China will set up a bank with $1bn of capital to finance Chinese companies doing business in Georgia, according to a bilateral memorandum of understanding signed by the Georgian government and China Energy Company Limited (CEFC) in Beijing on May 15.
The memorandum was signed during a visit to Beijing by Georgian Economy Minister Dimitry Kumsishvili on the same day a free trade agreement (FTA) between the two countries entered into force.
Tbilisi and Beijing have moved fast to strengthen ties in recent years. Georgia is important to China because it is a key link in the New Silk Road, or One Belt, One Road, trade transport infrastructure scheme that the Asian country is seeking to promote, thanks to Georgia's access to the Black Sea. Meanwhile, China is important to Georgia's efforts to diversify its diplomatic and commercial ties, especially since its 2008 war with Russia undermined relations with Moscow.
"We asked the Chinese side to launch a new project under the One Belt, One Road initiative to support Chinese private companies that will be represented in Georgia," Kumsishvili said after meeting with Chinese Deputy Prime Minister Wang Yang, according to agenda.ge.
According to the agreement, CEFC will set up a free industrial zone at Poti Port in Georgia, becoming the second Chinese company to do so after Hualing Group. In 2015, Hualing Group was the largest foreign investor in Georgia, with investment capital of $600mn.
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