Rules of games for sovereign wealth fund should be made by all
All international participants should have a say in the establishment of rules for sovereign wealth funds, said Foreign Minister Yang Jiechi when asked to comment on the code of conduct being established by the European Union and International Monetary Fund.
"It's in everyone's interest to make good use of sovereign funds in line with international financial rules. But of course, the rules of games should be set up by all involved," he said.
A dozen of countries have established sovereign wealth funds so far. The China Investment Corporate Ltd. (CIC) has been operating well according to commercial rules and was welcomed by many countries, he said.
CIC deputy general manager Wang Jianxi, a member of the 11th National Committee of the Chinese People's Political Consultative Conference, said early March that the company had contacted about 100 foreign fund managers for the highly-dispersed and little-related allocation of assets in an effort to achieve long-term investment returns.
Wang believed that long-term investment could ease the risks of stock market fluctuations and tap the potentials of the most valuable investment means.
The CIC was set up in September 2007 to increase the value of China's huge foreign exchange reserve, which stood at 1.53 trillion U.S. dollars at the end of last year.
Last December, the CIC agreed to take a 5-billion-U.S.-dollar stake in the U.S.-based Morgan Stanley. It also invested 3 billion U.S. dollars in the U.S. private equity firm Blackstone Group and put 100 million U.S. dollars into the initial public offering of the China Railway Group in Hong Kong.
Wang admitted that the CIC now faced much pressure in the wake of U.S. subprime mortgage crisis as the world capital market fluctuated. Meanwhile, the company had to cope with the debt cost of the 200-billion-U.S.-dollar initial capital of the CIC coming from the 15.5-trillion-yuan special treasury bond issued by the Ministry of Finance.
"The risk tolerance for the CIC is rather low, which brings higher requirement for the company operation," he said. "We should make more profits while limiting investment risks."
Wang noted that company management, risk management and talented people recruitment and management are the top issues for the CIC to profit.
"We will maintain transparency of company operations on the premise of safeguarding our commercial interests and deal with forex investment business independently by persisting in the principle of separating government functions from company management," he said.
