China Investment Corporation

China	US$ 482 Billion
Established: 2007 Transparency Rating: 7 View Sovereign Fund Transaction Data View Asset Allocation	Origin: Non-Commodity Firm Investment Style: Portfolio Entity Structure: Corporation Population Est.: 1.354 billion – 2012 Wealth Per Capita Est.: $356

Summary The China Investment Corporation (CIC) is responsible for managing part of China’s foreign exchange reserves. Background As of April 2013, the People’s Republic of China currently has around US$ 3.44 trillion in foreign reserves. The need to seek greater returns, increase diversification and hold less in U.S. 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, including direct investments. 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 Infrastructure Direct & Special Investments Governance The China Investment Corporation has a board of directors which has decision-making authority. Appointment and dismissal of the board of directors is under the power of China’s State Council.

Sovereign Wealth Enterprises

1. Central Huijin Investment Limited

Central Huijin Investment Ltd. (Central Huijin), a wholly owned subsidiary of CIC, holds controlling stakes in key state-owned financial institutions in China. It has also recapitalized selected domestic financial institutions. It is not involved in the operations of its investee companies, but it exercises its shareholder rights and fulfills its obligations to improve governance and preserve and enhance the value of state-owned financial assets.

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

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.

2. China Investment Corporation International Co., Ltd. (CIC International)
It was created on September 28, 2011 with a mandate to make and manage overseas investment

Others include:

Major Direct Foreign Investments (Public)
Not including Central Huijin Holdings data
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Major Direct Foreign Investments (Private)

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