China May Create Another $300 Billion Sovereign Investment Entity

China has $3.2 trillion in foreign exchange reserves. Over the past decade, China has been a key investor in U.S. government debt; however, combined with factors such as low yields and quantitative easing, China is hedging itself up the asset class ladder further into equities. In 2007, China established the China Investment Corp (CIC).

It is rumored that the People’s Bank of China plans to develop a new investment vehicle to manage investment funds worth around US$ 300 billion. The investment vehicle would be affiliated with China’s State Administration of Foreign Exchange (SAFE). The investment style would be similar to Hong Kong-based SAFE Investment Company Ltd also known as Hua An.

The proposed vehicle would operate two funds. One fund would be called Hua Mei (China-US) and focus on the United States. The other fund would be called Hua Ou (China-Europe) and focus on Europe.



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