CIC 'Eagerly Awaiting' Gov't Funding

(March 4, 2011) — The $300 billion China Investment Corp. is “eagerly awaiting” the government’s decision to inject fresh funds.

Wang Jianxi, CIC’s executive vice president, said that the fund has already used up its current pool of money, according to the Wall Street Journal. He noted that investment opportunities for the sovereign wealth fund were limited during the financial crisis. Furthermore, he indicated that investments in emerging markets are currently weak as a result of rising inflation, though those in the developed economies are faring much better.

Last month, the CIC reported in a rare public statement that the sovereign wealth fund posted “fairly good” returns in 2010 and has requested more capital after deploying all its current funds.

The sovereign wealth fund, which posted an 11.7% return on its overseas portfolio in 2009 after raising bets on commodities, said it would seek additional money from the government with hopes that the CIC will increase investments. The CIC received a $200 billion injection with central government funds in 2007 and it has awaited a second $200 billion injection for more than a year. At the end of 2009, the CIC reported total assets of $332 billion, realizing a 12.9% return that year compared with a 6.8% return in 2008.

Wang told Bloomberg that China should consider investing its foreign-exchange reserves in energy, resources, high technology and agriculture. Regarding the nation’s plan to diversify its investment portfolio that includes $906.8 billion in US Treasuries, Wang defended the logic behind dollar-denominated investments. “Actually, it is unnecessary to complain too much about risks in the dollar and US Treasurys,” Wang said, according to the WSJ. “Moving the investment into other sectors doesn’t necessarily reduce risks,” he said, noting the high liquidity of US Treasurys.