The maiden investment from China's 40-billion-U.S.-dollar Silk Road Fund, in a Pakistani hydropower project, has fired the starting gun for an institution expected to help strengthen international connections in the region.
The 1.65-billion-U.S. dollar project, to be built on the Jhelum River, northeastern Pakistan, is a flagship piece of the jigsaw that is the China-Pakistan Economic Corridor, a planned network of transport and energy projects linking southwest Pakistan's deepwater Gwadar Port with northwest China's Xinjiang Uygur Autonomous Region.
As countries in Asia, Europe and Africa try to understand the vision of the China-proposed Belt and Road Initiative, concrete action between China and Pakistan can provide useful references on joint construction of the Silk Road in the modern age, in at least three regards.
Firstly, the hydropower project, along with others under the economic corridor initiative, conforms to shared interests, a foremost principle of Belt and Road cooperation.
Pakistan has an energy bottleneck, with many regions struggling to supply residents and enterprises with enough power. The project, expected to be built by 2020, will provide 720 megawatts (MW) of electricity to Pakistan. The Fund, by allying with other investors including the China Three Gorges Corporation, will invest in further hydropower projects which will provide up to 3,350 MW of electricity to the South Asian nation.
The benefit is mutual. Chinese firms with technology and capital also get opportunities to expand their global presence, diversify investment portfolios, and prove their abilities through the cooperation.
Secondly, the Fund's market-oriented operation in the project is an exploration of business models for cross-border project investment, as well as a feasibility test of nation-to-nation cooperative projects under the Belt and Road scheme.
With capital injection from the Fund, China Three Gorges South Asia Investment Ltd., will develop the new hydropower facility. The Fund and the Export-Import Bank of China will also seek to provide extra loans to finance the project.
Success in the Fund's market operations could become an exemplary case and attract more investors to other Belt and Road projects.
Established in November, the Fund aims to support infrastructure and resources projects that improve international connections in the context of the Belt and Road. It seeks medium and long-term investment returns.
Thirdly and perhaps most importantly, China-Pakistan cooperation in the Belt and Road creates more opportunities for joint work in areas such as trade, security, and cultural exchange, which ultimately benefits all participating countries and their peoples.
Amid a sluggish global economic recovery, the dynamism emanating from Belt and Road cooperation will provide much-needed momentum for growth.
The Silk Road Fund, on its part, has just started the running in pursuits of common prosperity.
