Ten years on, where to now for China’s sovereign wealth fund?
Launched to much fanfare, CIC has struggle to generate returns, retain top talent and shed suspicions about its role
Gao Xiqing remembers the buzz around China’s US$200 billion sovereign wealth fund when it launched in 2007.
In an internal memo, Gao, China Investment Corporation’s (CIC) first president, said he was warmly welcomed by the investment community when he flew to the United States.
There was also a long queue of foreign fund managers keen to meet CIC’s management at its headquarters in Beijing’s New Poly Plaza. As the rest of the world was propelled towards financial crisis, CIC rode into town with a fresh cash infusion.
A decade later and much of the shine has come off the fund, with critics accusing it of poor investment decisions, overseas players wary of its links to the Chinese government and talent leaving for opportunities elsewhere.
The initial idea behind the fund was to boost the returns of China’s then mounting foreign exchange reserves. Under the State Administration of Foreign Exchange’s stewardship, the reserves had been invested conservatively, with critics saying it put too much emphasis on low-yield US Treasuries.
To plot a new financial course, CIC embarked on a high-profile recruitment campaign in major global financial centres, luring many experienced Chinese specialists from Western investment banks and hiring dozens of non-Chinese professionals.
Expertise was crucial if the fund was to meet its huge financing obligations.
