China Investment Corporation

China Investment Corporation (CIC) (Chinese: 中国投资有限责任公司; pinyin: zhōngguó tóuzī yǒuxiàn zérèn gōngsī) is a sovereign wealth fund responsible for managing part of the People's Republic of China's foreign exchange reserves. CIC was established in 2007 with approximately US$200 billion of assets under management. At the end of 2017, the CIC had over US$941 billion in assets under management.[1] It is China's largest largest sovereign wealth fund, reportedly managing an asset pool worth north of $800 billion.[3]

China Investment Corporation
TypeSovereign wealth fund
IndustryInvestment service
FoundedBeijing, China (2007)
Headquarters
Beijing
,
China
Key people
Ding Xuedong (Chairman and CEO)
Li Keping (Vice Chairman, President and CIO)
US$ 118.012  billion (2019)[1]
US$ 110.313  billion (2019)[1]
Total assets US$ 1045.715  billion (2019)[1]
Total equity US$ 946.934  billion (2019)[1]
Number of employees
689 (2019)[2]
SubsidiariesCentral Huijin Investment
Websitewww.china-inv.cn

History

As of 2007, the People's Republic of China has US$1.4 trillion in currency reserves,[4] while this had grown by 2013 to US$3.44 trillion.[5] The China Investment Corporation was established with the intent of utilizing these reserves for the benefit of the state, modeled according to Temasek Holdings of Singapore. The state-owned Central Huijin Investment Corporation was merged into the new company as a wholly owned subsidiary company.[4]

In May 2007 it was reported that CIC was to buy a $3 billion stake in the Blackstone Group.[6][7]

Special national debt bonds were issued to create the capital that the CIC needed. 1,550.35 billion yuan ($207.91 billion) was issued in this bond sale. The bond process was completed in December 2007. According to Lou Jiwei, the CIC needs to make a profit of 300 million Yuan every day just to pay the interest on the bonds and operation costs. The CIC paid its first interest on the bonds in February 2008 where it paid 12.9 billion yuan.[8]

In 2008, CIC joined the International Forum of Sovereign Wealth Funds[9] and signed up to the Santiago Principles on best practice in managing sovereign wealth funds.[10]

In 2010, CIC established a new subsidiary, CIC International (Hong Kong) Co in Hong Kong and appointed Lawrence Lau as its chairman.[11]

In 2011, CIC established its first foreign office in Toronto, choosing it over financial centres such as New York or London as its first office. Felix Chee will be the chief representative officer[12]

In September 2013, the fund acquire a 12.5% stake in Russian potash fertiliser company Uralkali for a rumoured $2 billion.[13]

In March 2014, the CIC acquired a $40 million stake in iKang Health Group.[14] In October 2015, the CIC provided capital in a deal between Carnival Corporation and China State Shipbuilding Corporation[15]

In October 2015, CSSC Carnival Cruise Shipping, a joint venture between the CIC, the China State Shipbuilding Corporation, and Carnival Corporation & plc, was founded, with operations expected to commence in 2019.[16][17]

In January 2017, acquired a 45% stake in the office skyscraper 1211 Avenue of the Americas, New York City, which valued the building at $2.3 billion.[18] On May 31, 2017, it was reported that China Investment Corp. was in talks to possibly purchase Logicor, a European warehouse company, from The Blackstone Group L.P. for $13.49 billion. Other companies were also bidding for Logicor.[19]

Governance

The management and board of the China Investment Corporation ultimately reports to the State Council of the People's Republic of China. The China Investment Corporation is seen as being "firmly entrenched" in the political establishment as the composition of its board of directors implies "considerable influence on the part of China’s Ministry of Finance."[20]

Board of Directors
  • Chairman & CEO - Ding Xuedong[21]
  • Vice Chairman, President & CIO - Li Keping
  • Executive Director, Executive Vice President & COO - Zhang Hongli
  • Non-Executive Director - Zhang Xiaoqiang
  • Non-Executive Director - Li Yong
  • Non-Executive Director - Fu Ziying
  • Non-Executive Director - Liu Shiyu
  • Non-Executive Director - Hu Xiaolian
  • Independent Director - Liu Zhongli
  • Independent Director - Wang Chunzheng
  • Employee Director - Li Xin

Board of Supervisors
  • Chairman of Board of Supervisors - Guo Haoda
  • Supervisor - Linghu An
  • Supervisor - Wang Huaqing
  • Supervisor - Fan Fuchun
  • Employee Supervisor - Cui Guangqing

Executive Committee
  • Chairman & CEO - Ding Xuedong
  • Vice Chairman, President & CIO - Li Keping
  • Chairman of Board of Supervisors - Guo Haoda
  • Executive Director, Executive Vice President & COO - Zhang Hongli
  • Executive Vice President - Peng Chun
  • Executive Vice President & Deputy COO - Fan Yifei- left CIC, announcement 12 March 2015[22]
  • Executive Vice President & Deputy CIO - Xie Ping
  • Executive Vice President & CRO - Wang Jianxi
  • Member of the Executive Committee - Liang Xiang

International Advisory Council
Asia
Africa
  • Omari Issa (Tanzania)
  • John H. Maree (South Africa)
Americas
Europe
Oceania
  • Peter Howard Costello (Australia)

Subsidiaries and minority interests
  • GDF Suez Exploration & Production International SA (30%; joint venture with Engie)[23][24]

See also

References
  1. China Investment Corporation Annual Report 2017
  2. http://www.china-inv.cn/wps/wcm/connect/62e332fc-8ddd-4eb9-b21c-b5cc3585e82a/CICAnnualReport2015.pdf?MOD=AJPERES&CACHEID=62e332fc-8ddd-4eb9-b21c-b5cc3585e82a
  3. "Ding Xuedong". Forbes. Retrieved October 26, 2020.
  4. China Business: "China's trillion-dollar kitty is ready", Asia Times, October 2, 2007.
  5. China Investment Corporation Profile. Sovereign Wealth Fund Institute. July 2, 2008. Retrieved August 27, 2013.
  6. "China to Buy $3 Billion Stake in Blackstone", The New York Times, MAY 20, 2007.
  7. "CIC leads race for unit of Blackstone", China Daily, June 1, 2017.
  8. Liming, Li (January 31, 2008). "Day of Reckoning for China's Sovereign Fund". Economic Observer.
  9. International Forum of Sovereign Wealth Funds. "IFSWF Our members". Archived from the original on September 27, 2016. Retrieved September 24, 2016.
  10. International Forum of Sovereign Wealth Funds. "IFSWF Santiago Principles". Retrieved September 27, 2016.
  11. "CIC launches Hong Kong subsidiary". Financial Times. October 19, 2010. Retrieved March 8, 2011.
  12. Canada (January 12, 2011). "China's sovereign wealth fund sets up shop in Toronto". Theglobeandmail.com. Retrieved March 8, 2011.
  13. Polina Devitt (September 24, 2013). "China gets 12.5 percent stake in Russia's Uralkali". PUBLISHER.
  14. "China's Sovereign Fund to Acquire $40 Million Stake in iKang". Sovereign Wealth Fund Institute. March 27, 2014. Retrieved July 15, 2014.
  15. "CIC Backs Carnival Cruise Joint Venture". Sovereign Wealth Fund Institute. October 22, 2015. Retrieved October 25, 2015.
  16. "China firms, Carnival Corp form JV to launch Chinese cruise line". Reuters. October 21, 2015. Retrieved November 8, 2018.
  17. "Costa Atlantica and Mediterranea Sold to New Chinese Brand". Cruise Industry News. November 6, 2018. Retrieved November 8, 2018.
  18. Katz, Rayna. "Chinese Buyer Snaps Up Chunk Of Midtown Office Bldg". globest.com.
  19. Grant, Peter (May 31, 2017). "China's CIC in Advanced Talks to Buy European Warehouse Company from Blackstone". The Wall Street Journal. New York City, New York. Retrieved June 1, 2017.
  20. A Review of Chinese-Language Literature on Sovereign Wealth Funds. - Oxford International Review. - (Adobe Acrobat *.PDF document)
  21. "China appoints Ding Xuedong as new CIC chairman -sources". June 28, 2013. Retrieved June 17, 2014.
  22. "China Investment Corporation".
  23. "2014 Management report and annual consolidated financial statements" (PDF). GDF Suez. February 26, 2015. Retrieved February 21, 2016.
  24. "ENGIE and China Investment Corporation (CIC) signed MOU". Engie. June 30, 2015. Retrieved February 21, 2016.
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