CIC outlines its commercial charter

2008-5-10

CHINA Investment Corp is pursuing long-term benefits and its investments won't hurt other countries' economic development, said Lou Jiwei, chairman of the state foreign-exchange investment agency, yesterday.

The company wouldn't be lured by short-term benefits and it would gradually increase the transparency when benefits can be secured, Lou said during the Lujiazui Forum in Shanghai.

China set up CIC last September to increase the return of China's huge foreign exchange reserves, which stood at US$1.53 trillion at the end of last year. CIC last year bought a US$3 billion stake in private-equity firm Blackstone Group LP and a US$5 billion stake in Morgan Stanley.

Sovereign-wealth funds (SWFs) are coming under the global spotlight as they invest a growing number of foreign reserves in international industry giants from financial institutions to miners.

The Government of Singapore Investment Corp and the Abu Dhabi Investment Authority this year bought billions of US dollars in stakes in several behemoth financial institutions such as Citigroup Inc and UBS AG.

Some critics have expressed concerns that the mounting influence of SWFs may threaten independent corporate management. The recent global credit crisis also stoked jitters over potential heavy losses in SWFs.

Lou said that his agency pursues commercial benefits and is not interfered with by the government. He called for a fair environment for SWFs and hoped countries treated investors equally.

Lou revealed that he recently scrapped a plan to invest in an overseas company due to strict review procedures required by regulators in that country.

"We want a level playing ground," he said.

Lou noted that the recent global financial turmoil had provided chances for CIC to buy into financial institutions and that the company had already purchased stocks in companies in other sectors.

He admitted the risk controls would be challenging under the current global economic scenario but said he was optimistic about long-term investment in companies such as Blackstone.

"CIC cares about corporate social responsibility when pursuing benefits, so its investments won't harm other countries' development," Lou said.