentsandfunds.WedefineChina’sODIFsaspoolsofcapital,oftenestablishedbymultiplepublicand/orprivateshareholders,whichprimarilyprovidesequityfinancingtocertainregionsandsectorsoverseas.WeclassifyODIFsintothreefundtypes:sovereigndevelopmentfunds(SDFs),privateequityfunds(PEFs)andjointinvest-mentfunds(JIFs).WeassembleadatasetofODIFsandanalyzepatternsincapitalization,regionsandsectorsoffocusandshareholders.Wealsopresentcasestudiesofeachclassi-ficationoffundtype,focusingontheSilkRoadFund(SDF),theGreenEcologicalSilkRoadFund(PEF)andtheChina-UAEJointInvestmentFund(JIF).Wefindthatthefundsinthe

ThisworkingpaperwasupdatedonNovember2,2022.

LauraGormleyisaResearchAssistantfortheGlobalChinaInitiativeatBostonUniversityGlobalDevelopmentPolicy(GDP)Center.LaurahelpstheGDPcen-ter’sresearchonChina’soverseasdevelopmentfinanceforitspublicdatabases.

CeciliaSpringeristheAssistantDirector,GlobalChinaInitiativeattheBostonUniversityGlobalDevelopmentPolicyCenter.HerinterdisciplinaryresearchfocusesontheenvironmentalimpactsofChina’soverseasinvestment,pol-icymakingprocesseswithinChinaandindustrialdecarbonization.Previously,shewasaPost-doc-toralFellowattheHarvardKen-nedySchool.SheearnedaM.S.andPh.D.fromtheEnergyandResourcesGroupattheUniversityofCalifornia,BerkeleyandaB.S.inEnvironmentalSciencefromBrownUniversity.

2/gdp

datasetrepresentatotalof$155billionincapitalization,accruedbetween2007-2019.ThisavailablecapitalissignificantinscalerelativetoChina’soverseasdevelopmentfinance,whichtotaled$462billioninloancommitmentsfromChina’spolicybanksbetween2008-2019.WhilecapitalavailableviaODIFsdoesnotexceeddevelopmentfinancecommit-ments,itrepresentsasizeablepoolofcapitalandanimportantandunderstudiedformofChina’soverseasengagement.

Keywords:BeltandRoadInitiative,BRI,China’soverseasdevelopmentfinance,overseasdevelop-mentinvestmentfunds,ODIFs

INTRODUCTIONANDLITERATUREREVIEW

China’soverseaseconomicactivityisdiversifying.China’s‘GoingOut’strategyandBeltandRoadInitiative(BRI)launchedtherapidexpansionofChineseoutboundfinance(WenBinandWilkes2011;Ye2020).Today,Chinaistheworld’slargestsourceofcumulativebilateralofficialdevelop-mentfinance(Rayetal.2021a).However,inrecentyears,therateofChina’soutboundlendinghasbeguntowane.OverseasdevelopmentfinancefromChina’spolicybanks–ChinaDevelopmentBank(CDB)andtheExport-ImportBankofChina(CHEXIM)–peakedin2016andhassincebeenindecline(Rayetal.2021b).DatabasestrackingChina’soverseasfinanceidentifiedthatChinamadenonewdevelopmentfinancecommitmentstoLatinAmerica(Albrightetal.2022)ortheglobalenergysector(“China’sGlobalEnergyFinanceDatabase”2022)in2021.

OfficialdevelopmentfinanceisonlyonechannelthroughwhichChinamovescapitaloverseas.Aid,foreigndirectinvestment,contractedservicesandcommercialbanklendingarealsoimportantave-nuesofoverseaseconomicengagementforChina.Tosomeextent,therearepublicandcommercialsourcesofdataonregional,sectoralandglobalflowsofthesetypesoffinanceandengagementpro-ducedbyresearchgroupsattheAiddataResearchandEvaluationUnitattheCollegeofWilliamandMary,theAmericanEnterpriseInstitute,theChinaAfricaResearchInitiativeattheJohnsHopkinsUniversitySchoolofAdvancedInternationalStudiesandtheBostonUniversityGlobalDevelopmentPolicyCenter.ResearchfromthesegroupshascontributedtobuildingapictureofChina’soverseasfinancialactivityandsetmethodologicalprecedentsindatatracking.However,mostpriortrackingandresearchconcentratesonChina’sloanandgrant-basedfinancing.

TrackingChina’sequityinvestmentsisnecessarytobuildacompletepictureofthescopeandmag-nitudeoffinancialactivitiescomprisingChina’soutboundeconomicactivity.OneemergingandunderstudiedareaofChina’soverseasdevelopmentactivityarespecialinvestmentfunds,whichwetermoverseasdevelopmentinvestmentfunds(ODIFs)basedontheirdevelopment-orientedman-datesandfocusontheprovisionofequity.ThisworkingpapertracksanddevelopsatypologyforChina’sODIFs,distinguishingthemfrompriorconceptualizationsofChina’soverseasequityinvest-mentsandfunds.

Projectsininfrastructureandproductioncapacity,theprimarydestinationofBRIinvestments(He2020),arefinancedthroughacombinationofequity,debtandgrants.Li(2020)arguesthatequityinvestmentsprovideanalternativeavenueforeconomicparticipationinBRIinfrastructureprojects,fillingthegapbetweenofficialgrantsandloans.Sheng(2021)proposessovereignwealthfundsasanoptiontoimprovetheefficiencyofChina’sBRIinvestments.Similarly,ODIFspermitabroaderrangeandflexibilityofprojectfinancestructuresbyofferingequityinvestment.ClarkandMonk

(2015)exploretheroleofsovereigndevelopmentfundsinmobilizingalternativeprivateinvestment

forstrategicdevelopmentareas.Yet,thereisaneedtobetterunderstandODIFs,whicharenot

exclusivelysovereign-backedandincorporateforeignpartners.Br?utigam(2015)pointsoutthat

sovereignwealthfundsarefundeddirectlyfromcentralbankreserves,excludingmostODIFsfrom

thisdesignation.ODIFscreateaforumfortraditionalBRIfinancialinstitutions–policy(CDBand

CHEXIM)andcommercial(BankofChinaandIndustrialandCommercialBankofChina)banks–to

partnerwithnewdevelopmentinvestorssuchasprivateenterprisesandforeignexchange(FOREX)

managers.WenBinandWilkes(2011)touchonthischaracteristicofODIFsintheiranalysisofthe

China-AfricaDevelopment(CAD)Fundasacredit-supportmechanismaimedatencouraging

investmentfromprivatecompaniesintheBRI.

Hu(2019)notesthatjointfundsbetweenChineseandforeignactorscansupportBRIinvestment

inforeignmarketsbeyondtheirfinancialcapacitiesthroughsecurityandlegalprotectionandasa

vehicleforpublicsupport.Asmechanismsforcooperatingwithlocalpartners,ODIFscanharness

specializedcapacitiesforoperatinginlocalmarkets,grantingthemanadvantageoverotherfinancial

institutionsinrealizinginvestmentreturns(ClarkandMonk2015).ODIFscanalsoprovidebanks

theopportunitytomakeoff-balancesheetequityinvestments.Asindependententities,investment

fundstakeonandreallocateinvestmentrisk.Lossesfrominvestmentsmadethroughthesefunds

willnotimpactthebank’sgearingratio,butinsteadtheequityarrangementofthefund(Kaplan

2021).Indeed,certainfundsaresolelycapitalizedbyapolicybank,suchastheCADFund,orabank

actsasthefund’scornerstoneinvestor,suchastheChina-ASEANInvestmentCooperationFund.

ODIFs’sponsorshiparrangementspresentpolicybankswiththeopportunitytoshareinvestment

riskamongadiversityofshareholders.

OurtaxonomybuildsoffcontributionstothedevelopmentofclassificationsystemsforChina’sover-

seasactivityinXuetal.(2019;2020).Li’s(2020)comprehensiveexplorationoftheCADFund’s

governanceandfunctionalsolaysimportantgroundworkforunderstandingtheoverlapanddiver-

gencebetweenODIFsandfinancialinstitutions.RegionallyfocusedstudiesofBRI-supportingfinan-

cialinstitutionswereinformativeforcontextualizingODIFsinbroaderbilateralandregionaldiplo-

maticinitiatives.Pardo(2018),YiandZuokui(2019)andBarisitz(2020)examineODIFstargeting

CentralandEasternEuropeanmarkets.MeyersandRay(2022),andLiandZhu(2019)explore

ODIFstargetingLatinAmericaandCaribbeanmarkets.Li(2020),Babonesetal.(2020)andWen-

BinandWilkes(2011)reportonODIFstargetingAfricanmarkets.Whilethesestudieshavepro-

ducedin-depthanalysesofindividualorregionalgroupsoffunds,ourstudypresentsthefirstglobal

viewofChina’sODIFs.

DefiningODIFs

WedefineChina’sODIFsaspoolsofcapital,oftenestablishedbymultiplepublicand/orprivate

shareholders,whichprimarilyprovideequityfinancingtocertainregionsandsectorsoverseas.

FinancingfromODIFsisoftendistributedwithinthecontextofcertaininitiativesandgoals,such

astheBeltandRoadInitiative(BRI)andgreeningtheBRI.ODIFsdifferfromtypicalequityfunds

becausetheirintendedreturnsoninvestmentexpandbeyondmakingprofits.Generally,ODIFshave

development-basedmandates,whichmeanstheydirecttheirfinancingtowardinvestmentprojects

withexpecteddevelopmentalsocioeconomicimpactsandananticipatedopportunitytostrengthen

economicrelationshipsbetweenChinaandhostcountries.WeclassifyODIFsintothreefundtypes:

sovereigndevelopmentfunds(SDFs),privateequityfunds(PEFs)andjointinvestmentfunds(JIFs),

discussedfurtherbelow.Thesefundsextendequityand/ordebtfinancingforthepurposeofequity

tooverseasdevelopmentprojectsinthegeneralinfrastructure,energyandresources,technology,

financialandsocialsector,agriculture,manufacturingandcapacitybuildingsectors.

/gdp3

ODIFsarediverseintheirtypesandscopes.TheyincludefundssolelycreatedorownedbyChinesegovernmententities,fundswithChinesecommercialshareholdersandfundswithamixtureofChi-nesepublicandnon-publicshareholders.Somefundswithregionalinvestmentscopeshavehostcountryorregionalactorshareholders.Theportfoliosofthesefundscanextendbeyondcommercialinvestmentstoincludehostcountrypublicinvestmentsaswell.ThediversityofChina’sODIFsandtheiruseofequityinstrumentssetsthemapartasfinancingtoolsworthexploringindetail.However,ODIFsshouldbecontextualizedinthebroaderlandscapeofpriorresearchonChina’soutboundfinancing.

FollowingthisdefinitionofODIFs,ourresearchsystematicallycollectsandanalyzesfund-leveldatatounderstandtrendsinODIFcapitalizationavailablebyregionandsectorandassessesthemajorshareholdersofChina’sODIFs.Inaddition,weclassifyODIFsintothreefundtypestofurtherdevelopourdefinitionsandunderstandingofODIFs.WepresentcasestudiesofeachtypeofODIFtodemon-stratesimilaritiesandvariationsintypesofshareholders,thefunds’structuresandtheparticipationofforeignsponsorsinthefunds.WethensituatetheemergenceofODIFsaspartofabroadertrendinChina’sdiversifyingoverseasactivitiesandassesshowemergingpolicyframeworksmaycontrib-utetothegrowthofODIFs.WealsodiscusslimitationsinstudymethodologyandassesshowfutureresearchcoulddeepenanalysisofODIFs.

COMPARINGODIFSANDDFIS

Inthissection,wetakeaninstitutionalapproachtoassessthesimilaritiesanddifferencesbetweendevelopmentfinanceinstitutions(DFIs)andODIFs.PreviousliteraturehasclassifiedcertainfundsfromourdatasetamongChina’sDFIs(Xuetal.2019;2020).However,theresultsofouranaly-sisrepudiatethisclassification.ODIFsconductdistinctiveeconomicactivity,possessingdifferentadvantagesandpoliticalimplicationsthanDFIs.

DFIsarefrequentlydefinedinexistingliteratureaslegallyindependent,government-supportedfinancialinstitutionsthatpursuepublicpolicyobjectives(Xuetal.2019;FIC2022).DFIsusevari-ousfinancinginstrumentsincludingdebt,equity,grants,insurance,guaranteesandinsomecases,capacitybuilding,toaddressdevelopmentalchallenges,ofteninforeigncountries.WedefineODIFsaspoolsofcapital,oftenestablishedbymultiplepublicand/orprivateshareholders,forthepurposeofprimarilyextendingequityfinancingforoverseasdevelopmentprojects.ContrarytothenumberoftoolsDFIshaveattheirdisposal,ODIFsemployamoreconsolidatedsetoffinancialinstruments,byprimarilywieldingequityfinance,tosupportdevelopmentprojects.

AsdemonstratedintheCaseStudyAnalysissection,likeDFIs,ODIFshavedevelopmentmandates,whichmeansdevelopmentimpactisconsiderablyinherenttopolicydirectivesandcapitalallocationpriorities.ThismandatedirectsODIFandDFIfinancingtooverseasdevelopmentprojects,orientingandexposingthemtohostcountrydemandforfinancing.SinceDFIsandODIFsusemarketmeanstoachievedevelopment-basedobjectives,theyarenotlikecommercialbanksorfundsbecausetheyarenotsolelyprofit-seekingfinancingmechanisms.

However,ODIFsandDFIsdivergeinhowtheydistributetheirfinancingandmakeprofits.Theloan-makingarmofDFIslendstoprojectsandseekstoreceivearepaymentwithinterestovermanyyears,whileaDFI’sequityinvestmentarmcanprovidedirectequityinvestmentsorequityinvest-mentsinfunds(Michelitsch

et.al

.2017).Bycontrast,butinsomewayssimilartoDFIs’equityinvest-mentstructuring,sponsors’investmentsthroughmostODIFspayfortemporaryorpartialowner-shipofaprojectwiththegoalofmakingprofitsuponexitingtheirinvestment–generallyatahigherrateofreturnthanloaninterestrates.InvestmentreturnsarenotusedtoreplenishanODIF’spoolofpaid-incapital,astheywouldforaDFI,butinsteadarepaidoutdirectlytoshareholders.

4/gdp

Thispaid-instructure,detailedintheResultssection,isalsoareflectionofthetypicalmulti-share-

holderstructureofODIFs.AsreflectedinTable2,multipleshareholdersoftenjointogethertoform

anODIF,resemblingthestructureofprivateequityfunds.Asaresult,anODIFentityisoftenman-

agedasadistinctinstitution,eveninthecaseoffundswhereaDFIactsasthecornerstoneshare-

holder.Duetothismulti-shareholderapproach,someODIFsarejointfundsbetweenDFIsandother

regionalfinancinginstitutions.TheseareclassifiedasJIFODIFsinTable1oftheResultssection.In

theMethodssection,wementionregionalDFIsthathousejointloanfundswithChinesefinancing

institutions,suchastheAfricanDevelopmentBankandPeople’sBankofChina’sjointAfricaGrow-

ingTogetherFund.However,accordingtoourdefinitionofODIFs,thesejointloanfundsarenot

ODIFs,astheydonotprovideequityinvestmentsordebtforequityfinancing.

TaxonomiesatthelevelofDFIfailtocapturethesedifferencesandoftenmisconstrueoverlapping

featuresbetweenDFIsandODIFs.ByanalyzingtheresultsobservedfromassessingODIFs,weiden-

tifycharacteristicsofODIFsthatdistinguishthemfromDFIs.Indoingso,wepinpointODIFsasa

distinctinstrumentinChina’stoolkitofoutboundinvestmentactivity.

METHODS

OurresearchaimstocomposethemostcomprehensivedatasetofChina’sODIFspossiblefrom

publiclyavailableresourcesandtodrawonthesefindingstodevelopasystemoffundclassification.

Dataonthe21ODIFsinourdatasetwasgatheredfromthewebsitesoffundsandfundshareholders,

andofficialstatementsofChinesegovernmentofficialsavailableonthewebsitesoftheMinistryof

ForeignAffairs,MinistryofCommerceandChineseEmbassies.Tenfundsinourdatasethadded-

icatedwebsites,sevenhadwebpagesfeaturedonshareholders’websitesandfourhadnoofficial

onlinepresence.Informationonthefourfundswithoutanofficialonlinepresencewasvalidatedby

state-affiliatedpressorwebarchives.Whenavailable,informationwascross-referencedbetween

primarysourcesproducedbyChineseandforeignfundshareholders.Reportingbyfundsorfund

shareholdersmightinvokeariskofbias.Tomitigatethis,presssourcesandacademicliteraturein

EnglishandChinesewereconsultedtosupplementandcross-checkprimary-sourcedata.

Ourresearchdrewontheliteratureoffinancialinstrumentclassificationstodetermineasetof

variablestoguidedatacollectionandanalysis.Wecollectedinformationonthefollowingfund-

levelvariables:capitalizationamountandtarget,shareholders,yearofestablishmentandlifespan,

regionalandsectoralfocusofinvestments,financialinstrumentsused(equity/debt)andpurpose

andpositioning.Ourcompletedatasetoffund-levelvariablescanbefoundintheAppendix.Infor-

mationonfunddisbursementsproveddifficulttofindfrompubliclyavailablesources.Fundreport-

ingonmanagementoperations,investmentactivitiesandsocialandenvironmentalsafeguardsis

sparse.Thiswasunsurprising,aslowtransparencyischaracteristicofthesubjectareaofresearch

onChineseeconomicactivity(Rayetal.2021a).

ODIFsgenerallyreportinformationoninvestmentsonlyforfeaturedprojects,withlimitedinforma-

tionontotaldisbursements.Thus,ourmainquantitativemetricforassessingthescaleofODIFs’

financeistheircapitalizationamountatthetimeofdatacollection(2022)ratherthandisburse-

ments.“Yearestablished”recordstheyearofthefund’sinitiationanddoesnotnecessarilycorre-

spondtothetimethefundwascapitalizedorbeganactivity.Atthetimeofestablishment,itwas

commonforfundstoannounceagoalcapitalizationamount.Somefundsbeganactivelyinvest-

ingbeforereachingtheirgoalcapitalization,othersachievedgoalcapitalizationbeforebeginning

operationsorcontinuedtoaccruemorefundingandstillothersneverrecordedreachingtheirgoal

capitalization.Ourdatasetprovidesthefirstcompletevaluationofthesefunds’availablecapitaland

recordofthetimetheywereestablished.Theresultingtrendscanbeusedtoassessthecontribution

ofODIFstoChina’stotalavailableoutboundcapitalandthepopularityofequityinvestmentasan

/gdp5

economicandpoliticalactivityovertime.Dataongoalcapitalizationandlifespanofthefundswasincomplete,andthereforenotincludedintheanalysis.InformationthatwasavailableisincludedintheAppendix.

Weclassifiedsectorssupportedbythefundsintotencategories:generalinfrastructure,energyandresources,manufacturing,technology,thefinancialsector,greendevelopment,agriculture,thesocialsector,capacitybuildingandconsumergoodsandservices.Dataontargetinvestmentsectorandregion,andfinancialinstrumentsemployedbythefundswasgatheredfrominformationpro-videdbyfundsandfundshareholders,ratherthanassessedfrominvestmentactivity.Informationontargetedsectorsallowsforananalysisofaggregateinvestmentbehaviorandavailablecapitalforequityinvestinginindustriesofinterest,suchasgreenindustry.Ouridentificationofshareholdersincludesallsponsorswhoparticipatedinfundcapitalization.Insomecases,shareholdersmayhaveexitedandenteredfundsatdifferentpointsinthefund’slifespan.Shareholderinformationallowsforcriticalanalysisoffundownershipandidentity.

Wealsoidentifiedandincludedtwosub-fundsinouranalysis.TheCAFIndonesiaSub-FundandTheChina-KazakhstanProductionCapacityCooperationFundareclassifiedassub-fundsbecausetheircapitalizationisentirelysuppliedbyotherODIFs.ThereareothercasesinwhichanODIFinitiatedtheformationofanotherfundtogetherwithothersponsors.Forexample,theRussia-ChinaInvest-mentFund(RCIF)isasponsoroftheChina-RussiaRegionalRMBFundandRussia-ChinaVentureFund(RCVF).Inbothcases,thesefundswerecreatedtotargetamorespecificinvestmentfocus.TheRCIF’scontributionstothepaid-incapitalwerefundedbyraisingadditionalroundsoffinancing,ratherthanusingtheRCIF’sownpaid-incapital.

Fundssolelyestablishedtoallocatedebtfinancingorgrantswereexcludedfromouranalysisbecausetheydonotextendanyequityfinancing.Such“otherfunds”includethedebt-financingAfricaGrowingTogetherFund(AGTF)attheAfricanDevelopmentBankandtheChinaCo-financingFundforLatinAmericaandtheCaribbeanattheInter-AmericanDevelopmentBank(IDB),eachwithacapitalizationof$2billion.Thegrant-makingSouth-SouthClimateCooperationFundandSouth-SouthCooperationAssistanceFundalsofallintothisgroup.Tobeconsideredinourdataset,fundsmusthaveanexternaldevelopmentfocus.FundsthatonlytargettheChinesemarket,suchastheChina-QatarJointInvestmentFund,donotmeetthiscriterionforinclusion.Althoughthesefundsarenotwithinthescopeofthispaper,theycouldalsoplayasignificantroleindiversifyingthesourcesofChinesedevelopment-relatedfinanceinthecomingyears.

RESULTS

FundCapitalizationTrends

Thefundsinourdatasetrepresentatotalof$155billionincapitalization,excludingsub-fundscap-italizedbyfundsinthedatasetinordertoavoiddoublecounting.Basedontheyearinwhichafundwasestablished,wetrackedtheamountofcapitalizationovertime(Figure1).Thefundsinourdatasetwerecapitalizedbetween2007-2019.2014hadthegreatestadditionalcapitalization,while2008,2009and2011hadnoadditionalcapitalization.

Forcomparison,theChina’sOverseasDevelopmentFinanceDatabasemaintainedbytheBostonUniversityGlobalDevelopmentPolicyCenteridentified$462billioninloancommitmentsfromChi-na’spolicybanksbetween2008-2019,andtheWorldBankcommitted$467billionoverthesameperiod(Rayetal.2021a),indicatingthatwhilecapitalavailableviaODIFsdoesnotexceeddevelop-mentfinance,itrepresentsasizeablepoolofcapital.Itisimportanttonotethatcapitalizationdoesnotmeanfundsweredisbursedinthesameyear.

6/gdp

CumulativeCapitalization(BillionUSD)

140

120

100

80

60

40

20

Figure1:AdditionsbyYear(inRed)toCumulativeCapitalization(inBlue)ofChina’sOverseas

DevelopmentInvestmentFunds

180

160

0

2007200820092010201120122013201420152016201720182019Total

Source:Authors’visualization.

Note:Amountsdonotincludesub-funds.Thegraphdepictscapitalizationaccordingtotheyearthefundwasestablished,

andnotnecessarilytheyearcapitalwasavailable.

Aftergatheringpublicinformationaboutthedescriptionsofthefund,fundownership,financing

instrumentsandfundpurpose,weclassifiedODIFsintothreetypes:SDF,PEFandJIF.Sincethere

arevariousexistingcharacterizationsofChina’sODIFsduetocommonlyusedfinancialstructures

andinstruments,ourclassificationsservetodistinguishODIFsbasedoncharacteristicsweobserve.

ODIFsareclassifiedbasedonthecriteriaofeachfundtype,asdescribedinTable1.Criteriawere

preparedbasedonpublicdescriptionsofthefundsfoundonfundwebsitesorcharacteristicsofthe

fundthatareinlinewithourdefinitionsbasedonexistingliterature.

WeusedClarkandMonk’s(2015)definitionofSDFstoshapeourclassificationofChina’sODIFs

intheSDFcategory.ClarkandMonkdefineSDFsas“publiclysponsoredcommercialinvestment

fundsthatcombinefinancialperformanceobjectiveswithdevelopmentobjectives.”Thisdefinition

isinlinewithourfindings,whereweobservedthatChina’sSDFODIFsarepubliclyownedinvest-

mentfundswithcommercialanddevelopmentobjectives.SDFsaredistinguishablefromsovereign

wealthfunds(SWFs)basedontheirdevelopmentmandateandcapitalsourcing.SWFsare“spe-

cial-purposeinvestmentfundsorarrangementsthatareownedbythegeneralgovernment”and

they“manageoradministerassetstoachievefinancialobjectives”(ClarkandMonk2015).SWFs

sourcecapitaldirectlyfromcentralbankFOREXreservesurpluseswhileSDFssourceinitialcapital

fromtheirshareholders.ThisdisqualifiesallofChina’sSWFsfrombeingaddedtoourdatasetof

ODIFs.Forexample,China’sInvestmentCorporation(CIC)wouldnotbeconsideredanSDFODIF

becauseitisaChineseSWFthatmanagesChina’sFOREXreserves.Instead,CICisconsidereda

shareholderofseveralSDFfunds.

OurdefinitionofPEFsalignswithgeneralliteratureonprivateequityfunds,especiallylong-term

privateequity.Privateequityfundspoolcapitalforthepurposeoflong-terminvestinginprojects

withinaten-yearfundcycleandbeyond(LeeandSynetos2018).Weusethisdefinitionandaddthe

developmentmandateaspectofChina’sPEFODIFs.Lastly,weclassifyJIFsbasedonattributeswe

recognizedinagroupofODIFs.SuchODIFswithChineseandnon-Chineseshareholdersareasetof

fundsthatseektobuildeconomiccooperationbetweenChinaandthehostcountry.

/gdp7

WeidentifiedfiveSDFs($75.5billionincapitalization),nineJIFs($34.5billion)andsevenPEFs($45.3billion).AlthoughtherewerefewerSDFs,theirlargertotalcapitalizationisdrivenbytheclassificationoftheSilkRoadFundasanSDF,asitisthelargestfundbycapitalizationinourdatasetat$54.5billion.JIFsarethemostfrequenttypeofODIFsinourdataset.TheytargetinvestmentsinAsia,Europe/CentralAsiaandLatinAmericawiththeprimarypurposeofstrengtheningeconomiccooperationbetweentheregionorcountryandChina.AhighnumberofJIFfundsmaybereflectiveofChineseinvestorspartnering