China Investment Corporation

China	US$ 409.6 Billion
Established: 2007 Transparency Rating: 7	Origin: Non-Commodity Firm Investment Style: Portfolio Entity Structure: Corporate

Summary
The China Investment Corporation (CIC) is responsible for managing part of China’s foreign exchange reserves.

Background
As of October 2011, the People’s Republic of China currently has around US$3.2 trillion in foreign reserves. The need to seek greater returns, increase diversification, and hold less in US currency helped prompt the creation of the China Investment Corporation. Established in September 29, 2007, the CIC has made substantial investments in a variety of asset classes. The previous vehicle, state-owned Central Huijin Investment Limited was merged into the new company as a wholly-owned subsidiary company.

Some of the funds are also applied locally to some State Owned Enterprises(SOE) and State-Owned Banks.

The capital of the China Investment Corporation is funded through issuing special treasury bonds. With the approval of the Standing Committee of the 10th National People’s Congress, the Ministry of Finance issued Y1.55 trillion special treasury bonds and used raised funds to purchase foreign reserves (US$200 billion) to be injected into CIC as its registered equity capital. China Investment Corporation has to pay dividends to the State Council as its owner, to cover the cost of these special treasury bonds.

Strategy & Objectives
The purpose of the China Investment Corporation is to maximize return at acceptable risk tolerance and improve the corporate governance of key state-owned financial institutions. CIC tends to use external money managers and participate in indirect equity holdings through various investment funds. Some of the fund money is being used for helping out certain State Owned Enterprises(SOE).

They are active in pursuing global resources such as in places like Africa, Asia, North America, and Australia.

Some of their asset allocation consists of:
Equities – Developed Markets
Equities – Emerging Markets
Hedge Funds
Sovereign Debt
Corporate Debt
Real Estate (Funds or Direct Investments)
Private Equity
Commodities
Direct & Special Investments

Governance
The China Investment Corporation has a Board of Directors which has decision-making authority.

China Investment Corporation – Global Investment Portfolio Distribution 06/08/2010

Asset Class	Percentage of Fund
Listed Equities	25.0%
Special Situations	18.9%
Fixed Income	18.0%
Hedge Funds	9.4%
Inflation Protected	8.8%
Cash	8.6%
Private Equity	7.0%
Other Assets	4.3%

Sovereign Wealth Enterprises:

1. Central Huijin Investment Limited

The State Council wanted to reform and restructure China’s major commercial banks, so the Central Huijin Investment Company was created. Established in December 2003, its main purpose was to recapitalize and stabilize China’s major state-owned commercial banks. In September 2007, the Ministry of Finance issued special treasury bonds and acquired all the shares of Central Huijin from the People’s Bank of China. The acquired shares were injected into China Investment Corporation as part of its initial capital contribution for around US$ 67 billion. However, Central Huijin’s principal shareholder rights are exercised by the State Council. It is authorized by the State Council to exercise rights and obligations as an investor in major state-owned financial enterprises on behalf of the Chinese Government. Central Huijin has stakes in a number of financial enterprises including five large commercial banks, two securities companies, one financial holding company, one investment company and one reinsurance company.

This sovereign wealth enterprise makes equity investments in domestic financial institutions. It also owns the China Jianyin Investment Limited which was the original purchaser of the $3 billion stake in the Blackstone Group. It still owns a very large stake in Bank of China Limited.

Source: Central Huijin website

china jianyin China Investment Corporation
A. China Jianyin Investment Securities Co., Ltd

China Jianyin Investment Securities Co., Ltd is a securities company subsidiary of Central Huijin Investment Co. It was established in Shenzhen on September 28, 2005 with registered capital of 50 billion yuan. It was formerly known as China Southern Securities Co., Ltd founded in 1992.

Others include:

Name	Information
Stable Investment Corporation	It is an arm of the China Investment Corporation that invests in short term instruments such as money market funds and convertibles.
Beijing Wonderful Investments Ltd.	Beijing Investments is an arm of the China Investment Corporation that holds interest in Blackstone LP.
Fullbloom Investment Corporation	SWE that holds Teck Resources Limited & a stake in JSC KazMunaiGas Exploration.
Country Forest Limited	SWE that loaned PT Bumi Resources Tbk funds of 1.9 billion U.S. dollars.
Chengdong Investment Corporation	Chengdong Investment Corporation is a wholly-owned subsidiary of China Investment Corporation.
Land Breeze II	Land Breeze II is a wholly-owned subsidiary of China Investment Corporation.
Best Investment Corporation	Best Investment Corporation is a wholly-owned subsidiary of China Investment Corporation which is invested in Morgan Stanley.
China Investment International (Hong Kong) Co.	Established in 2010, this is the Hong Kong sovereign wealth enterprise of the China Investment Corporation.
Terrific Investment Corp	SWE that holds position in AES Corp.