SWF Radar

60 Minutes broadcast its interview with CIC’s Gao Xiqing this evening. The interview is now available online (and is embedded below).

In the interview Gao expresses irritation about the mistrust of SWFs in the US and some European countries, talks about the CIC’s policy of not taking control of companies, is honest about the CIC’s performance to date (60 Minutes: “The timing couldn’t be worse”; Gao: “You said it”), and denies that he has been under any political pressure “so far” regarding CIC’s investments.

Gao offers up the example of Taiwan as a potential flashpoint between the US and China and says that, were a serious dispute to arise, he “seriously doubt[s]” that he would be asked to pull the fund’s US investments.

Gao dismisses the suggestion that a firm like Blackstone could be ordered or otherwise compelled by CIC to invest in sensitive US companies by counter-suggesting that, “Maybe they love China so much that they just want to steal all your technology for us?”

As previously announced by CBS, Gao makes what the interviewer describes as an “unexpected commitment” during the interview to have the CIC adhere to the Norwegian model of SWF openness. Gao adds the proviso that the openness not stray beyond commercial viability. He also commits the CIC to the publication of an annual report.

Gao describes the attempt to impose rules on SWFs as insensitive, economically nonsensical, politically stupid and–given the opacity of private equity firms and hedge funds–unfair. He says that he doubts that the IMF has the power to enforce a code of conduct.

Peter Navarro is interviewed in the broadcast and presents the mistrustful view that I have elsewhere described as extreme.

Lawrence Summers is also interviewed in the broadcast. He suggests that the CIC still needs to be monitored but that, “[The fund’s] willingness to be interviewed and go on your show is probably not something they would do if they thought of themselves as having some nefarious purpose.”

Summers also spells out the case against US protectionism, as has been spelled out recently also by various current US Treasury officials in the context of SWF investment in the US.

Update (Apr 7): Here is FT Alphaville’s review of the broadcast.