The CIC Funding Saga Continues

Ashby Monk

I’ve been chronicling the China Investment Corporation’s funding saga for well over a year now. So it is with sincere reluctance that I sit down to write another post on this topic (see older posts herehereherehereherehere and here). In fact, about six months ago, I felt this story had grown so complex and strange that I wrote a tongue-in-cheek “SWF funding soap opera” (…on what must have been a very slow work day for me…). In fact, entire academic papers have been written on the tournament among China’s SWFs for the country’s forex reserves.

Well, as it turns out, the soap / saga continues. Apparently, CIC has now invested all of its cash and cash equivalents and is awaiting the government’s decision as to whether it will ever get more funding. The latest word comes from (soon to retire) EVP Wang Jianxi, who reportedly has been lobbying the State Council for months to get the funding in place. Well, he hasn’t succeeded, which leaves the CIC’s deal teams sitting on their hands.

My position in all this is clear: The CIC deserves to receive more money from the State Council. The fund has done everything asked of it, and it has done it darn well (especially considering it launched just before one of the worst financial crises in history). The returns have been solid. And the governance has improved dramatically (if we believe the annual report). In fact, I think it should have gotten a top up 12 months ago…

2 Responses to “The CIC Funding Saga Continues”

  1. 1 Prof. Bruce W Bean January 17, 2011 at 11:41 am

    Even in China, or, perhaps, especially in China, Politics is everything!!

  2. 2 Rien Huizer January 18, 2011 at 5:55 am

    Right, and maybe CIC has lost its usefulness, or its friends lost power/money, or.. Who knows. Why CIC exists and what good it does within the PRC structure is still unclear. Mr Wang comes from the state bank clean-up side that came to CIC via Central Huijin. MOst likely, that institution’s bank stakes need topping up as those banks’ Basle requirements grow by China’s lending explosion and rising standards. If CIC is really fully invested, there may be a bit of a problem..

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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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