SWF Radar CIC

The China Economic Quarterly, in an article in the Financial Times, discusses research by Brad Setser on China’s stockpile of foreign assets, writing that, “[It] is actually much larger and growing far faster than official foreign exchange reserve figures would suggest - a situation that demands a decisive shift in policy both to keep the country’s finances on track and to dampen international criticism of Beijing’s growing financial muscle.”

Brad Setser (aka “the go-to guy in the blogosphere when it comes to international capital flows”) writes that, “[The China Investment Corporation] almost certainly has outperformed other sovereign funds this year.”

He then describes its winning strategy.

Thomson Reuters reports that, “The chairman [Lou Jiwei] of China’s sovereign wealth fund [China Investment Corp. (CIC)] has defended its operations, saying its investment in U.S. private equity firm Blackstone will pay off in the long run, and noted it holds over 90 percent of its assets in cash just as global equity markets are plummeting.”

China Knowledge reports that, “Central Huijin Investment Co, an investment arm of China’s sovereign wealth fund China Investment Corp (CIC), is said to be in talks with China’s insurance protection fund to buy 38.815% stake in New China Life Insurance Co from the latter, sources reported.”

RIA Novosti writes that, “China is a true ‘island of stability’ amid the raging financial crisis. Given its huge international reserves, assessed at $1.9 trillion, it can maintain its own stability, but it can also help developed countries overcome the crisis.”

Euromoney writes (subscription required) that, “Beijing's best banks are snapping up emerging market lenders left, right and centre, and have long coveted access to developed markets in Europe and North America. So why are they nowhere to be seen?”

The Oxford International Review’s SWF blog has published an interview with Yu-Wei Hu, consultant on Chinese pensions at the OECD.

Among other things, he says that, “[The m]ain topics in which the OECD is interested and has worked on include a) SWFs and recipient country investment policy; b) SWFs and public pension reserve funds; c) SWFs and state-owned enterprises.”

Thomson Reuters reports that, “China’s cabinet approved a plan on Tuesday for the restructuring of Agricultural Bank of China, the last of the major state lenders yet to receive a capital injection from the government. … Analysts expect AgBank’s bailout could cost $100 billion or more, with $20-40 billion of that in the form of an infusion of capital from China Investment Corp, the country’s sovereign wealth fund.”

The Wall Street Journal writes that, “Mideast and Chinese money is back. After largely staying on the sidelines during the past few tumultuous weeks of the global financial crisis, the cash-rich governments of the Persian Gulf and China appear to be getting back in the game.”

It adds that, “Meanwhile, the Chinese government intends to raise its ownership stake in Blackstone Group LP, according to people familiar with the situation. In a securities filing Thursday, Blackstone said it reached an agreement with China Investment Corp. that will allow the country’s year-old $200 billion investment fund to increase its holding in the New York-based private-equity firm to 12.5% from 9.9%. CIC is expected to purchase those shares on the open market, according to those people.”

ChinaStakes.com writes that, “It appears that the China Investment Corporation (CIC) may not lose any of its $5.4 billion investment in the Reserve Primary Fund (RPF), a US money market fund that last month suspended withdrawals. CIC had already ordered redemption before the suspension, and RPF has confirmed the return of CIC's investment with interest in a written verification. However, it is seen in China as yet another of CIC's investments in the US to have gone wrong and has again triggered criticism from the public and government officials.”