China's Vice Minister of Finance Li Yong disclosed plans for the
China Investment Corporation (CIC) Wednesday, dispelling rumors
that China would try to buy out European and American companies in
large numbers.
Li said one third of CIC's capital would be used to purchase
Central Huijin, which now controls China's major state-owned
commercial banks; another third to replenish the capital of the
Agricultural Bank of China and China Development Bank; and the
remaining one third to invest in global financial markets.
Li told the International Finance Forum in Beijing Wednesday
that the CIC's investment in world financial markets would be
realized gradually and in a cautious way.
The CIC would not buy into overseas airlines, telecommunications
or oil companies.
"The CIC will make things more transparent, and learn best
practices from other sovereign wealth funds," said Li.
The CIC was launched in September to mitigate the risks in
China's huge foreign exchange reserve.
It has US$200 billion in registered capital allocated from
China's foreign exchange reserve. The Ministry of Finance issued
1.55 trillion yuan (US$208 billion) worth of special treasury bonds
to buy the forex reserve and inject the fund into the CIC.
By the end of September, China's forex reserve exceeded US$1.43
trillion, the highest in the world, up 45.1 percent year-on-year,
according to the People's Bank of China.
In May, the new company, still in preparation, made its first
investment in non-voting shares, valued at US$3 billion, in the US
private equity firm, the Blackstone Group.
A previous report said that a special department on private
equity investment had been set up within the CIC which would also
focus on equity investments and fixed-return investments.
(Xinhua News Agency November 8, 2007)
