Each side putting in $50 million to lure more cash to the tech sector

China and Ireland have jointly invested in a $100 million fund to facilitate bilateral investment in the technology sector, as capital from Beijing continues to play a constructive role in Dublin's economic rebound.

The fund, which was launched with $50 million injections each from the China Investment Corp and Ireland's National Pension Reserve Fund, expects to attract up to $250 million, said Brendan Howlin, Irish minister of the department of public expenditure and reform.

Under the pact, the two countries' sovereign-wealth funds will finance the purchase of stakes in Irish technology companies. It is expected to be the first in a string of joint initiatives to take place between the two countries.

"The fund primarily targets companies operating in core technology sectors such as the Internet, software and clean technology, but it may also expand to agriculture, food and medical services with the advent of time," he told China Daily in Shanghai.

Co-managed by Chinese firm WestSummit Capital and Dublin outfit Atlantic Bridge Capital, the fund was established under the auspices of the Ireland Strategic Investment Fund, a national initiative to stimulate exports and boost foreign direct investment as the country emerges from its debt crisis.

The fund won't itself borrow to invest, but it would be leveraged in the sense that its cash will be used to attract more equity, said the minister. A 100 million euro ($139.5 million) fund could typically bring in extra investment exceeding $200 million.

Ireland was hit hard by a financial crisis that wrecked its banks and the property market. The country has formally exited a 2010 bailout with the European Union and the International Monetary Fund, and started to fund itself through the international bond markets.

According to Irish Minister of Finance Michael Noonan, the joint venture was part of a strategy to deepen economic links between the two countries, which he hoped would ultimately lead to Ireland tapping China to buy Irish sovereign bonds.

Since the outset of the financial crisis, Ireland has been seeking to diversify its sources of foreign investment away from Washington, which has long contributed the bulk of Dublin's foreign direct investment. This particular fund is designed to serve as a new model to garner investment from emerging partners such as China, Howlin said.

"China, as a less traditional partner of Ireland, is becoming the world's economic giant. We want to develop ever-closer economic ties with China," the minister said.

Ireland witnessed a net increase of 7,071 posts by foreign investors in 2013, the highest level of job creation in more than a decade, according to data from IDA Ireland, the Irish government agency responsible for attracting foreign direct investment.

While the Chinese presence is still at a relatively moderate level, Howlin said a number of high-profile companies, including Huawei Technologies Co Ltd, Tencent Holdings Ltd and Industrial and Commercial Bank of China Ltd, have either gained a foothold or embarked on business expansion.

The latest example is China's fifth-largest lender, Bank of Communications Co Ltd, whose financial leasing arm established its European headquarters in Dublin in February, from where it will manage 21 aircraft.

Likewise, Irish firms are also looking for investment opportunities in China as the market matures and regulatory transparency increases.

Since 2008, China has outpaced Australia to become the top market in the Asia-Pacific region for small and medium-sized Irish enterprises, said Alan Dixon, a Shanghai-based director of Enterprise Ireland, a government agency overseeing the development and growth of Irish enterprises across the world.

"There are more than 90 Irish companies with either investment or partnerships in China spanning from manufacturing, food to high-tech industries. We expect these areas to grow exponentially in the years to come," said Dixon.

He said the Chinese government has made big strides in relation to intellectual property protection, a long-term concern held by multinational corporations including those from Ireland. These have helped them determine their business strategies in China.

Total Chinese investment in Ireland amounted to $150 million by the end of 2012, compared with $148 million by the end of 2011, according to the Economic and Commercial Counselor's Office of the Chinese Embassy in Ireland. Bilateral trade stood at 8 billion euros.

The Irish government proposed a 10-year strategy in early 2014 to boost trade between Ireland and China and other Asian countries which could treble trade levels to 20 billion euros a year and create thousands of new jobs.